Questions and Answers of Accounting for Business

Reef Tours Ltd commenced operations on 1 July 2022. By the end of the first year of operations, the accountant identified $$3$ 400 of receivables would be uncollectible and wrote these debts off as
On 1 June, Sugar Rush Ltd had Accounts Receivable and Allowance for Doubtful Debts accounts as below. GST Inclusive.The following transactions occurred during the month of June:5. Credit sales
On 1 June, Cambria Financial Services Ltd had balances in the Accounts Receivable and Allowance for Doubtful Debts accounts as set out below. Ignore GST.The following transactions occurred during the
Outback Get Away Ltd sells four-wheel drive accessories and recovery equipment on credit. The accounting records at 30 June 2023 highlights the following. Ignore GST.In the past, the company’s
Northern Communications Specialists Ltd manufactures and sells satellite phones and communication equipment. The company maintains a cash receipts, cash payments, sales, purchases and general journal
All transactions below relate to Alpha Ltd’s uncollectable accounts for the financial year ended 30 June 2023. Ignore GSTThe Accounts Receivable account, prior to the transactions listed above, had
The accountant for Metro Motorcycles Ltd prepared an aged analysis of accounts receivable balances at 30 June 2023. The percentages of each age group are based on historical analysis and are
Foodies Warehouse Supplies Ltd has traditionally made sales for cash and on credit only. Management has resisted accepting credit cards on the basis that the business would lose on average a credit
EZZ Ltd and RHI Ltd are competitors operating in the same industry. The following information has been extracted from their annual reports over a 2 year period:Required:(a) Calculate the receivables
The information below has been extracted from the financial statements of Supreme Sporting Goods Ltd.Required:a) Calculate the following for years 2024 and 2025:i. the receivables turnover ratio ii.
Mulberry Ltd has been using the FIFO costing method to account for inventories for several years. The company also has a policy of paying out all of its profits in cash dividends. What are the likely
If the ending inventory is understated because of an error, what is the effect on profit in that reporting year and in the next reporting year? What is the effect on the value of assets as reported
Josie was absent from her accounting class on inventory valuation. She believes the value of ending inventory is verified by a physical stocktake, but it will only include inventory items held on
The directors of Outback Ltd decided to issue 200 000 ordinary shares.Required(a) Prepare journal entries (in general journal form) to record the issue of shares as a private placement to Rural Ltd
Burkinshaw Ltd was established on 1 April 2025 and began by issuing 250 000 ordinary shares and 120 000 8% cumulative preference shares. The preference shares were issued privately at a value
On 1 July 2025, Agatha Ltd issued a prospectus offering 80 000 of its ordinary shares, payable $$1$ on application, $$1$ on allotment and $$2$ to be called as and when required. When
Dahlitz Ltd was registered on 2 January 2025. The following events occurred in that year.Required (a) Prepare entries in general journal form to record the transactions.(b) Show the equity section of
The following events occurred in the newly formed company, Bourke Ltd, which was registered on 31 January 2025.Required (a) Prepare ledger (T accounts) to record the events in the records of Bourke
(a) As the above share issue was a private placement with several well-known investors, prepare the journal entry, in general journal form, made by the company to record the share issue.(b) How would
Torcello Ltd issued 500 000 ordinary shares for $$8.20$ and 100 000 8% preference shares for $$6,$ all shares being fully paid. At the annual general meeting on 30 September 2025, a
Bega Ltd was registered as a new company on 2 January 2025. On that day a prospectus was issued inviting applications for 300 000 ordinary shares at $$10,$ payable $$2.50$ on application,
During the year ended 30 June 2025, the directors of Cooma Ltd paid a final dividend out of retained earnings of $$60$ 000, which had been recommended at the end of the previous financial year.
Urquhart Ltd’s balance sheet, before a share dividend, is as follows.Required (a) Prepare any journal entries necessary to record the payment of this share dividend. ASSETS Cash at bank Non-current
The following information relates to Neverland Ltd. Profit before income tax for the year ended 30 June 2025 was $220 000. The following items were used in determining that profit:Required (a)
During the year ended 30 June 2025, the directors of Jindabyne Ltd declared and paid an interim dividend of $$18$ 000 out of retained earnings. At the end of the year the financial statements
The below transactions are for Jenolan Ltd.1. Profit for the year was $$3$ 500 000. Ignore income tax.2. Directors resolved to transfer the amounts specified below from retained earnings to:•
On 1 July 2025, Grafton Ltd was incorporated, and on 4 July a prospectus was issued inviting applications for 80 000 shares payable $$4.50$ on application, $$2.50$ on allotment and $$2.50$ on
Newcastle Ltd was incorporated on 1 July 2025. On 1 August, it was decided to issue 600 000 ordinary shares on the following terms.To the end of August, applications for 700 000 shares had been
Baldacchino Ltd was registered on 1 July 2025; that day the company purchased the net assets (excluding cash) of a partnership for a consideration of 380 000 ordinary shares (fully paid) at a price
Rowbotham Ltd was registered on 1 July 2025. On 4 August a prospectus was issued inviting public subscriptions for an issue of 200 000 12% preference shares payable $$2$ in full on application, and
The following is the equity of Bowral Ltd at 30 June 2025.The transactions below occurred during the year ended 30 June 2026.Required (a) Prepare entries in general journal format to record the above
Hassink Ltd presented the following information for the year ending 30 June 2026 in the company’s records.On 30 June 2026, the directors decided to:1. recommend a final cash dividend of $$30$
Equity of Townsville Ltd at 14 February 2025 consisted of the following.The following events occurred during 2025.Required (a) Prepare journal entries in general journal format to give effect to the
Broken Hill Ltd’s equity at 30 June 2025 was as follows.The following events occurred during the year ended 30 June 2026.Required A. Prepare journal entries (in general journal form) to record the
On 1 January 2025 Rippon Ltd was incorporated. The company issued a prospectus offering on 1 January 2025 for 500 000 ordinary shares at an issue price of $40, payable on the following terms.•
At 30 June 2025, Box Hill Ltd’s equity was as follows.The preference shares were non-participating. The following events occurred after 30 June 2025:Required (a) Prepare the journal entries (in
A trial balance taken from Snowy Ltd’s accounting records at 30 September 2025 showed the following account balances.At a meeting of directors on 1 October, it was decided to issue additional
In January 2024, the management of Newlands Ltd decided to expand the business. On 1 July 2024, the company had $768 900 in retained earnings, and another reserve totalling $512 600 had been set
The equity of Lochinvar Ltd at 30 June 2025 was as follows.Required (a) Prepare general journal entries to record all transactions for the year.(b) Prepare a statement of changes in equity for
Silverton Ltd prepared the unadjusted trial balance as at 30 June 2025 shown below.The following information and events are yet to be recorded by the company on 30 June 2025.1. Inventory on hand
The accounts in the ledger of Antunaz Ltd as at 30 June 2026 had the following balances..The Share Capital account represents 30 000 000 shares fully paid at $$1$ and 50 000 000 shares issued at
The trial balance of Vincent Ltd at 30 June 2026 is shown below.There was no movement in share capital for the year.The following adjustments are required.1. Record income tax expense of $$7500$.2.
Several independent situations are described below.1. The owner of the business included his personal dental expenses in the entity’s income statement.2. The company spent $25 000 on computer
Described below are several transactions and events for Alana Streaming Services Ltd for the year ended 30 June 2025.1. Alana Streaming Services Ltd owns a multi story building in the City Business
Goode Medical Laboratory Ltd, GMLL, a medical research entity, has discovered a cure for a previously incurable disease. GMLL is protecting the drug’s formula by keeping it secure in the company
Gas Giant Australia Ltd signed a 20‐year deal to sell gas to a neighbouring country for $$1.8$ billion. The contract was signed on the last day of Gas Giant Australia Ltd’s financial year, 30
State the amount of revenue that should be recognised by Nanscawen Ltd in the year ended 31 December 2026 for each item below, justifying your answer by reference to the revenue defi¬nition and
Outline whether you would recognise each item below as a liability, justifying your answer by reference to the Conceptual Framework’s liability definition and recognition criteria:(a) Your parents
Portier Ltd sold a shopping centre and car park to Rosato Ltd for $$2$ 500 000 cash in March 2026, recording a profit of $$320$ 000. Portier Ltd gave Rosato Ltd an option to sell the shopping
Liabilities The following items occurred in Sarah Ltd for the year ended 30 June 2026.(a) Some of Sarah Ltd’s plant and equipment is situated in an area which, on average, is flooded every 15
For several seasons, Jessica Gomes and Victoria Lee have been employed by David Jones Limited in order to attract more fashion-conscious customers to their stores. This strategy has met with some
Armagnacq Ltd is seeking your advice on how to account for the following transactions, in line with the Conceptual Framework and other relevant documents.1. Armagnacq Ltd raised $$1$ 000 000 by
Assume that the IASB (and AASB) is in the process of writing an accounting standard on accounting for water resources, and has received submissions that can be divided roughly into two camps —
Wyoming Wines Ltd has suffered a significant reduction in profitability, as a result of the current economic downturn and doubts about the quality of certain boutique wines. The company’s profit
Johara Mining Limited (JML) is a mining company that operates large mineral mines throughout Australia. In June 2026, JML had sold and delivered mineral ores from other mining operations. The total
A well-known Australian airline has placed a non-cancellable order for a new Dreamliner aircraft. The price between the airline and the manufacturer is fixed, and delivery is to occur in 24 months
After conducting an audit of the accounts of Iskra Ltd, you discover that the following transactions and events were recorded during the current year. Iskra Ltd uses the historical cost
Martindale Ltd uses the historical cost system. While reviewing the business activities of the company, you discover that the following transactions and events were recorded. Ignore GST.1. Ending
Land and Water Waste Disposal Ltd (LAWWD) is a public company providing waste disposal services to private homeowners and to customers in the commercial, industrial and public sectors. Because of its
Cochrane Collett Cornish Ltd (CCC), is a reporting entity that manufactures and sells specialised machinery. The following transactions occurred during the financial year ended 30 June 2025.1. Credit
Taylor Leasing Ltd (TLL) is the owner–lessor of some high-quality apartment blocks, which have pleasant surroundings of parks and gardens and are only a short walk to a busy shopping centre and to
Museum collections — assets? Read the extract Accounting as Technical, Social and Moral Practice: The Monetary Valuation of Public Cultural, Heritage and Scientific Collections in Financial
Read the following extract from an article Is prudence still a virtue?, which is about Bob Jane’s latest business venture.Required(a) By referring to definitions and recognition criteria of the
Simpson Ltd is a public company supplying different types of packaging for the food and bev¬erage industry. Among its products are labels for beer bottles, soft-drink bottles and jam jars and tins,
Carl Caldersmith owns 80% of the issued shares of Caldersmith Commercial Cleaning Ltd (CCC), a distributor of cleaning equipment for industrial purposes. During the annual audit of CCC, the firm’s
Dampier Dirtworks Company Ltd (DDC) was floated by public subscription on 1 July 2026. The entity so formed engaged in a number of revenue-earning activities which had been previously administered by
S. Hudson uses subsidiary ledgers and special journals in his accounting system. The accounts in the accounts payable subsidiary ledger for the most recent month are shown below:Required(a) Prepare
Assume that Xinshan’s China sold merchandise to three customers during June on credit, as shown in the following Accounts Receivable Control account.Required(a) Explain why the control account and
Reconciling a control account and a subsidiary ledger Hanna’s Homeware bought merchandise from three suppliers during September on credit, as shown in the Accounts Payable Control account on the
Ollie’s Outdoor Centre is owned and run by Oliver Baker, using the periodic inventory system and balancing her books at month-end. At 30 April 2025, the balances of the Accounts Receivable Control
Bailey Stokes uses a purchases journal, a cash payments journal, a sales journal, a cash receipts journal and a general journal. Indicate in which journals the following transactions are most likely
