Questions and Answers of Accounting for Business

The following errors were discovered during the current year.1. A machine with a cost of $$33$ 500 and accumulated depreciation to the date of sale of $$24$ 000 was sold for $$9000$. The sale
Below are extracts from the financial reports of Wollowiec Traders Ltd for the years ended 30 June 2025 and 30 June 2026.Additional information 1. The revaluation surplus at 30 June 2025 was raised
On 1 January 2020, Jeffries Ltd purchased two identical new machines at a total cost of $$700$ 000. It was estimated that the machines would have a useful life of 10 years and a residual value of
The following transactions and events affected the accounts of Heritage Ltd for the current year (ignore GST).1. On 3 January of the current year, Heritage Ltd paid $$550$ 000 in legal fees for the
Adam Hamilton, who recently won a major prize in a lottery, left his coaching job to invest in a business of his own. He found what he believed was an ideal business for his background, Hamilton Gym,
Bittoto Ltd has four different intangible assets at the end of 2025. Facts concerning each are as follows.1. Franchise. On 2 January 2025, Bittoto Ltd purchased a franchise to distribute a new
Morgan Ltd, which started operations on 1 October 2022, prepared the following account balances as at 30 June 2025.Additional information 1. Morgan Ltd calculates depreciation to the nearest month
On 1 July 2025, Foster Ltd acquired the assets and liabilities of Jenkins Ltd. The assets and liabilities of Jenkins Ltd consisted of the following.In exchange for the business of Jenkins Ltd, Foster
Identify and discuss the issues involved in accounting relating to employee benefits.
The debt ratio is the inverse of the equity ratio. If the company decreases its level of leveraging what will the effect be on the equity ratio?
Finesse Jewellers Ltd performed a physical stocktake on 31 December 2024 and identified stock on hand at that date valued at $$82,800$. The accountant performed an audit and identified the
Inventory cost flow methods — periodic inventory system Inventories and purchases for the month of January for Good Buys Electrical Ltd are presented in the table below:Required:Using the periodic
Lower of cost and net realisable value The inventory of Premium Fasteners Ltd contains the following packs of screws, nails, nuts and bolts at 30 June 2024. Unit Price Inventory Item Quantity of
Handyman’s Hardware Ltd conducts classes for the general public focusing on DIY projects using various power tools. One of the most popular power tools used in the DIY demonstrations is a 600-watt
The following information relates to the inventory of the Denki Ltd during the month of August:Denki Ltd uses the perpetual inventory method of accounting for inventory. Ignore GST.Required Determine
FIFO and average cost flow methods — periodic and perpetual inventory systems Non-GST version Clean Air Ltd sells air purifiers. The table below summarises the inventory movements for the most
Personal Tech Ltd records its inventory of fitness watches using the FIFO cost allocation for perpetual inventory. The following information summarises the inventory movements for their most popular
Audio Attitude Ltd uses the perpetual inventory system to maintain its inventory records of Play it car stereos. The computerised accounting system identified the closing inventory value was $$245$
Sun Solar Ltd manufactures and sells a portable folding solar panel blanket for use in caravans and camping. Inventory balances at 1 July 2023 totalled 900 units at a cost of $$250$ and sold at
Battery Supplies Ltd manufacturing batteries for use in the automotive industry. During the annual audit for 2023/2024, the accountant identified incorrect procedures occurred when conducting the
The Statement of Profit or Loss for Galaxy Donuts for a period of 3 years are presented below:Due to errors, the 2023 ending inventory is overstated by $$3$ 000 and the 2024 ending inventory is
Part A Alpha Ltd’s inventory on 1 January 2024 had a cost of $$150$ 000 and a retail value of $$255$ 500. During the month of January, the company’s purchases of inventory amounted to
Rods and Reels Ltd, a specialist retail business selling fishing supplies, performed a physical stocktake of inventory at retail price at the end of the current year. The manager calculated the total
The table below summarises inventory transactions for Staples Ltd for the month of March 2024:Required (a) Staples Ltd has adopted a periodic inventory system using the FIFO method of cost
