Questions and Answers of Managerial Accounting An Integrative Approach

Beachcombers Supplies Pty Ltd chart of accounts includes the following selected accounts. On 1 April the accounts receivable ledger of Beachcombers’ Supplies showed the following balances:
Musac Hi Fi Ltd uses both special journals and a general journal as described in this chapter. Musac Hi Fi Ltd also posts customers’ accounts in the accounts receivable subsidiary ledger. The
Ruby Ltd uses both special journals and a general journal as described in this chapter. On 30 June, after all monthly postings had been completed, the Accounts Receivable Control account in the
Building Blocks Pty Ltd uses both special journals and a general journal to record transactions. Building blocks also posts creditors’ accounts in the accounts payable subsidiary ledger. The
The chart of accounts of Raquets ‘R’ Us Ltd includes the following selected accounts.In July the following selected transactions were completed. All purchases and sales were on account. The cost
Aditya Ltd provides this information for the month ended 31 October 2015: sales on credit $363 000; cash sales $121 000; discount allowed $6050; and sales returns and allowances $24 200. Prepare the
Holiday Travel Australasia commenced business on 1 April 2016. Alice Adare is a good manager but a poor accountant. From the trial balance prepared by a part-time bookkeeper, Alice prepared the
Use the data provided in E4.11 to answer the following questions:Required(a) Record the journal entries for the March quarter assuming the company uses a GST clearing account.(b) Record the journal
Use the data in BE2.3 and journalise the transactions. Data in BE2.3Dudley Advertising Ltd had the following transactions during August of the current year. Indicate (a) the basic analysis and
Brothers Ltd began operations on 1 February 2016. The trial balance at 30 June is as follows. In addition to those accounts listed on the trial balance, the chart of accounts for Brothers Ltd
Solo Ltd began operations on 1 June 2016. The trial balance at 30 June is as follows. In addition to those accounts listed on the trial balance, the chart of accounts for Solo Ltd also contains
Data for Bookit Pty Ltd, a bookkeeping service, are presented in E2.6.Data in E2.6.Selected transactions for Bookit Pty Ltd, a bookkeeping service, in its first month of business are as follows:1.
Matrix Ltd began operations on 1 July 2016. Quarterly financial statements are prepared. The trial balance and adjusted trial balance on 30 September are shown below. Required(a) Journalise the
Micro Ltd, based in Perth, manufactures computers. Micro Ltd’s products are distributed through both independent and company-owned distribution entities, which are located throughout Australasia.
At the end of its first year, the trial balance of Shah Ltd shows Equipment $25 000 and zero balances in Accumulated Depreciation—Equipment and Depreciation Expense. Depreciation for the year is
At the beginning of April 2016, the ledger of Racquets ‘R’ Us Tennis Shop showed Cash $3750; Inventory $2550; and Share Capital $6300. The following transactions were completed during
McPherson Ltd began operations on 1 January 2015. Quarterly financial statements are prepared. The trial balance and adjusted trial balance on 31 March are shown below. Required(a) Journalise
Here are some accounting reporting situations:(a) Tercek Ltd recognises revenue at the end of the production cycle but before sale. The price of the product, as well as the amount that can be sold,
The bookkeeper for DeVoe Ltd asks you to prepare the following accrued adjusting entries at 30 June:(a) Interest on loan of $200 is accrued.(b) Services performed but not yet invoiced total $700.(c)
Presented below are the concepts, principles and criteria used in this and previous chapters. 1. Accounting entity concept.2. Going concern principle.3. Monetary principle.4. Accounting period
Lou’s Advertising Agency Pty Ltd was founded by Louise Lou in 2001. Presented here are both the adjusted and unadjusted trial balances as of 31 December 2017. Required(a) Journalise the annual
The ledger of Uniform Ltd on 30 June of the current year includes these selected accounts and corresponding account numbers before adjusting entries have been prepared. An analysis of the
Smart Rentals Ltd opened for business on 1 April 2017. Here is its trial balance before adjustment on 30 June 2017 presented on a worksheet.In addition to those accounts listed on the trial balance,
Characters Ltd adjusted and unadjusted trial balances as of 30 June 2017 are as follows.Required(a) Journalise the annual adjusting entries that were made.(b) Prepare a statement of profit or loss
Why might the financial information in a trial balance not be up to date and complete?
