Questions in attachment

Here are the details for assignment part B.

Please aim to complete the assignment a few days before the due date to allow for any unforeseen circumstances such as illness, family issues, work commitments etc. You may submit the assignment early if you have other commitments around the due date.

The due date and time is stated in the unit outline, on the unit website and above. Please note it is your responsibility to ensure you factor in any time difference between Adelaide (South Australia) and your location when submitting your assignment.

Please note that following important instructions relating to the assignment format and submission:

1. You mustcomplete your assignment using the assignment Word document provided.

2. Do not convert this document into any other format (.docx or .doc are the only permissible file formats than can be uploaded).

3. You can only submit this one file.

4. Do not ‘embed’ other files (Excel for example) as pictures within the assignment Word document.

5. You cannot scan hand written responses and submit.  All assignments must be typed. 

6. Remember to fill out the assignment coversheet which is the second page of assignment Word document.

7. All assignments must be lodged via the unit Learnonline page (see link above). 

8. Assignments submitted via e-mail (or any other method) will NOT be accepted.

9. Make sure that you upload the correct file. If you discover (after the due date) that you have uploaded a draft version or the wrong file completely, you will not be allowed to submit a second file.

QUESTION2: Balance Day Adjustments (45 marks)

	Debit ($)	Credit ($)
Chipping Good Takeaway Trial Balance 30 June 2016
Shop Cleaning Expense	58 400
Water Expense	3752
Motor Vehicle	45 000
Cash at Bank	146 810
Shop Furniture	75 000
Gas Expense	5034
Sales Returns & Allowances	1 060
Interest expense	9 200
Discount Received		2 250
Electricity Expense	7400
Lilly, Capital		264 475
Accounts Receivable	650
Loan		55 885
Accumulated Depreciation – Motor Vehicle		9 000
Inventory (1 July 2015)	58 950
Rent Expense	30 256
Bookkeepers Wages Expense	41 459
Shop Staff Wages Expense	49 090
Purchases	253 000
Advertising Expense	24 700
Office Cleaning Expense	20 000
Accounts Payable		10 233
Office Supplies Expense	2 350
Lilly, Drawings	58 065
Cooking Oil Disposal Expense	12 683
Repairs and Maintenance Payable		10 750
Sales		634436
Accumulated Depreciation – Refrigeration Equipment		32 625
Accrued Rent		2 270
Refrigeration Equipment	95 625
Discount Allowed	1 300
Deep Fryer	18 300
Insurance Expense	3 840
Totals	1 021 924	1 021 924

Lilly has emailed you the following list of account information related to the year ended 30 June 2016:

(Continued next page)

(1) The Shop Furniture is expected to have a useful life of seven years and have a $1290 residual value (calculate and record the depreciation expense for the year). The deep fryer is expected to be depreciated at an amount of $9,000 per year and have a residual value of $300.

(2) The Office Supplies on hand at 30 June 2016 was $843.

(3) The 12 month Insurance policy (policy #247786) of $3 840 was paid on February 1 2016.

(4) The Motor Vehicle is expected to have a useful life of five years and have a zero scrap value (calculate and record the depreciation expense for the year).

(5) $12 314 of the recorded sales represent receipts for catering at the Nutwood Music Festival which is not until the 4th August 2016.

(6) On 30th June, Lillyestimated $50 of Accounts Receivable will not be collected as this amount has been outstanding for 240 days.

(7) Staff wages payable but not recorded as at 30 June are $1 886. Of this $848 was bookkeepers wages payable whilst the remaining amount of $1 038 was shop staff wages payable.

(8) The bank has approved an overdraft facility for $10 000 for Chipping Good Takeaway.

(9) The Refrigeration Equipment is expected to have a useful life of ten years and have a $4 000 scrap value (calculate and record the depreciation expense for the year).

REQUIRED:

It is now the end of the financial year and Lilly requires you to undertake the following:

a. Prepare the Balance Day Adjustment Journals for Chipping Good Takeaway where required. Include narration (explanation) for each journal entry. (20marks)

b. Post the journals from (a) above to the General Ledger provided. (10 marks)

c. Complete the attached Adjusted Trial Balance provided for the account balances calculated in the General Ledger from (b) above. (10 marks)

a. Prepare the Balance Day Adjustment Journals for Chipping Good Takeawaywhere required. Include narration (explanation) for each journal entry.

Date	Details	Debit ($)	Credit ($)

b. Post the journals from (a) above to the General Ledger provided. All ledgers must be footed.

Allowance for Doubtful Debts

Prepaid Insurance

Office Supplies on Hand

Accumulated Depreciation – Shop Furniture

Accumulated Depreciation – Deep Fryer

Accumulated Depreciation – Motor Vehicle

			1 July	Balance	9 000

Accumulated Depreciation – Refrigeration Equipment

			1 July	Balance	32 625

Unearned Sales

Bookkeepers Wages Payable

Shop Staff Wages Payable

Sales

			1 June	Balance	634 436

BookkeeperWages Expense

1 June	Balance	41459

Shop StaffWages Expense

1 June	Balance	49 090

Depreciation– Shop Furniture

Depreciation– Deep Fryer

Depreciation– Motor Vehicle

Depreciation– Refrigeration Equipment

Office Supplies Expense

1 June	Balance	2 350

Insurance Expense

1 June	Balance	3 840

Doubtful Debts Expense

c. Complete the attached Adjusted Trial Balance in the proforma provided. You may need to insert additional accounts that are not currently listed.