(a) Explain the effect of each of the following errors in the ending inventory of a retail business.i. Incorrectly included 200 units of Product A, valued at $10 per unit, in the ending inventory;
The following information relates to the inventory of the ‘Coffee Bean’, a retail business that sells speciality coffee. A summary of the transactions for coffee beans are presented below for the
Solar Heat Ltd sells and services solar hot water systems. Different models and sizing of units are referred to by brand and model number. Ignore GST.The inventory on 1 July 2024 is as
Heaven Scent is a retail business selling handmade soaps, essential oils, candles and lotions. The manager is required to prepare quarterly financial reports to the owner of the business. To assist
Clean Chem Industrials Ltd manufactures cleaning solvents used in industrial dry cleaning and laundry services. On 25 April, the electrical system in the factory shorted causing a fire. When the fire
Air Support Ltd manufactures long distance drones. The drones were developed primarily for use in the agricultural industry, but are now sought after by other industries for their ability to capture
The information below relates to barrels of oil held in the inventory of Petroleum Ltd during 2024.Owing to an oil glut, the net realisable value for a barrel of the same grade of oil was $$60$ per
SuperSpinner is a company that manufactures and sells a multi-functional fidget spinner. The fidget spinner is very popular amounts all ages and has a retail price of $5.00. The beginning inventory
The following information has been extracted from the records of Aussie School Supplies Ltd about one of its popular products, a set of coloured scented textas. Aussie School Supplies Ltd uses the
The following information relates to the inventory of Luscious Lashes for the month of JanuaryLuscious Lashes use the periodic inventory system. During the month, 700 units of false lashes were sold
Erica Winters is the new manager of ‘The Perfect Bed’ a retail business specialising in beds and bedroom suites. She concerned about the end-of-year physical stocktake and ‘cut-off’
Part A Booker Ltd balances its accounts at month-end, using special journals, and the perpetual inventory system with the FIFO cost flow assumption. All purchases and sales of inventory are made on
During the year ended 30 June 2024 Templeson Ltd sold each unit of its goods at $9. Purchases and sales of the goods are shown below. Ignore GST.Required (a) Using dollars and cents in appropriate
Top Tech Pty Ltd sells tempered glass screen protectors for mobile phones. The selling price up to 30 June was $$12$ per unit, but due to rising costs, the selling price was raised to $$14$ for
Aroma Oils Ltd sells essential oils for aromatherapy. The business uses the perpetual inventory system with the moving average cost flow method for inventory management and costing. The manager likes
Presented below is the comparative Statement of Profit or Loss for Uniform Smart Ltd for the financial years ended 30 June 2023 and 2024:On preparing the inventory valuation for the 2024 financial
'It does not matter which depreciation method is used for a particular asset or class of assets because the total accumulated depreciation will be the same at the end of the assets life regardless of
Kerry, Dawn, Louise and Alex were at a business women’s lunch. Kerry was showing the group photos of her new work vehicle that she had sign wrapped to promote her business. Louise thought Kerry was
Green Leaves Golf Ltd acquired a parcel of land, buildings and ground maintenance equipment on 1 August for a cash price of $3 600 000. Fair values of the assets on the acquisition date were
On 1 July 2023, Victor Ltd purchased an excavator with a list price of $$351$ 500. Due to their business relationship, the supplier provided a trade discount of 10% and credit terms of 2/10, n/30.
Sierra Concrete Pty Ltd purchased two new cement trucks on 1 January 2023, at a cost of $$350$ 000. The accountant estimated the trucks would have a residual value of $$20$ 000 each at the end of
Minimart Express Ltd purchased a new refrigerated delivery van for its home delivery service. The van cost $$100$ 000. Minimart Express was also required to pay an additional $$3500$ for stamp
Summers Ltd purchased a new forklift for the warehouse for $$90$ 000 on 2 July 2023. The forklift was expected to have an $$8$ 000 residual value at the end of its 4-year useful life. Management
On 2 January 2023, Que Engineering Ltd purchased new 3D digital printer for $$155$ 000. Management estimated the 3D printer will have a useful life of 4 years and a residual value of $$10$ 000.