Wellcovered Insurance Ltd sells general insurance policies. At the end of the reporting period, the business information system manager, Mark Duncan, found that the company’s accounting system had
An entity recognised some expenditure as an expense but the future benefits have not expired. Indicate which of the following accounts is debited and which is credited in the adjusting entry:(a)
This is a partial adjusted trial balance of Darcy Designs Pty Ltd. RequiredAnswer these questions, assuming the year begins on 1 July:(a) If the amount in Supplies Expense is the 31 July
This is a partial adjusted trial balance of Martin Pty Ltd. RequiredAnswer these questions, assuming the year begins on 1 March.(a) If the amount in Supplies Expense is the 31 March adjusting
What is the basic form and purpose of a worksheet?
Selected accounts of Snowmass Ltd are shown here.RequiredAfter analysing the accounts, journalise (a) the July transactions and (b) the adjusting entries that were made on 31 July. July 31 July
Presented here are the components in Felix Ltd’s statement of profit or loss. Determine the missing amounts. Sales $195000 $280 800 (a) Cost of sales $ 169 000 $ 186940 Gross profit $113
Clucker Poultry Distributing Company completed these inventory transactions in the month of April. At the beginning of April, the ledger of Clucker Poultry’ showed Cash of $4500 and Share Capital
Neo Ltd buys inventory on account from Gruff Ltd. The selling price of the goods is $1800 and the cost of goods to Mayo Ltd is $1200. Both entities use perpetual inventory systems. Journalise the
Frasier Ltd has net sales revenue of $220 000, cost of sales of $154 000, and operating expenses of $44 000. What is its gross profit?
As the corporate community is increasingly aware of the impact of business activities on society and the environment, many entities are adopting strategies to counter such impact and contribute to
Peter Freeman believes revenues from credit sales may be recognised before they are collected in cash. Do you agree? Explain.
The following information relates to Hampton Pty Ltd.1. On 5 April purchased inventory from R. Ward & Co. for $9000, terms 2/7, n/30.2. On 6 April paid freight costs to Freight Masters of $450 on
Goods costing $2240 are purchased on account on 18 July with credit terms of 2/7, n/30. On 20 July a $140 credit note is received from the supplier for damaged goods. Give the journal entry on 24
Long Pty Ltd reported net sales of $275 000, cost of sales of $110 000, operating expenses of $55 000, profit after tax of $88 000, beginning total assets of $550 000, and ending total assets of $660
MBA Ltd reports net sales of $480 000, gross profit of $348 000, and profit before tax of $180 000. What are its operating expenses?
Fixit Hardware Pty Ltd completed the following inventory transactions in the month of May. At the beginning of May, Fixit Hardware Pty Ltd’s ledger showed Cash $2500 and Share Capital
Sonya Packovski was hired as the assistant accountant of Delicacy Foods, a gourmet food business that has nine retail stores concentrated in one city. Among other things, the payment of all invoices
The following journal entry was recorded in the books of Sellers Limited.Explain the nature of this journal entry. Dr Cr Cr GST Collected GST Paid Cash 100 90 10
Financial information is presented here for two entities: Required(a) Fill in the missing amounts. Show all calculations.(b) Calculate the profit margin ratio, gross profit ratio, and operating
Phams Pottery Ltd reported the following transactions for May: RequiredRecord the journal entries for May and the journal entry to discharge the GST liability. May 3 Purchased inventory for $440
Ezios Earthenware Ltd lodges quarterly business activity statements with the taxation authority.Required(a) Record the journal entries during the March 2016 quarter for sales $6600 (including GST)
Which of the following statements relating to GST is true? Give reasons for your answers.(a) The first purchaser bears the cost of the GST.(b) GST is not a tax on business income.
