Professional Documents
Culture Documents
QUESTION 1
(10 marks)
2015S2
Accounts Receivable
Rupert Ltd maintains subsidiary ledgers for debtors and creditors. At 31 May 2014,
the debtors control account has a debit balance of $50,120 and the creditors control
account has a credit balance of $30,670. An extract of totals from the special
journals for the month of June 2014 is as follows:
$
Credit sales
86,500
Cash sales
6,100
Credit purchases
93,200
Cash received from debtors
67,800
Cash paid to creditors
55,890
Cash purchases
4,300
Discount received from
7,500
creditors
Discount allowed to debtors
3,500
Complete the debtors control accounts as they would appear in the general ledger.
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3. Describe Scope 1 and Scope 2 emissions and provide an example for each of
them. (4 marks)
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CR
Bank Overdraft
10,000
Accounts Receivable
200,000
1,000
Inventory
100,000
Prepaid Rent
10,000
450,000
200,000
Accounts Payable
60,000
Bank loan
50,000
Contributed Capital
310,000
34,000
Sales revenue
450,000
265,000
Interest Expense
5,000
Wages Expenses
80,000
Rent Expense
5,000
1,115,000
1,115,000
The following information is given which may give rise to year end adjustments:
Depreciation on Property, Plant and Equipment is provided for on a straight line
basis at 10% per annum, and it is assumed that it will have no salvage value.
The balance in Prepaid Rent relates to the 12 month period from 1 January 2014 to
31 December 2014.
An ageing analysis shows that $4,000 of Accounts Receivable is estimated to be
uncollectible.
On 30 June 2014, the directors declared a dividend of $5,000, which the
shareholders authorised. The dividend is to be paid on 15 September 2014.
2015S2
It is discovered that $10,000 cash received during the year and credited to sales are
actually related to services to be delivered in July 2014.
$5,000 of wages relating to June 2014 have not been paid and need to be accrued.
Part A (12 Marks)
Prepare journal entries for the necessary end of period adjustments.
Debit
$
Account name
Credit
$
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Part B (7 Marks)
Prepare an Income Statement for the year ended 30 June 2014:
Part C (4 Marks)
In the Balance Sheet as at 30 June 2014, what would be the closing balance of
retained profits? Show all workings.
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Cash Purchases
Cash Sales
Balance
100 units @ $10
80 units @ $12
140 units @ $20
30 units @ $14
50 units @ $25
Prepare the journal entries for inventory purchases and cost of sales for the month of
June 2014. (12 Marks)
Date
Debit
$
Account name
Credit
$
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Cost Classification
The following information was supplied by Bandcamp Ltds accountant about the
opening and closing inventory:
31 January
1 January
(ending)
(beginning)
$80 000
$95 000
$110 000
$60 000
$255 000
$75 000
Required:
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10
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$1,800,000
(900,000)
900,000
(750,000)
$150,000
Fit4U wants to boost sales, and has decided to change the design of the exercise bikes.
The pedals and bike seats will now be hot pink in colour (instead of black), and glow
in the dark. This will increase the cost per exercise bike by $20. The price for these
new bikes will be increased to $1,990 each.
In addition, Fit4U will run a $50,000 advertising campaign to raise awareness of its
product. The expectation is that the campaign will cause demand to increase to 1500
units, despite the increased price.
1) Using the above income statement format, calculate the expected profit for Fit4U
Ltd next year.
(5 marks)
2) How many bikes would Fit4U have to sell to earn as much profit next year as it did
last year?
(3 marks)
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3) Do you agree with Fit4U Ltds decision to change the design of the bike and price,
and spend more on advertising? Explain why or why not.
(2 marks)
12
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13
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Bank Reconciliation
14
(4 marks)
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(2 marks)
Debit
$
Account name
15
Credit
$
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15%
1.8 times
2.2 times
0.8 times
17%
For each of the following transactions or events, indicate the directional effect
(increase, decrease, no change) on the Profit Margin, Current Ratio and Debt to
Equity in the table below. Note that you must write either increase, decrease or
no change. A blank response will be marked as incorrect. Consider each transaction
independently of all the other transactions.
a. Drake Ltd borrowed an additional $200,000 as short-term loan from the bank. (3
marks)
b. An equipment costing $120,000, on which $90,000 of depreciation was charged,
is sold for $30,000. (3 marks)
Record your answer in the table below.
Profit Margin
Transaction
Current Ratio
Debt to Equity
Ratio
a.
b.
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RATIO FORMULAE
Operating Profit after Tax
Shareholders' Equity
Cash from Operations
Operating Profit after Tax
Return on Equity
Quality of Earnings Ratio
Return on Assets
Total Assets
Total Shareholders Equity
Leverage Ratio
Current Assets
Current Liabilities
Current Ratio
Quick Ratio
Profit Margin
Asset Turnover
Inventory Turnover
Debtors Turnover
Interest Coverage Ratio
Debt to Equity Ratio
Days in Inventory
Days in Debtors
Price/Earnings Ratio
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Debit
$
Account name
18
Credit
$