The financial statements for Cayman Ltd at 30 June 2023, presented a building with a cost of $$450$ 000 and accumulated depreciation amounting to $$220$ 000.The entity has adopted the
Depreciation, financial position and management decision making On 1 January 2022, Ormond Ltd purchased a van which is estimated to have a $$9,000$ residual value and a useful life of 5 years. On 1
Salamandar Ltd recently paid $$400$ 000 for new equipment. Management policy is to keep equipment for a period of 5 years. The estimated residual value is $$40$ 000. As a trainee accountant, the
Printbooks Pty Ltd commenced business on 1 July 2023. On 5 July 2023 it spent $$200$ 000 on industrial printing and binding machinery, payable in two equal instalments on 1 August and 1 November
Seeview Travels Ltd owns two touring coaches. The company chooses to use the units of production method of accounting for depreciation where possible. The financial year ends on 30 June. The
Maynard Timber Supplies Ltd operates three different types of machinery. Management has reviewed the nature of each item of machinery and has chosen the depreciation method which best represents the
PKE Ltd commenced coachiness on 1 July 2023. Property was purchased to construct a manufacturing plant for operations. Once construction was completed, the plant opened and commenced on 1 February
Top Catch Ltd purchased 2 refrigerated display units, to display fresh fish, on 1 January 2023 for $$23$ 000 per unit or total cost of $$46$ 000. The refrigerated display units will be
On 2 January 2024, Omega Ltd purchased, by exchanging $$420$ 000 cash and a $$250$ 000, 12%, 18-month finance company loan, assets with the following independently determined appraised values.The
Over a 5-year period, Eureka Ltd completed the following transactions affecting non-current assets in financial years ending 30 June. The company uses straight-line depreciation on all depreciable
Pioneer Manufacturing Ltd completed the following transactions during 2023:Required Prepare journal entries to record all the transactions of Pioneer Manufacturing Ltd from 1 July 2023 to 30 June
Quick Smart Dry Cleaners Ltd uses the straight-line method for recording depreciation of its assets. The following is a summary of the non-current assets purchased during the second half of the
Marlow Metalworks Ltd commenced business on 31 March 2023 in the scrap metal industry. The company balances its accounting records at month-end and the end of its reporting period is 30 June. Ignore
In the preparation of its annual financial reports for 30 June 2024, Walgarra Ltd identified several transactions that needed to be resolved. Ignore GST.1. On 1 July 2023, Walgarra Ltd purchased a
The accountant recorded the following information in the Land, Buildings and Equipment account for Mickelbury Ltd. The company issued share capital on the 1 April 2024 to purchase property, plant and
Aquarium Ltd has been developing specialised computer software for its own use. At the end of the current reporting period, the company has spent $$180$ 000 on the project. The final date for full
Several years ago, Baxter Ltd acquired for $$220$ 000 a patent for the manufacture of special ‘seal-tight’ plastic containers. After 5 years, the manufacture of these containers was
Julia Ross Company has the following internal control procedures over cash payments. Identify the internal control principle that is applicable to each procedure.1. Payments exceeding certain limits
Lisa Ceja is unable to reconcile the bank balance at 31 January. Lisa’s reconciliation is as follows.Required Prepare a correct bank reconciliation.Journalise the entries required by the
Sandy Lee, the owner of Sandy’s Sandwiches, wants a bank reconciliation statement to be prepared for the month ended 31 March 2025 using the following information:1. Final balance in the Cash at
The following information relates to the cash position of Cathy Fraser, loan broker.1. Cash at Bank account balance as at 30 June 2025: $181 804 debit.2. Bank statement balance as at 30 June 2025:
Top Value Consulting collected its latest bank statement on 1 July 2025. All entries appearing in the bank statement that had not been entered into the cash journals were entered therein. The cash
During October, Hair Styles Pty Ltd experiences the following transactions in establishing a petty cash fund.Required Journalise the entries in October that pertain to the petty cash fund. Oct. 1 31
Hannah’s Handbags Pty Ltd is preparing a budget for the quarter ended 30 June 2025. Hannah estimates that approximately 70% of the handbag sales will be for cash and the rest will be on credit. Of
Tom’s Hardware Ltd’s budgeted monthly sales for January to June 2025 are given below. About 70% of the monthly sales are expected to be on credit. Approximately 60% of the credit sales are
The accountant for Schulz Ltd compiled the following figures in order to estimate budgeted cash payments for March and April 2025.Schulz Ltd uses the following assumptions when preparing budgets. The