In its statement of profit or loss for the year ended 30 June 2016, Lulu Ltd reported the following condensed data: Required(a) Prepare a fully classified statement of profit or loss.(b)
Kids + Kites Ltd sells all kinds of children’s toys. The entity’s accountant, Fred Heights, was preparing the information needed to account for the GST and report to the taxation authority for
Alex Rogers started his own delivery service, Rogers Deliveries Ltd, on 1 June 2016. The following transactions occurred during the month of June: Required(a) Show the effects of the previous
Lights Out Theatre Ltd was recently formed. All facilities were completed on 31 March 2016. On 1 April, the ledger showed: (100) Cash $6000; (120) Land $10 000; (130) Buildings $8000; (140) Equipment
The financial statements of Domino’s in the appendix at the back of this book contain the following selected accounts, all in thousands of dollars: Required(a) What is the increase and
Crazy Bob’s Repair Shop Ltd was started on 1 May. Here is a summary of the May transactions: 1. Shareholders invested $16 000 cash in the company in exchange for shares.2. Purchased equipment
Aurora Goodwin started her own consulting firm, Best Consulting Pty Ltd, on 1 May 2016. The following transactions occurred during the month of May:Required(a) Show the effects of the previous
Presented here are three economic events. On a sheet of paper, list the letters (a), (b) and (c) with columns for assets, liabilities and equity. In each column, indicate whether the event increased
An analysis of transactions for Foxes Ltd in August 2016, its first month of operations, is shown below. Each change in equity is explained. Required(a) Describe each transaction.(b) Determine
Just for Fun Park was started on 1 April by Greg Winters. These selected events and transactions occurred during April: Just for Fun Park uses the following accounts: Cash, Prepaid Insurance,
Selected transactions for Expensive Designs Pty Ltd, an interior decorator, in its first month of business are as follows:1. Issued shares to investors for $10 000 in cash.2. Purchased used car for
Charles Nguyen, a fellow student, contends that the double-entry system means each transaction must be recorded twice. Is Charles correct? Explain.
Diane Smith incorporated Accurate Accountants, an accounting practice, on 1 May 2015. During the first month of operations of her business, these events and transactions occurred: The following
The trial balance of Wellington Dry Cleaners on 30 June is given here: The July transactions were as follows: Required(a) Prepare a general ledger using T accounts. Enter the opening
Tanya Nikolic, an introductory accounting student, believes debit balances are favourable and credit balances are unfavourable. Is Tanya correct? Discuss.
From the ledger balances below, prepare a trial balance for Evans Ltd at 30 June 2016. All account balances are normal. Accounts Payable Cash Share Capital Dividends Equipment $ 8650 6400 30 000 2
John Jones, a new university graduate, has just been appointed as an assistant accountant in the small business division of a public accounting practice. One of John’s first tasks is to verify the
Maria George incorporated Busy Bookkeepers Pty Ltd, a bookkeeping practice, on 1 January 2016. During the first month of operations, these events and transactions occurred: The following chart
Answer the following questions on ethics by conducting research using the library and/or internet and reflecting on your knowledge of ethics, your life experiences and beliefs. (a) What does the
The Drive-in Movie Palace Ltd was recently formed. It began operations in March 2015. The Movie Palace is unique in that it is a drive-in theatre and will show only triple features of sequential
Selected transactions from the journal of Ink Pad Printers Ltd during its first month of operations are presented here: Required(a) Post the transactions to T accounts.(b) Prepare a trial
This trial balance of Queenstown Ltd does not balance.Each of the listed accounts has a normal balance. An examination of the ledger and journal reveals the following errors: 1. Cash received
These simple T accounts summarise the ledger of Zebra Tours Ltd at the end of the first month of operations:Required(a) Prepare in the order they occurred the journal entries (including narrations)
This trial balance of Helpful Services Ltd does not balance. Each of the listed accounts has a normal balance. An examination of the ledger and journal reveals the following errors: 1. Cash
This trial balance for Glasgow Pty Ltd does not balance. Each of the listed accounts has a normal balance. An examination of the ledger and journal reveals the following errors: 1. Cash
Selected transactions for Ranch Ltd during its first month in business are presented below:Ranch Ltd’s chart of accounts shows: Cash (no. 100), Equipment (no. 120), Accounts Payable (no. 200),
