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Financial Accounting Reporting Analysis And Decision Making 6th Edition Shirley Carlon - Solutions
BE12.7 Calculate cash-basis liquidity, profitability and solvency ratios. LO4 Selected data taken from the 2019 financial statements of Madison Ltd are as follows.Net sales $8 232 000 Current liabilities, 1 July 2018 216 000 Current liabilities, 30 June 2019 288 000 Net cash provided by operating
BE12.6 Evaluate collection of accounts receivable. LO4 The following data are taken from the financial statements of Bristol Ltd.2020 2019 Accounts receivable (net), end of year $ 672 000 $ 564 000 Net sales on account 6 600 000 4 920 000 Terms for all sales are 1/10, n/45.Calculate for each year
BE12.5 Calculate liquidity ratios. LO4 The following selected condensed data are taken from a recent statement of financial position of Sunnydale Ltd. What are the (a) current ratio and (b) quick ratio?Cash $ 640 000 Marketable securities 84 500 Accounts receivable 106 300 Inventories 924 000 Other
BE12.4 Calculate change in profit. LO2 Horizontal analysis percentages for Jayden Ltd’s sales, cost of sales and expenses are presented below.Horizontal analysis 2020 2019 2018 Sales 92% 105% 100%Cost of sales 105% 93% 100%Expenses 107% 96% 100%Explain whether Jayden Ltd’s profit increased,
BE12.3 Prepare vertical analysis. LO3 Using the data presented in BE12.2, prepare a vertical analysis.
BE12.2 Prepare horizontal analysis. LO2 Using these data from the statement of financial position, prepare a horizontal analysis using 2018 as a base year.30 June 2020 30 June 2019 30 June 2018 Accounts receivable $ 800 000 $ 600 000 $ 700 000 Inventory 950 000 420 000 530 000 Total assets 4 600
BE12.1 Identify inter-entity and intra-entity comparison data. LO2 Identify the inter-entity and intra-entity comparisons from the following data:(a) Madison Ltd’s current ratio has increased from 1.78:1 in 2018 to 1.90:1 in 2019.(b) Broadway Ltd’s quick ratio has decreased from 0.71:1 in 2018
PSA11.6 Prepare the operating activities section — direct and indirect methods. LO3 The statement of profit or loss of Sticky Stationery Supplies Ltd is presented here.STICKY STATIONERY SUPPLIES LTD Statement of profit or loss for the year ended 30 June 2018 Sales $7 100 000 Cost of sales
PSA11.5 Prepare a statement of cash flows — direct and indirect methods. LO3 The condensed financial data of Freshest Farmers Ltd follow.FRESHEST FARMERS LTD Statement of financial position as at 31 March 2019 2019 2018 ASSETS Cash $147 000 $ 57 600 Accounts receivable 136 200 49 500 Inventories
PSA11.4 Prepare a statement of cash flows—direct and indirectmethods—and calculate cash-based ratios. LO3, 5 These are the financial statements of Metro Meats Ltd.METRO MEATS LTD Statement of financial position as at 31 December 2018 2018 2017 ASSETS Cash $ 29 000 $ 15 000 Accounts receivable
PSA11.3 Prepare the operating activities section — direct and indirect methods. LO3 Peebody Enterprises Ltd’s statement of profit or loss contained the condensed information below.PEEBODY ENTERPRISES LTD Statement of profit or loss for the year ended 30 June 2018 Revenues $1 176 000 Operating
PSA11.2 Prepare the operating activities section — direct and indirect methods. LO2, 3 The statement of profit or loss of Phillips Screwdrivers Ltd is presented here.PHILLIPS SCREWDRIVERS LTD Statement of profit or loss for the year ended 31 March 2020 Sales $6 900 000 Cost of sales Beginning
PSA11.1 Prepare the investing activities section of the statement of cash flows. LO3 The following selected account balances relate to the plant asset accounts of Waihi Beach Surfboards Pty Ltd at year-end.2018 2017 Accumulated depreciation—buildings $125 000 $100 000 Accumulated