Chipping Good Takeaway – ADJUSTED TRIAL BALANCEAS AT 30 JUNE 2016	Debit ($)	Credit ($)
Shop Cleaning Expense	58 400
Water Expense	3752
Motor Vehicle	45 000
Cash at Bank	146 810
Shop Furniture	75 000
Gas Expense	5034
Sales Returns & Allowances	1 060
Interest expense	9 200
Discount Received		2 250
Electricity Expense	7400
Lilly, Capital		264 475
Accounts Receivable	650
Loan		55 885
Accumulated Depreciation – Motor Vehicle
Inventory	58 950
Rent Expense	30 256
Bookkeepers Wages Expense
Shop Staff Wages Expense
Purchases	253 000
Advertising Expense	24 700
Office Cleaning Expense	20 000
Accounts Payable		10 233
Office Supplies Expense
Lilly, Drawings	58 065
Cooking Oil Disposal Expense	12 683
Repairs and Maintenance Payable		10 750
Sales
Accumulated Depreciation – Refrigeration Equipment
Accrued Rent		2 270
Refrigeration Equipment	95 625
Discount Allowed	1 300
Deep Fryer	18 300
Insurance Expense
TOTAL

QUESTION 3: Financial Statement (24 marks)

The following Trial Balance for Buzz’s Toyshop has been prepared at year end by Buzz but he realises it is not in the correct order.

Buzz’sToy Shop - TRIAL BALANCE AS AT 30 JUNE 2016

Debit ($) Credit ($)

Shop Furniture & Fittings	30 421
Accounts Receivable	46 089
Accumulated Depreciation – Shop Furniture & Fittings		9020
Office Rent Expense	3 650
Cash at Bank	43 066
Advertising Payable		4526
Sales		545 000
Electricity Expense	1 568
Purchases	386 210
Buzz, Capital		44 810
Depreciation Expense – Shop Furniture & Fittings	3 550
Interest received		2 310
Freight Inwards	2 820
Shop Rent Expense	25 650
Accounts Payable		16 018
Discount Allowed	3 725
Inventory (1 July 2015)	20 960
Salaries Expense - Store	33 400
Loan Payable		33 600
Allowance for Doubtful Debts		1 000
Prepaid Advertising	1 540
Interest Payable		620
Advertising Expense	6 547
Purchase returns and allowances		5 421
Sales Equipment	14 400
Interest Expense	470
Doubtful Debts Expense	1 000
Buzz, Drawings	18 500
Sales Returns & Allowances	8 630
Discount Received		3 171
Office Salaries Expense	13 300

**The loan is payable in equal amounts over 48 months**

**A physical stocktake of inventory at 30th June 2016 revealed $46,750 on hand.

REQUIRED:

Prepare a fully classified Income Statementand Statement of Changes in Equityusing the Trial Balance provided for the period in question

QUESTION 4: Accounting Concepts (5 marks)

For each of the following scenarios, in your own words, using references where appropriate:

1. Explain which accounting concept/s or definitions has/have been violated, and

1. State the correct accounting treatment required.

Superman Pty Ltd provides superhero services to those in perilous situations. Once Clark Kent (aka Superman) becomes aware of someone in need he races to the one and only telephone booth on the corner of 42nd and 62nd street to change into his distinctive blue costume.

You are the Chief Financial Officer of Superman Pty Ltd and during your last meeting with Clark Kent he requested that the telephone booth on the corner of 42nd and 62nd street be listed as an asset in the Superman Pty Ltd business as he argues that he requires this particular booth to change into his Superhero costume and cannot use any other booth, as this particular booth is larger than any other in the city and has a secret invisible cupboard in which he stores his Superman costume.

In your own words, in a letter document format please advise Clark Kent whether or not the telephone booth can be recorded as an asset in the business of Superman Pty Ltd. Refer to the conceptual framework.

(5 marks)

QUESTION 5: Cash Flow Statement (17 marks)

Sally Slipper is a client of your accounting firm. Sally has sought your advice regarding the potential purchase of a shoe shop. Sally has provided you with the summarised cash flow statements for two shoe shops which are currently for sale. You have told Sally that you will review the two summarised cash flow statements and will send her a letter explaining each section of the cash flow statement and which of the two businesses has the healthier cash flow situation. Sally is quite confused about the cash flow statements so you have assured her that you will fully explain your analysis each of the three types of cash flows for each business.

The letter must be written in your own words.

	Instep Ltd	Soft Sole’s Ltd
Cash flow from Operating Activities	28 800	(28 800)
Cash flow from Investing Activities	(19 200)	19 200
Cash flow from Financing Activities	16 000	(16 000)
Net increase / (decrease) in cash held	25 600	(25 600)
Cash at the beginning of the year	44 300	44 300
Cash at the end of the year	69 900	18 700

[Word limit 400 words]

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