Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

problem 1:

Amanda White has started a domestic cleaning business Spotless View Cleaning (SVC). She started the business on 1st May 2013, it is now 30th June and she has asked for your assistance in preparing her financial statements. On 1st May Amanda deposited $5,000 into a new bank account opened in the name of the business. The $5,000 consisted of a $2,400 interest free loan from her father and $2,600 of her own money.

Amanda rented some equipment from Barry’s Equipment Hire. On 1st May, she signed a four-month rental agreement on cleaning equipment (vacuum cleaners and a floor polishing machine) and paid $400 for the four month rental period. On the same day Amanda also purchased (for $3,000) an old van to be used exclusively for the business. She believes that the van has three years of useful life and then will have a resale value of $300.

Amanda has made a note in her diary whenever she has taken items from the business for her personal use. At 30th June she consults her diary and find outs that she has taken $950 cash and $20 worth of cleaning supplies during the period.

The loan made by her father is to be repaid in twenty four equal repayments. Each repayment is made on the last business day of the calendar month. Normally all of the work done by SVC is performed on account but one domestic customer insisted in paying in cash at the time the work was done. The customer paid $120 and Amanda decided that it was not worth producing an invoice for an amount which had already been received. All work done during the period has been invoiced. Invoices totaling $8,300 had been issued.

At 30th JuneAmanda’s customers owe her $900. Herdiary records list payments for supplies totaling $380, and at the end of the period she still has supplies that cost $60 on hand. She paid her employees $2,900, and still owes them $320 for their final week of work. During June Amanda paid her mobile telephone bill of $280 from her personal bank account. She estimates that 60% of the calls made were for the business purposes. She also has an unpaid bill for $125 from Keen Maintenance for a repair made to her floor polishing machine.

Required:

You must clearly show how you have find outd each amount shown on the statements, either by writing it next to the account name, for ex Sales ($5 x 2,000) or by referencing the amount using a, b c etc. and putting your calculations for each of these at the bottom of the statement. For ex, Sales (a) and then at the bottom of the statement put (a) and your calculation. Statements provided without calculations/explanations will receive no marks.

a) Prepare the business Income Statement for the period.
b) Prepare the Statement of Changes in Equity for the period.
c) Prepare the classified Balance Sheet at the end of the period.

problem 2:

Mary is a student and also operates a part time business called Jano Enterprises. She sells imported marker pens to various retail office and stationery supply shops. Business commenced in May 2012.Mary conducts all of the business’ operations (she works alone and has no employees).

Mary purchases pens for 60c each and sells them for $2.50 each. These amounts have not changed since Mary started operations.

At 1st July 2012 an amount of $1,500 appears as inventory in the trial balance.

During the year ended 30th June 2013, Mary made the following unit purchases and sales.

1212_unit purchase and sales.jpg

On 30thJune 2013(the end of the accounting period), Mary counted 370 pens remaining on hand.

Required:

a) find out the Gross Profit for the year ended 30th June 2013 under both the (i) perpetual and (ii) periodic methods of inventory recording by providing a correctly formatted extract (up to gross profit only) from Jano Enterprises income statement. You must also provide explanations and calculations for each amount shown on the statement extracts. Present this information below your statement extract. Statements provided without calculations and explanations will not receive marks.

b) Of the two methods used in 1. Above, which method (if any):

i. Provides the higher Gross Profit figure?
ii. Provides the most information for control purposes, and how?
iii. Considering the circumstances, which inventory method would be the most appropriate for Mary’s business? describe why.

problem 3:

Tamara Nice set up a secretarial services business (TN Services) on 1 July 2013. Usually, Tamara collects $20 per hour for services provided on the completion of each day's work and pays for the maintenance of her computer equipment with cash. Tamara did an accounting subject at secondary school and so has kept her own accrual-based accounting records. At the end of the first year, Tamara produced the following unadjusted trial balance:

957_trial balance.jpg

The following adjustments were required at the year-end:

• Supplies on hand at year-end, $230.
• An account was received for repairs done to Tamara’s computer equipment before year-end but not recorded, $270.

All calculations must be shown. Solutions provided without calculations will not receive marks.

Ignore the GST in your answers.

Required:

a) Prepare an income statement for the year ended 30th June 2013 using accrual accounting.
b) Prepare an income statement for the year ended 30th June 2013 using cash accounting.
c) Tamara was not sure whether she could use cash accounting rather than accrual accounting for her business records. From the information provided, decide whether Tamara should use accrual or cash accounting, and describe to her the reasons for your decision.

problem 4:

The following values relate to various ratios determined for a sole trader, Ben Bournemouth, for the year ended 30 June 2013. At that date, the total assets in the Balance Sheet were $900 000. The ratios relate to the accounts either in respect of the 12-month period or at the date of the Balance Sheet for the end of the period.

893_balance sheet.jpg

Required:

Assuming that there are no prepaid expenses and that accounts payable are the only liability, and rounding answers to the nearest dollar, prepare:

a) A detailed Income Statement for the year ended 30 June 2013, including an itemized cost of sales calculation (assuming a periodic inventory system).

b) The business’ Balance Sheet as at 30 June 2013.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M92647
  • Price:- $50

Priced at Now at $50, Verified Solution

Have any Question? 


Related Questions in Accounting Basics

Assignment case studyreqiredassume you are employed as a

Assignment Case Study Reqired Assume you are employed as a graduate tax accountant and have been asked to detail to your manager, the Australian income tax implications of the following facts relating to Mrs Gilling, who ...

Identifying account titles-the following are independent

Identifying Account Titles- The following are independent situations. a. A new company is formed and sells 100 shares of stock for $12 per share to investors. b. A company purchases for $18,000 cash a new delivery truck ...

Q1 partners a b and c are contemplating using the following

Q1. Partners A, B and C are contemplating using the following profit distribution plan: Salary is to be given to A in the amount of P60,000, with the remainder in an equal rates to all partners. A is guaranteed a minimum ...

Pinciples of accounting5-6 pages body of paper only

Pinciples of Accounting 5-6 pages (Body of Paper only) Excluding title page and work cite You will select a company from this list, and you will analyze the company's financial performance, highlighting accounting princi ...

Practice questionswhat influences have encouraged new

Practice questions: What influences have encouraged new developments in management accounting?

Part a1000 word short essay about the nature of impairment

Part A: 1000 word short essay about the nature of "Impairment loss" and required disclosures including referencing.

Review of current accounting issuestaskin your accounting

Review of Current Accounting Issues Task In your accounting career you will be required to analyse current accounting issues and communicate your theoretical understanding to your professional colleagues and your clients ...

Problem -the partners agreed to share profits and losses

Problem - The partners agreed to share profits and losses equally and decided to invest an equal amount in the partnership. Lucena and Mulles agreed that Lucena's land is worth P500,000 and his building P1,450,000. Lucen ...

1 under gasb rules for the financial reporting entitya

1. Under GASB rules for the financial reporting entity a. component units are included if the primary government is financially accountable for their operations B. counties are component units of the state government C. ...

Problem 1a two four-year-old companies are identical in all

Problem 1: a. Two four-year-old companies are identical in all respects except that Company A has used straight-line depreciation exclusively since inception while Company B has used double-declining balance depreciation ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate