Questions and Answers of Financial Accounting 11th

Richards, David and Andrews decided to enter into a partnership agreement as from 1 July 2019, some of the provisions of which were as follows.1. Richards to contribute $20 000 cash, inventory, the
Selected accounts from the trial balance as at 30 June 2020 of the partnership of Amber, Ruby and Gemma are as follows.End‐of‐period adjustments for the financial year ended 30 June 2020 have yet
On 1 July 2019, McGregor and Roberts decided to amalgamate their businesses and to share profits equally. Financial information at that date was as follows.At one July 2019, McGregor’s accounts
Gregory and Simpson share profits in a proportion of 60:40. Gregory is entitled to a salary allowance of $60 000 p.a., and Simpson is entitled to $50 000 p.a. Capitals are fixed at Gregory $72 000
At the end of the financial year ended 30 June 2019, the trial balance of Veronica, Valda and Victoria is as shown below.Victoria made her advance before 1 July 2018. Veronica and Valda each withdrew
Harris, Harmar and Higgins are partners in the consulting firm of Harris and Associates. The balance sheet of the partnership as at 31 March 2019 is set outIt was agreed that all profits would be
Miller, Morris and Mason are partners in the consulting firm of MMM Partners. The balance sheet of the partnership as at 30 June 2019 is set out below.It was agreed that all profits should be divided
Jones, Jackman and Johnson are partners in the consulting firm of Triple J Partners. The balance sheet of the partnership as at 30 June 2019 is set out below.It was agreed that all profits would be
O’Malley and O’Reilly formed a partnership on 1 July 2019 to run an information systems consultancy business by investing $400 000 and $360 000 respectively. Both partners work similar hours in
Refer to the latest financial report of JB Hi‐Fi Limited on its website, www.jbhifi.com.au, and answer the following questions using the consolidated income statement and balance sheet/statement of
Warren Ltd was organised on 2 January 2019, and proceeded to issue 100 000 9% cumulative preference shares and 200 000 ordinary shares. The preference shares were issued privately at a value of $2
On 1 July 2019, Denman Ltd issued a prospectus offering 160 000 of its ordinary shares, payable $1 on application, $1 on allotment and $2 to be called as and when required. When applications closed
Scone Ltd was registered on 1 February 2019. The following events occurred in that year.Required(a) Prepare entries in general journal form to record the above transactions.(b) Show the equity
The following events occurred in the newly formed company, Armidale Ltd, which was registered on 31 January 2019.Required Prepare ledger T accounts to record the above events in the records of
In an attempt to fund mining expansion operations in Far-North Queensland, Metallamine has raised more than $200 million extra in funding than their original target of US$300 million. Metallamine
Maitland Ltd has issued 2 000 000 ordinary shares for $4 and 200 000 8% preference shares for $4, all shares being fully paid. On 30 September 2019, at the annual general meeting of the company, a
Bega Ltd was registered as a new company on 2 January 2019. On that day a prospectus was issued inviting applications for 300 000 ordinary shares at $10, payable $2.50 on application, $2.50 on
During the year ended 30 June 2019, 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. They
The following information relates to Nevertire Ltd. Profit before income tax for the year ended 30 June 2019 was $220 000. The following items were used in determining that profit.Assume the
During the year ended 30 June 2019, 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 showed a
On 1 July 2019, 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 each of two
Newcastle Ltd was incorporated on 1 July 2019. On 1 August, it was decided to issue 300 000 ordinary shares on the following terms.To the end of August, applications for 350 000 shares had been
On 1 January 2019, Shoalhaven Ltd was registered; on the same day the company purchased the net assets (excluding cash) of a partnership for a consideration of 240 000 ordinary shares (fully paid) at
Picton Ltd was registered on 1 July 2019. 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 600
The following is the equity of Bowral Ltd at 30 June 2019.The transactions below occurred during the year ended 30 June 2020.Required(a) Prepare entries in general journal format to record the above