The accounting system for Wallace Ltd uses a general journal and special journals for sales, purchases, cash receipts and cash payments.Required(a) What journal would be the most probable source of
Casey Ltd’s accounting system uses special journals and subsidiary ledgers. The following transactions occurred during March 2025 (GST is ignored). All sales are n/30.Required(a) Ignoring GST,
Journals, subsidiary ledgers and control accounts Cavuilati and Company’s Accounts Receivable control account in the general ledger on 1 March was $$12$ 090. The subsidiary ledger contained the
Relating sales and cash receipts to the subsidiary ledger Model Trains Enthusiasts Shop’s sales and cash receipts journals for the month of April are presented below. The accounts receivable
Relating purchases, cash payments and the general journal to the subsidiary ledger and control account At 1 February, the following information was extracted from the records of Sonia Toombs (assume
Accounting with several journals Icasas & Daughters uses sales, purchases, cash receipts, cash payments and a general journal (ignore GST). The following column totals were taken from the
Crawford & Co. uses sales and purchases journals in its accounting system. The following transactions took place during April (ignore GST):Required(a) Establish all necessary general ledger
Hansford and Harding use purchases, cash payments and general journals with their accounting system. They also maintain an accounts payable subsidiary ledger, which contains the following accounts at
Adil & Bazhenskiy uses sales, cash receipts and general journals in its accounting system. The firm also maintains an accounts receivable subsidiary ledger, which contained the following accounts
Detecting errors in an accounting system Melanie Jacobs accounting system that uses sales, purchases, cash receipts and cash payments journals and a general journal. At various times during the year,
Accounting with sales journal and purchases journal Non-GST version Toby’s Traders Ltd uses sales and purchases journals in its accounting system. The following transactions occurred during April
Accounting with sales journal and purchases journal GST version Toby’s Traders Ltd uses sales and purchases journals in its accounting system. The following transactions occurred during April
Pereira Brick Pizza Ovens sells custom built stone and brick outdoor pizza ovens on both a credit and direct debit basis. They stock a full range of spare parts and accessories for preparing and
Silverado Ltd uses the periodic inventory system and has control accounts and subsidiary ledgers for trade receivables and payables. The general ledger control account balances at 1 June 2025
You are the person responsible for the accounts payable ledger of Cameron Ltd. You are concerned that the statement of account for the month ending 30 June 2025 received from Deveson Ltd does not
Cottle Ltd uses a sales journal, a cash receipts journal, a general journal and an accounts receivable subsidiary ledger within a periodic inventory system. The terms of all credit sales are 2/10,
Elliott started business on 1 July 2025. The accounting system includes a sales journal, a purchases journal, a cash receipts journal, a cash payments journal and a general journal. The chart of
Zhang Ltd uses sales, purchases, cash receipts, cash payments and a general journal along with subsidiary ledgers for accounts receivable and accounts payable. Zhang Ltd’s financial year ends on 31
For the accounts of her business Rebecca Goumas uses sales, purchases, cash receipts, cash payments and general journals along with subsidiary ledgers for accounts receivable and accounts payable.
Chee Yong Chaw began his business on 1 July 2025. The business balances its books at month-end and uses special journals and the periodic inventory system. Transactions for July 2025 were as
Chee Yong Chaw began his business on 1 July 2025. The business balances its books at month-end and uses special journals and the periodic inventory system. Transactions for July 2025 were as
On 1 June 2026, Aaron Draper began trading as a landscape material supplier. The transactions for the month of June 2026 were as follows (ignore GST):The following additional information is
Zoe Borrillo, the accountant for Comfy Home Furnishings, was having difficulty completing the trial balance of the business’s general ledger. The balance of the Accounts Receivable Control account
On 30 June 2025 the following information appeared in the accounting records of Ndung and Mkoka.• Balance of Accounts Receivable Control account, $$7450$• Total of schedule of accounts
Thomas and James, who were operating separate competing businesses, decided on 1 July 2025 to form a partnership by contributing cash, assets and liabilities of their respective businesses. At that
Sofina Ali and Tristan Filippidis agreed to form a partnership by combining their businesses. The fair value and the carrying amount of the assets contributed by each partner and the liabilities
Refer to the data presented in exercise 8.2. Assume further that Price and Stewart agree that their opening capital balances in the new partnership should be the same and set the amount at $380
Godfrey and Taylor formed a partnership on 1 July 2025 with initial capital balances of $$90$ 000 and $$60$ 000 respectively. For the year ended 30 June 2026, the Profit or Loss Summary account
On 1 July 2025 Roxanne and Asterios formed a partnership with initial capital balances of $$280$ 000 and $$310$ 000 respectively. The Profit or Loss Summary account for the year ended 30 June

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