E11.13 Prepare a partial statement of cash flows using the indirect method. LO3 The following accounts appear in the ledger of Castle Ltd during 2019.Equipment Date Description Debit$Credit$Balance$01/07/18 Balance 40 000 31/01/19 Purchase of equipment 17 500 57 500 02/03/19 Cost of equipment
E11.12 Prepare the operating activities section of the statement of cash flows — indirect method. LO3 The current section of Opotiki Ltd statement of financial position at 30 June 2019 is presented below.2019 2018 Current assets Cash $105 000 $ 99 000 Accounts receivable 120 000 89 000 Inventory
E11.11 Calculate cash provided by operating activities — direct method. LO3 The 2019 accounting records of Home and Away Travels Ltd reveal the following transactions and events.Payment of interest $ 21 000 Collection of accounts receivable $ 266 000 Cash sales 84 000 Payment of salaries and
E11.10 Compare two entities by using cash-based ratios. LO5 Presented here is information for two entities in the shipping industry: Kang Ltd and Jang Ltd:Kang Ltd Jang Ltd Cash provided by operations $220 000 $240 000 Average current liabilities 50 000 100 000 Average total liabilities 200 000 250
E11.9 Calculate cash flows — direct method. LO3 The following information is taken from the general ledger of Chau Ltd.Rent Rent expense $ 93 000 Prepaid rent, 1 January 17 700 Prepaid rent, 31 December 9 000 Salaries Salaries expense 162 000 Salaries payable, 1 January 15 000 Salaries payable,
E11.8 Calculate cash provided by operating activities — direct method. LO3 The 2018 accounting records of Outdoor Adventures Ltd reveal the following transactions and events.Payment of interest $ 15 000 Collection of accounts receivable $190 000 Cash sales 60 000 Payment of salaries and wages 68
E11.7 Calculate cash payments — direct method. LO3 The statement of profit or loss for Colin Ltd shows cost of sales $355 000 and operating expenses(exclusive of depreciation) $230 000. The statement of financial position for the year shows that inventory increased $6000, prepaid expenses
E11.6 Calculate cash provided by operating activities — direct method. LO3 Christchurch Motors Pty Ltd completed its first year of operations on 30 June 2018. Its statement of profit or loss showed that the business had revenues of $170 000 and operating expenses of$80 000 including bad debts
E11.5 Classify transactions by type of activity. LO2 An analysis of the statement of financial position, the current year’s statement of profit or loss, and the general ledger accounts of Simpson Ltd uncovered the following items. Assume all items involve cash unless there is information to the
E11.4 Prepare a statement of cash flows (direct method), and calculate cash-based ratios. LO3, 5 Here is a statement of financial position for Big Bang Balloons Pty Ltd:BIG BANG BALLOONS PTY LTD Statement of financial position as at 30 June 2018 2018 2017 ASSETS Cash $ 72 000 $ 26 400 Accounts
E11.3 Identify phases of product life cycle. LO4 The information in the following table is from the statement of cash flows for an entity at four different points in time (A, B, C and D). Negative values are presented in parentheses.Point in time A B C D Cash provided by operations $100 000 $ 30
E11.2 Prepare the operating activities section — indirect method. LO3 Madonna Ltd reported profit of $200 000 for 2018. Madonna Ltd also reported depreciation expense of $35 000 and a loss of $5000 on the sale of equipment. The statement of financial position shows an increase in accounts
E11.1 Classify transactions by type of activity. LO2 Wilderness Equipment Ltd had these transactions during 2018:(a) Purchased a machine for $37 500, giving a long-term note in exchange.(b) Issued ordinary shares for $62 500 in cash.(c) Collected $20 000 of accounts receivable.(d) Declared and paid