The following information relating to the year ending 30 June 2020 for Penrith Ltd has been obtained from the company’s records.On 30 June 2020, the directors decided to:1. recommend a final cash
Equity of Toronto Ltd at 14 February 2019 consisted of the following.The following events occurred during 2019.Required (a) Prepare journal entries in general journal format to give effect to the
Broken Hill Ltd’s equity at 30 June 2019 was as follows.The following events occurred during the year ended 30 June 2020.Required(a) Prepare journal entries (in general journal form) to record the
Gundagai Ltd was incorporated on 30 June 2019. On 1 July 2019, the company issued a prospectus offering 300 000 ordinary shares at an issue price of $10, payable on the following terms.• $3 on
At 30 June 2019, Box Hill Ltd’s equity was as follows.The preference shares were non‐participating. The following events occurred after 30 June 2019.RequiredPrepare the journal entries (in
A trial balance taken from Galston Ltd’s accounting records at 30 September 2019 showed the following account balances.At a meeting of directors on 1 October, it was decided to issue additional
In January 2018, the management of Branxton Ltd decided on a program of expansion for the business. On 1 July 2018, the company had $900 000 in retained earnings, and another reserve totalling $600
The equity of Lochinvar Ltd at 30 June 2019 was as follows.During the year ended 30 June 2020, the following transactions occurred.Required(a) Prepare general journal entries to record all
Swansea Ltd prepared the unadjusted trial balance as at 30 June 2019 shown below.The following information and events are yet to be recorded by the company on 30 June 2019.1. Inventory on hand after
The accounts in the ledger of Zetland Ltd as at 30 June 2020 had balances as shown below.The Share Capital account represents 30 000 000 shares fully paid at $1 and 50 000 000 shares issued at $1 but
The trial balance of Victoria Ltd at 30 June 2020 is shown below. There was no movement in share capital for the year. The adjustments that need to be made are:1. record income tax expense of
Described below are several transactions and events for Chisholm Insurance Ltd for the year ended 30 June 2019.1. The company issued a 1‐year insurance policy to Boronia Ltd on 1 March 2019,
State the amount of revenue that should be recognised by Whitehall Ltd in the year ended 31 December 2020 for each item below, justifying your answer by reference to the revenue definition and
Greenvale Ltd sold some property to Thornleigh Ltd for $1 000 000 cash in June 2020, recording a profit of $200 000. A further element of the sale was that Greenvale Ltd gave Thornleigh Ltd an option
The following items occurred in Mitcham Ltd for the year ended 30 June 2020.(a) Some of Mitcham Ltd’s plant and equipment is situated in an area that, on average, is flooded every 15 years. The
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
Hampton Housing Ltd (HHL) is a land development company trading in the construction of residential house and land packages in Sydney’s western suburbs. The company is currently developing a
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
Dowden Machinery Ltd (DML), a reporting entity which distributes heavy‐duty equipment to industrial entities, has had a significant increase in sales to government departments over the last few
Read the following extract from an article about a business venture of the Bob Jane company.RequiredDo you agree with removing prudence from the Conceptual Framework? Why / Why not? Is prudence still
Cambridge Ltd is a public company supplying different types of packaging for the food and beverage industry. Among its products are labels for beer bottles, soft‐drink bottles, and jam jars and
Dampier Dirtworks Company Ltd (DDC) was floated by public subscription on 1 July 2020. The entity so formed engaged in a number of revenue‐earning activities which had been previously administered
Sandy Poglase, owner of Sandy’s Sandwiches, wants a bank reconciliation statement to be prepared for the month ended 31 March 2019 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 2019: $45 451 debit.2. Bank statement balance as at 30 June 2019: $47
Cathy’s Consulting collected its latest bank statement on 1 July 2019. All entries appearing in the bank statement that had not been entered into the cash journals were entered therein. The cash