The accounts in the ledger of Sushi To Go Ltd contain the following balances on 31 July 2016: RequiredPrepare a trial balance with the accounts arranged as illustrated in this chapter, and fill
The accounts in the ledger of Boxer Ltd contain the following balances on 31 March 2017: RequiredPrepare a trial balance with the accounts arranged as illustrated in the chapter, and fill in the
This information relates to Rosie’s Rentals Pty Ltd for the year 2015: RequiredAfter analysing the data, prepare a statement of profit or loss and a calculation of retained earnings for the
Presented below are five independent situations.(a) Fiona has just graduated with a media and communications degree and wants to start an events management business. She has some savings and her
Extracts from the 2013 financial statements of Classic Food Ltd (a hypothetical company) are presented below, and Domino’s 2013 financial statements are in the appendix. Required(a) For each
Deanna Veale is the bookkeeper for Quality Products Ltd. Deanna has been trying to make the statement of financial position of Quality Products Ltd balance. It is finally balanced, but now she’s
NuSmart Technology Ltd launched its latest wireless communications product in 2016. The company spent much of 2015 developing and testing software so that its equipment could operate seamlessly in
Smart Travel Goods Pty Ltd was formed on 1 July 2014. At 30 June 2015, Mark Austin, the managing director and major shareholder, decided to prepare a statement of financial position, which appeared
What are some of the financial decisions owners need to make when running a new business?
Evans Ltd was started on 1 July 2015 with an investment of $150 000 cash. Following are the assets and liabilities of the company on 30 June 2016, and the revenues and expenses for the year of
Presented below are selected financial statement items for Daisy Ltd for 31 December 2015:RequiredDetermine which items should be included in a statement of cash flows, and then prepare the statement
Here are incomplete financial statements for Road Ltd:RequiredCalculate the missing amounts. Cash Inventory Property Total assets Assets ROAD LTD Statement of financial position $ 10500 15
Ultra Pty Ltd was started on 1 May with an investment of $75 000 cash. Following are the assets and liabilities of the company on 31 May 2016, and the revenues and expenses for the month of May, its
Permanent Press provides laundry services to hotels and hospitals. In a recent annual report, Permanent Press chronicled its contributions to community services over the past 10 years. The following
Goodwin Ltd was started on 1 May 2016 with an investment of $60 000 cash. Following are the assets and liabilities of the company on 31 May 2016, and the revenues and expenses for the month of May,
A list of financial statement items for Swift Ltd includes the following: accounts receivable $15 000; prepaid rent $1000; cash $4500; supplies $2000; short-term investments $12 000; property, plant
The following items were taken from the 30 June 2013 consolidated statement of financial position of AGL Energy Limited. (All dollars are in millions.)RequiredPrepare the assets section of a
Presented below are selected financial statement items for Liddy Ltd for 30 June 2016.RequiredDetermine which items should be included in a statement of cash flows, and then prepare the statement for
Why it is important to determine if a business entity is a reporting entity? Outline the three main indicators that determine if an entity is a reporting entity.
Presented below are selected financial statement items for Spoon Ltd as at 30 June 2016. RequiredDetermine which items should be included in a statement of cash flows, and then prepare the
The following items are taken from the 30 June 2013 statement of financial position of Boral Ltd (in millions):RequiredPrepare a statement of financial position, appropriately classified, for Boral
The following information is available for Ware Ltd for 2015: sales revenue $7 840 000; cost of sales $3 528 000; profit $1 176 000; total equity $2 233 300; average total assets $5 113
The following items were taken from the 30 June 2013 consolidated statement of financial position of Goodman Fielder Limited. (All dollars are in millions.) RequiredPrepare the assets section of
These financial statement items are for Christchurch Flooring Pty Ltd at yearend, 31 July 2015: Required(a) Prepare a statement of profit or loss for the year.(b) Prepare a classified statement
An extract from the general ledger of Retail Limited for the year ended 30 June 2015 appears as follows: Additional information:Cash paid to suppliers $84 500All other expenses were paid in
Selected financial data (in thousands) of two competitors, AKA Ltd and UFO Ltd, for 2015 are presented here: RequiredFor each entity, calculate these values and ratios:(a) Working capital.(b)

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