BE11.7 Answer questions related to the phases of product life cycle. LO4(a) Why is cash from operations likely to be lower than reported profit during the growth phase?(b) Why is cash from investing often positive during the late maturity phase and during the decline phase?(c) Why is cash from
BE11.6 Determine cash received from sale of equipment. LO3 The T accounts for equipment and the related accumulated depreciation for Lau Pty Ltd at the end of 2018 are shown here.Equipment Accumulated depreciation 2018 2018 Op. bal. 225 000 Disposals 33 000 Disposals 9 000 Op. bal. 54 000
BE11.5 Calculate net cash provided by operating activities — indirect method. LO3 Rotorua Rides Ltd’s profit for the year is $200 000. The comparative statement of financial position shows these changes in non-cash current asset accounts: Accounts receivable decrease$80 000, Prepaid expenses
BE11.4 Calculate cash payments for operating expenses — direct method. LO3 Pete’s Pies Ltd reports operating expenses of $216 000 excluding depreciation expense of$18 000 for 2018. During the year prepaid expenses decreased $7920 and accrued expenses payable increased $5280. Calculate the cash
BE11.3 Calculate receipts from customers. LO3 Cheong’s Chinese Herbs Ltd has accounts receivable of $14 000 at 1 July 2018, and $24 000 at 30 June 2019. Sales revenues were $600 000 for 2019. Bad debts written off directly against accounts receivable were $2000 in 2019. What is the amount of cash
BE11.2 Identify financing activity transactions. LO2 The following T account is a summary of the cash account of King Fisheries Pty Ltd.Cash (summary form)2018 Payments for goods 180 000 Balance, 1 Jan. 8 000 Payments for operating expenses 140 000 Receipts from customers 264 000 Interest paid 30
BE11.1 Indicate statement presentation of selected transactions. LO2 Each of these items must be considered in preparing a statement of cash flows for Vong’s Thongs Ltd for the year ended 30 June 2018. For each item, state how it should be classified in the statement of cash flows for 2018.(a)
E10.11 Compare equity financing with debt financing. LO10 SpringTime Ltd is considering these two alternatives for financing extensions:1. Issue 70 000 shares at $20 per share. (Cash dividends have not been paid; nor is the payment of any cash dividend contemplated.)2. Issue 10%, 10-year debentures
E10.10 Calculate return on ordinary shareholders’ equity and dividend payout. LO9 The equity of Yang Pty Ltd was $210 000 at 30 June 2018. During the year ended 30 June 2019, Yang made a profit of $70 000 and declared dividends of $40 000.Required Calculate the dividend payout and the return on
E10.9 Journalise share transactions, post, and calculate share capital. LO3 Young Ltd was registered on 3 January 2019. The following private share issues were completed during the first year:Jan. 10 Issued 240 000 ordinary shares for cash at $2 per share.Mar. 1 Issued 30 000 ordinary shares for
E10.8 Journalise share transactions, post, and calculate share capital. LO3 South Island Skiwear Ltd was registered on 5 January 2019. The following private share issues were completed during the first year:Jan. 10 Issued 90 000 ordinary shares for cash at $1 per share.Mar. 1 Issued 6000 ordinary
E10.7 Determine changes in retained earnings. LO8 Speedy Deliveries Ltd had the following equity accounts at 1 January 2018:Share capital (30 000 shares) $150 000 Dividend equalisation reserve 10 000 Retained earnings 34 000 During the year ended 31 December 2018, the following occurred:1. A profit
E10.6 Determine changes in retained earnings. LO8 Gold Ltd had the following equity accounts at 1 July 2017:Share capital (200 000 shares) $400 000 General reserve 30 000 Retained earnings 20 000 During the year ended 30 June 2018, the following occurred:1. A profit of $40 000 was generated.2.