Hannah’s Handbags Pty Ltd is preparing a budget for the quarter ended 30 June 2019. Hannah estimates that approximately 70% of the handbag sales will be for cash and the rest will be on credit. Of
Kay’s Hardware Ltd’s budgeted monthly sales for January to June 2019 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 2019.Schulz Ltd uses the following assumptions when preparing budgets. The
Overton Pty Ltd is a private company that runs a coffee shop. Its owner, Carl, is concerned that the cash flows for the past year have deteriorated and has provided the following abridged versions of
During the week ended 12 September 2019 the daily sales for Calum’s Chocolaterie were as follows.RequiredRecord the transactions for the week ended 12 September in the cash receipts journal of
The daily sales for Sunny Fruit & Vegetable Shop during the week ended 5 April 2019 were as follows.Required Record the transactions for the week ended 5 April 2019 in the cash receipts journal
The bank reconciliation statement of Feng Zhen Liu on 21 June 2019 was as shown below.The cash receipts and cash payments journals for the week ending 28 June were as follows.Feng Zhen Liu’s bank
The March 2019 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 J. Stojanovic & Son, you are required to perform a bank reconciliation at the end of June 2019. The bank reconciliation statement for the previous month is set out
As the accountant for Sam & Ben’s Ice Cream you are required to perform a bank reconciliation at the end of June 2019. The bank reconciliation statement for the previous month is set out
Brockbank Builders Ltd is preparing a cash budget for May and June of 2019. 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 2019. In response to your request for past and projected financial data, you receive the following:Of sales, 70% of sales are
Ken Dunlop of Dunlop’s Dishes wishes to prepare a cash budget for the 6 months ending 30 June 2020 so he can arrange for overdraft drawings facilities, if required. The following information is
Centenary Ceramics deals in ceramic pots and figurines. All sales are conducted on a credit basis and no cash discounts are given. Ignore GST. The following information was extracted from the
The following transactions relate to the gardening maintenance business of Steve Jones. The balance in the Allowance for Doubtful Debts account on 1 July 2018 was $7440. The bad debts during the year
The following details were obtained from the accounting records of Civil Construction Consultants at the end of the financial year.The firm requires an allowance for doubtful debts of 10% of
The information in the following table relates to the accounts receivable and allowance for doubtful debts of Prime Moving Ltd. Ignore GST. The company policy is to provide an allowance for doubtful
While accounting for accounts receivable for Easy DVD Ltd, the following information became available to the accountant. At 1 July 2018, the Allowance for Doubtful Debts account balance was $8100. To
Karen Broderick commenced business on 1 July 2018. On 30 June 2019, she found that she had written off debts amounting to $1875. In addition, she found it necessary to create an allowance for
Great Outdoors Ltd sells outdoor furniture settings on credit. The accounting records at 30 June 2019 reveal the following. Ignore GST.In the past, the company’s yearly bad debts expense had been
Cathy Smythe, who trades as Cathy’s Corner, uses the following journals in her business: general, cash receipts, cash payments, sales and purchases. The control account for the accounts receivable
All transactions below relate to Biancardi Construction Ltd’s uncollectable accounts for the financial year ended 30 June 2019. Ignore GST.The Accounts Receivable account had a balance at 30 June
The accountant for Debbie’s Dance Ltd prepared an ageing analysis of accounts receivable balances at 30 June 2019 as set out below. The percentages of each age group are based on past experience
The information below has been extracted from the financial statements of Crystal Craft Ltd.Required(a) Calculate the following for years 2020 and 2021:i. receivables turnover ratio ii. average
Jenny Pike, assistant accountant for Blenheim Instruments Ltd, was finalising the balance sheet of the company as at 30 June 2019 with the accountant of the business, Russell Bayer. Although both
Sapphire Ltd’s ending inventory was assigned a cost of $55 200 by way of a physical inventory count on 31 December 2019. An audit of the company’s records revealed the following information.