Hops and Malt Pty Ltd is a private company that runs a brewery. Its director, Fred, is concerned that the cash flows for the past year have deteriorated and has provided the following abridged
During the week ended 19 September 2025 the daily sales for Lena’s Chocolaterie were as follows.Required Record the transactions for the week ended 19 September in the Cash Receipt Journal of
The daily sales for Fresh Fruit & Vegetable Shop during the week ended 11 April 2025 were as follows.Required Record the transactions for the week ended 11 April 2025 in the cash receipts journal
The following information has been extracted from the cash records of Wheeler Ltd and shows four independent situations. Assume there were no direct bank debits or credits on the bank statement and
Information about the cash position for Charter Tours Pty Ltd for the month of June is presented below.1. The general ledger Cash at Bank account had a balance of $$25$ 200 on 31 May.2. The cash
Information about Bond Ltd’s cash position for the month of December is presented below.1. The general ledger Cash at Bank account had a balance of $$42$ 400 on 30 November.2. The cash receipts
The following information was available from records and the bank statement of Baldacchino Services Ltd, on 31 May.The date and the amount of each deposit as recorded during May were as follows.On 31
The bank reconciliation statement of Feng Zhen Liu on 21 June 2025 was as shown below.Required (a) Complete, where necessary, the cash journals starting with the totals shown.(b) Open a Cash at Bank
The March 2025 bank statement of Tong’s Toyworld has just been received from its bankers. The following information is available.1. The March bank column totals of the cash receipts and cash
As accountant for Stepanovic & Son, you are required to perform a bank reconciliation at the end of June 2025. The bank reconciliation statement for the previous month is set out below.Abridged
As the accountant for Billy & Ben’s Ice Cream you are required to perform a bank reconciliation at the end of June 2025. The bank reconciliation statement for the previous month is set out
The following transactions and events relate to the petty cash fund (imprest amount $400) of Honshu Ltd.1. Paid $$50$ delivery charges on inventory purchased.2. Paid $$80$ (part payment) for the
The following transactions and events relate to the petty cash fund (imprest amount $400) of Honshu Ltd (all amounts include GST).1. Paid $$50$ delivery charges on inventory purchased.2. Paid
Brockbank Builders Ltd is preparing a cash budget for May and June of 2025. Past records reveal that 20% of all credit sales are collected during the month of sale, 60% in the month following the
The owner of Smith Hardware has completed a bank reconciliation and cannot get the bank’s records to agree with the cash records of his business. He concludes that internal control has somehow
Prickly Pear Ltd wishes to prepare a cash budget for the first quarter of 2025. In response to your request for past and projected financial data, you receive the following:Of sales, 70% of sales are
Explain why the Allowance for Doubtful Debts account might have a debit balance before the end-of-period adjustment is made.
Briefly compare and contrast the direct method and the allowance method of accounting for bad debts.
Several months ago, Jackson Co., a trade debtor owing $$10$ 500 in excess of 120 days, had their account written off as a bad debt. Email notification was received yesterday to notify $$10$ 500
Gnarly Nails Ltd sells manicure sets, nail polish and hand lotions. All sales are conducted on a credit basis. The business does not allow cash discounts for prompt payment. Ignore GST. The following
The following transactions relate to Clover Landscaping Services owned by Rob Clover. The balance in the Allowance for Doubtful Debts account on 1 July 2023 was $$4$ 464. The bad debts during the
The following transactions relate to the business of Kinky Heels n Boots Ltd. Ignore GST.Required:(a) Record the above transactions in general journal for Kinky Heels n Boots Ltd.(b) Calculate the
Home Help Ltd, a not-for-profit organisation that provides assistance for elderly care, completed an age analysis of its accounts receivable on 30 June. It was estimated an allowance for doubtful
The following information was obtained from the financial records of Fast Track Courier Services Pty Ltd on 30 June 2024:After performing an ageing analysis of receivables, the firm has requested the
The information in the following table relates to the accounts receivable and allowance for doubtful debts of Exotic North Travel Services Ltd. The balance of the Allowance for Doubtful Debts account
The accountant for Elite Security Services Ltd reviewed the following information for accounts receivable:For the financial year 2022 - 2023 1. At 1 July 2022, Allowance for Doubtful Debts had an

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