E10.5 Calculate earning power. LO6 Bettie Ltd reported a current year’s profit of $2 500 000.Additional information: Prior period sales included in current sales revenues, $15 600. Gain on sale of a division of the entity, $45 200. New asset acquired — related depreciation expense for the
E10.4 Prepare correcting entries for dividends. LO5, 8 Before preparing financial statements for the current year, the chief accountant for Jeckel Ltd discovered the following errors in the accounts:1. The declaration and payment of a $15 000 cash dividend were recorded as a debit to interest
E10.3 Compare effects of a share dividend and a cash dividend. LO5 On 31 October the equity section of Summer Ltd’s statement of financial position consists of contributed equity $550 000 and retained earnings $240 000. Summer Ltd is considering the following two courses of action: (1) declaring
E10.2 Journalise transactions and indicate statement presentation. LO3, 5 On 1 January 2019 Otter Ltd’s share capital comprised 95 000 issued ordinary shares ($950 000)and retained earnings of $350 000. During the year, the following transactions occurred.Apr. 1 Issued 3000 additional ordinary
E10.1 Journalise issue of ordinary shares. LO3 During its first year of operations, SunLand Ltd had the following transactions pertaining to its capital.Jan. 10 Issued 60 000 shares for cash at $5 per share.July 1 Issued 20 000 shares for cash at $9 per share.Required(a) Journalise the
BE10.8 Compare debt financing with equity financing. LO10 Brianna Ltd is considering these two alternatives to finance its construction of a new $3 million factory:(a) Issue 600 000 shares at the market price of $5 per share.(b) Issue $3 million, 6% unsecured notes at face value.Complete the table
BE10.7 Evaluate a company’s dividend and earnings performance from a shareholder’s perspective.LO9 The average shareholders’ equity of Jonty James Ltd was $500 000 for the year ended 30 June 2019. During that year, Jonty James Ltd had a profit of $90 000 and declared cash dividends of$20 000.
BE10.6 Prepare a corrected statement of profit or loss. LO6 An inexperienced accountant for Basil Ltd showed the following in Basil Ltd’s statement of profit or loss: profit before income tax $600 000; income tax expense $180 000; correction of prior period error $90 000; and profit $330 000. The
BE10.5 Determine the effect of a share split and journalise cash dividends. LO4, 5 At 1 July, TriTop Ltd had 1500 shares issued. An interim cash dividend of $0.25 per share was declared on 31 December and paid on 31 January. The shareholders agreed to a 3-for-1 share split, which occurred on 31
BE10.4 Journalise cash dividends. LO5 Spinning Ltd had 15 000 shares issued. On 30 June 2019, a cash dividend of $0.15 per share was declared. The dividend was paid on 31 July 2019. Prepare journal entries to record the declaration and payment of the dividend.
BE10.3 Journalise the issue of shares. LO3 On 2 March, Makayla Ltd invited the public to subscribe for 5000 shares at $1.50 each,$1.00 payable on application and $0.50 payable on allotment. By 31 March, applications were received for 5000 shares, and these were allotted on 1 April. All amounts
BE10.2 Prepare entries for a share dividend. LO5 Connor Ltd has 400 000 $3 shares issued. It declares a 10% share dividend on 1 December. The dividend shares are issued as $5 shares on 31 December. Prepare the entries for the declaration and payment of the share dividend.
BE10.1 Journalise private issue of ordinary shares. LO3 On 1 June, Walrus Ltd issues 4800 shares by private invitation at a cash price of $2.50 per share. Journalise the issue of the shares.
E9.13 Prepare journal entries for leases. LO6 On 30 May, Grand Design Ltd (lessee) signed a 3-year operating lease agreement with Doby Ltd(lessor) to lease office space for $500 per month. Payments are due every 3 months on the last day of the month. Both the lessee and the lessor have a 30 June
E9.12 Prepare journal entries for leases. LO6 On 1 June, Sunny Nursery Ltd (lessee) signed a 2-year operating lease agreement with Bunning’s Rentals Ltd (lessor) to lease gardening tools for $400 per month. Payments are due every 2 months on the last day of the month. Both the lessee and the
E9.11 Explain journal entries for leases. LO6 The following entries were recorded in the accounts of Speedy Delivery Ltd.June 30 Truck lease expense 200 Truck lease payable—Fast Trucks Ltd 200 Aug. 31 Truck lease payable—Fast Trucks Ltd 200 Truck lease expense 400 Cash 600 The following entries