The inventory of Gordon Ltd contains the following items at 30 June 2019.Required(a) Determine the ending inventory value at 30 June 2019, applying the lower of cost and net realisable value rule to
Value Vehicles is a car dealership. One of its models was used as a demonstrator during the year.Presented below is information relating to the demonstrator as of 30 June 2019, the end of the current
Bristols Bicycles maintains inventory records under the perpetual inventory system. At 30 June 2019, the inventory balance determined by the system showed a value of $300 000. However, on conducting
Soakwell Supplies Ltd manufactures and sells soakwells for use in suburban and light industrial areas of Perth. Over the past year, the cost of manufacturing the soakwells has gradually risen and the
Toowoomba Irrigation Ltd began operations in the south‐east Queensland region in July 2015. During the annual audit for the year ended 30 June 2020, it was discovered that errors had been made in
Brown Brothers’ income statements for the past 3 years are shown below.Because of errors, the 2018 ending inventory is understated by $2000 and the 2019 ending inventory is overstated by $6000. The
Part A Branxton Ltd’s inventory on 1 April 2019 had a cost of $100 000 and a retail value of $170 000.During April, the company’s net purchases cost $216 000 and had a net retail value of $324
Felton Ltd’s inventory transactions for November 2019 were as shown below.Required(a) Using the information shown and assuming no losses of inventory, if Felton Ltd uses the periodic inventory
Weston’s Washers Ltd buys and sells brand‐name washing machines, which are identified by the manufacturer’s initials and model number. Ignore GST.The inventory on 1 July 2019 is as
Redfern Retailers provided the following information for the month of June 2019. The entity uses the retail inventory method for interim reporting purposes. Normal mark‐up on cost is 60%. Ignore
The following information applies to the inventory of Carson’s Camera Store as at 30 June 2019.Required(a) Calculate the ending inventory value as at 30 June 2019, applying the lower of cost and
The information below relates to barrels of oil held in the inventory of Olsen’s Ltd during 2019.Owing to an oil glut, the net realisable value for a barrel of the same grade of oil was $40 per
The following information has been extracted from the records of Steven’s Stationery about one of its popular products. Steven’s Stationery uses the perpetual inventory system. The end of the
Thomas Turnbull, who operates a business as a toy retailer, was concerned about the end‐of‐year physical stocktake and ‘cut‐off’ procedures.The Inventory Control account balance at 30 June
Part A Beyer Ltd balances its accounts at month‐end, uses special journals, and uses the perpetual inventory system with the FIFO cost flow assumption. All purchases and sales of inventory are made
During the year ended 30 June 2019, Laing Ltd sold each unit of its goods at $9. Purchases and sales of the goods are shown below. Ignore GST.Laing Ltd uses a perpetual inventory system.Required(a)
Pet and Produce Ltd balances its books at month‐end, uses special journals, and uses the perpetual inventory system with the moving average cost flow assumption. All purchases and sales of
The income statements for Campbell’s Camping Ltd for the year ended 31 December for 2 years are shown below.The following information has been discovered concerning 2019.1. On 23 December,
During January 2019, Preston’s Personal Computers, a retailer of personal computers, began operations. The transactions for January were as shown below (ignore GST).Other expenses for the month
During an audit of the inventory records of Winthrop Ltd for the year ended 30 June 2019, the auditor discovered that the ending inventory balance was overvalued by $36 000. On further investigation,
The manager of Felicity’s Fashions Ltd, importer and wholesaler of fashion clothing for women, has been investigating the inventory levels of the business at the end of the previous year ended 30
On 2 January 2019, Johnston Ltd purchased a machine with a list price of $234 300 and credit terms of 2/10, n/30. Payment was made within the discount period. Freight costs of $5400 and installation
Hampstead Ltd purchased new equipment on 1 January 2019, at a cost of $590 000. The company estimated that the equipment has a useful life of 5 years and a residual value of $45 000.Ignore

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