E9.10 Calculate liquidity and solvency ratios. LO7 Investment Ltd’s annual report 2019 contained the following selected data (in $’000).Current assets $ 422 275 Accounts receivable $ 6 858 Total assets 1 562 014 Short-term investments —Current liabilities 89 588 Interest expense 6 988 Total
E9.9 Prepare entries to record provisions for warranties. LO7 Benson Builder Pty Ltd provides a 12-month warranty on building work performed by the entity. On 1 January 2019, there was a credit balance of $80 000 in its warranty provision account. During the year ended 31 December 2019, Benson
E9.8 Prepare entries to record provisions for warranties. LO7 Olden Motor Vehicles Ltd offers a 12-month warranty for the sale of used motor vehicles. On 1 July 2018, there was a credit balance of $70 000 in its warranty provision account. During the year ended 30 June 2019, Olden Motor Vehicles
E9.7 Categorise liabilities as provisions, contingent liabilities or other. LO7 Liabilities can be provisions, contingent liabilities or other liabilities.Required Categorise each of the following liabilities as (1) provisions, (2) contingent liabilities, or (3) other liabilities.(a) An
E9.6 Record payment and identify components of a loan payable by instalment. LO4 Use the mortgage schedule in the ‘Demonstration problem’ section of this chapter to complete this exercise.Required(a) Prepare a journal entry to record the mortgage payment on 30 June 2019.(b) What is the carrying
E9.5 Record payment and identify components of a loan payable by instalment. LO4 Use the information in figure 9.6 to complete this exercise.Required Prepare a journal entry to record the mortgage payment on 30 June 2019.(a) What is the carrying amount of the mortgage liability at that date, after
E9.4 Prepare journal entries for redemption of debentures. LO3 The situations presented below are independent.Required For each situation prepare the appropriate journal entry for the redemption of the debentures.(a) Whitewater Rafting Ltd redeemed $130 000 face value, 12% debentures on 30 June
E9.3 Prepare journal entries for issue of notes and payment and accrual of interest. LO3 On 1 January Fairy Wren Ltd issued $100 000, 10%, 10-year unsecured notes at face value. Interest is payable half-yearly on 1 July and 1 January. Interest is not accrued on 30 June. FairyWren Ltd’s year-end
E9.2 Journalise payroll entries. LO2 During the month of June, Transfield Pty Ltd’s employees earned wages of $105 000. Payroll deductions related to these wages were $6750 for General Health Fund, $11 250 for PAYG withheld tax, $9450 for superannuation, and $2000 for union fees.Required Prepare
E9.1 Prepare entries for interest-bearing notes. LO2 Ellie and Brad Nowland borrowed $12 000 on an 8-month, 10% note from a financial institution to open their business, EB’s Caf´e. The money was borrowed on 1 May 2019.Required(a) Prepare the entry to record the receipt of the funds from the
BE9.9 Prepare journal entries for leases. LO9 On 1 June, Fresh Flowers Ltd (lessee) signed a 2-year operating lease agreement with Trucks R Us Pty Ltd (lessor) to lease a delivery truck for $100 per month. Payments are due every 3 months on the last day of the month. Trucks R Us Pty Ltd has a June
BE9.8 Analyse liquidity and solvency. LO9 Johnson Ltd’s 2019 financial statements contain the following selected data (in $’000).Current assets $ 294 705 Total assets 1 237 785 Current liabilities 301 830 Total liabilities 436 689 Cash 13 877 Short-term financial assets 941 Accounts receivable
BE9.7 Prepare journal entries for debentures issued at face value. LO3 Eccencia Ltd issued 2000 8%, 5-year, $1000 debentures dated 1 January 2020 at 100.(a) Prepare the journal entry to record the issue of these debentures on 1 January 2020.(b) Prepare the journal entry to record the first interest
BE9.6 Prepare entries to record provisions for warranties. LO8 Mac’s Auto Repairs Pty Ltd provides a 3-month warranty for repairs. Mac’s Auto Repairs estimates its warranty liabilities as 4% of the service revenue for the preceding quarter. For the 3 months from April to June, Mac’s Auto
BE9.5 Prepare entries to record provisions for warranties. LO8 Trish’s Toasters Pty Ltd sells toasters with a 1-year warranty. At 30 June, it is estimated that the liability for unexpired warranties is $35 000. The warranty provision account has a debit balance of $1000. Prepare the adjusting
BE9.4 Prepare journal entries for loans payable by instalment. LO4 Using the mortgage schedule in figure 9.6, prepare the journal entry to record the mortgage payment on 30 September 2019.
BE9.3 Prepare journal entries for loans payable by instalment. LO4 Using the mortgage schedule in figure 9.6, prepare the journal entry to record the mortgage payment on 31 May 2019.
BE9.2 Prepare entries for an interest-bearing note payable. LO2 Admiralty Pty Ltd borrows $160 000 on 1 July from the bank by signing a $160 000, 10%, 1-year note payable. Prepare the journal entries to record (a) the proceeds of the note and(b) accrued interest at 31 December, assuming adjusting
BE9.1 Identify whether obligations are current liabilities. LO1, 4 Alvin Ltd has these obligations at 31 December: (a) a note payable for $50 000 due in 2 years,(b) a 10-year mortgage payable of $100 000 payable in ten $10 000 annual payments, (c) interest payable of $5000 on the mortgage, and (d)
E8.12 Calculate average useful life, average age of property, plant and equipment, and asset turnover ratio. LO14 For the year ended 31 January 2018, Beta Ltd reported the following information (in thousands):net sales $1 663 970, profit $21 935, depreciation expense $6399. The statement of
E8.11 Discuss implications of amortisation period. LO10 MouseTrap Ltd in Canada noted in its 2019 annual report that, beginning that year, it changed the estimated life of its computer software for amortisation purposes from a 3-year life to a 12-year life.Required Write a short memo explaining the
E8.10 Answer questions on depreciation and intangibles. LO4, 10, 11, 14 The questions listed below are independent of one another.Required Provide a brief answer to each question.(a) Why should an entity depreciate its buildings?(b) How can an entity have a building that has a reported carrying
E8.9 Prepare entries to set up appropriate accounts for different intangibles; calculate amortisation.LO10 Wilkins Ltd, incorporated in 2018, has these transactions related to intangible assets in that year:Jan. 1 Purchased patent (10-year life), $440 000.July 1 Acquired an existing 10-year
E8.8 Journalise entries for disposal of PPE assets. LO8 Presented here are selected transactions for Zhou Ltd for the year ended 31 December 2019:Jan. 1 Scrapped a piece of machinery that was purchased on 1 January 2009 at a cash price of $66 000. The machinery had a useful life of 10 years with no
E8.7 Revaluation, depreciation and reversal of PPE asset. LO4, 7 On 1 July 2017, Capers Ltd purchased equipment for a total cost of $220 000 including 10%GST. The estimated useful life of the equipment was 10 years, with an estimated residual value of$15 000. The entity’s reporting period ends on
E8.6 Revaluation and disposal of non-current assets. LO7, 8 On 1 January 2018, Wall Ltd purchased equipment for a total cost of $55 000. The estimated useful life of the equipment was 8 years, with an estimated residual value of $5000. The entity’s reporting period ends on 30 June, and it uses
E8.5 Journalise entries for asset impairment. LO6 Able Ltd purchased machinery on 1 November 2019 for $160 000. The estimated useful life of the machinery is 8 years, with an estimated residual of $10 000. The entity’s reporting period ends on 30 June, and it uses the straight-line method of
E8.4 Account for subsequent expenditure and revised depreciation. LO4, 5 Lion Ltd purchased equipment on 1 January 2019 at a cost of $180 000. It had an estimated useful life of 8 years and an estimated residual value of $20 000. Each year $1000 is spent on the maintenance of the equipment. On 1
E8.3 Calculate depreciation under units-of-production method. LO4 AJ Bus Ltd uses the units-of-production method in depreciating its buses. One bus was purchased on 1 January 2018 at a cost of $268 000. Over its 5-year useful life, the bus is expected to be driven 120 000 kilometres. Residual value
BE8.4 Journalise entries for disposal of PPE assets. LO8 Prepare journal entries to record the following:(a) James Ltd scraps its delivery equipment, which cost $59 000. Accumulated depreciation is also $59 000 on this delivery equipment. No residual value was expected or taken into account when
BE8.3 Calculate diminishing-balance depreciation. LO4 Depreciation information for Brianna Ltd is given in BE8.2. Assuming the diminishing-balance depreciation rate is one-and-a-half times the straight-line rate, calculate annual depreciation for the first and second years under the
BE8.2 Calculate straight-line depreciation. LO4 Brianna Ltd acquires a delivery truck at a cost of $96 600 (GST exclusive) on 1 January 2019, the beginning of the company’s financial year. The truck is expected to have a residual value of$4000 at the end of its 5-year useful life. Calculate
BE8.1 Determine the cost of land. LO2 These expenditures were incurred by Knight Ltd in purchasing land: cash price $180 000; rates$10 000; solicitor’s fees $9500; real estate agent’s commission $8100; clearing and grading$7000; and fencing $5000. What is the cost of the land, assuming all
E7.14 Calculate ratios to evaluate two divisions’ credit risk and receivable balances. LO10 Advanced Lifestyle Ltd has stores in Auckland and Queenstown. The following information was taken from the 2019 financial statements, showing the results of its two divisions:(in NZ$ millions) Auckland
E7.13 Determine cash adequacy. LO6 You are considering investing in the bed and breakfast (B&B) industry. Two B&Bs, Burleigh Heaven and Miami Paradise, have been shortlisted for your consideration. Both companies are about the same size, with similar assets and sales. The following is extracted
E7.12 Prepare entry for credit card sale. LO2 On 10 May New Mark Ltd sold inventory for $2400 and accepted the customer’s Business Bank MasterCard. At the end of the day, the Business Bank MasterCard receipts were deposited in New Mark Ltd’s bank account. Business Bank charges a 1.5% service
E7.11 Prepare entry for sale of accounts receivable. LO9 On 3 March Virtual Appliances sells $900 000 of its receivables to Fundamental Factors Ltd.Fundamental Factors Ltd assesses a finance charge of 4% of the amount of receivables sold.Required Prepare the entry in Virtual Appliances’ records
E7.10 Calculate ratios to evaluate an entity’s receivables balance. LO10 The following information was taken from the 2020 financial statements of Honey Factory Ltd:(in millions) 2020 2019 2018 Accounts receivable $ 146.6 $ 104.3 $ 126.0 Allowance for doubtful debts 6.3 5.7 8.2 Sales 1 113.0
E7.9 Report on receivables in financial statements. LO9 Spring & Co Ltd had the following balances in receivable accounts at 30 June 2018 (in millions):Allowance for doubtful debts $11; Accounts receivable $290; Other receivables $22; Notes receivable $95.Required Prepare the presentation of Spring
E7.8 Prepare journal entries for GST for bad debts expense. LO8 Brian Bazaar had sold goods on credit in September 2019 for $5500 (including 10% GST). In November 2019 he became aware that the debtor M. Waters was bankrupt and the creditors were unlikely to receive any amounts due. On 28 November,
E7.7 Determine bad debts expense, and prepare the adjusting entry. LO8 Marc Pty Ltd has accounts receivable of $92 500 at 31 March 2019. An analysis of the accounts shows these amounts:Balance, 31 March Month of sale 2019 2018 March $65 000 $75 000 February 12 600 8 000 December and January 8 500 2
E7.6 Prepare journal entries for a petty cash fund. LO11 During October, Hair Styles Pty Ltd experiences the following transactions in establishing a petty cash fund.Oct. 1 A petty cash fund is established with a cheque for $130 issued to the petty cash custodian.31 A count of the petty cash fund
E7.5 Calculate and comment on the cash to daily cash expenses ratio. LO6 Green Dot Furniture reported the following financial data in its latest annual report:$’000 Cash and cash equivalents 17 312 Total cash expenses 92 728 Net cash provided by operating activities 15 520 Required Calculate and
E7.4 Prepare bank reconciliation statement and adjusting entries. LO4 Shoe City Pty Ltd’s bank reconciliation clerk is unable to reconcile the bank balance at 31 January.The balance of the cash at bank account, before any entries for transactions initiated by the bank, was $4770.20 in the company
E7.3 List internal control weaknesses over cash receipts and suggest improvements. LO3 The following control procedures are used for over-the-counter cash receipts:1. All over-the-counter receipts are registered by three clerks who share a cash register with a single cash drawer.2. To minimise the
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