ABC Ltd imports designer spectacle frames and sclls them to optometrists. The assets, liabilities and shareholders'...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
ABC Ltd imports designer spectacle frames and sclls them to optometrists. The assets, liabilities and shareholders' equity balances of the business at 30 June 2016 are shown on the attached worksheet. (70 marks] The following information about ABC Ltd is available: The business has an accounting period of one year. It determines profit or loss for each year following proper accrual principles. The opening balance in the prepayment's column relates to 6 months insurance for the period July 2016 to December 2016. The balance in the accrual column relates to electricity owing for June 2016. ас On 1 January 2016 ABC Ltd borrowed $25 000 from Robin Banks and agreed to pay 12% interest per annum in arrears for 3 years. It is an interest only loan where the principal will be repaid in full at the end of the 3 years. The interest is paid on 30 June each year. The motor vehicle owned by the business on 30 June 2016 has an expected life of 4 years, and an expected residual value at the end of that time of $2 000. The company has 40 000 shares issued when the business began for $1 per share. O Time Remaining Show Han Here is a summary of the transactions that took place during the year ended 30 June 2017: In July 2016 the company delivered a special order to a customer. The special order had previously been paid for in May 2016 column. These special frames had cost ABC Ltd $1 000. Received 80% of the amounts owing from debtors. Purchased frames on credit for $ 35 000. see the opening balance in the uncarned revenue 3 4 Paid tax owing from the previous year and also paid dividends to shareholders that had been declared at the end of the previous year. Paid accrued expenses from previous year. On I January 2017 paid a reduced annual insurance premium $5 400 Credit sales of frames totalled $64 000, while cash sales totalled $5 000. (The frames sold during the year had cost the business $32 000). A second delivery vehicle was bought on 1 July 2016 for S 15 000 cash. It is expected to have a useful life of four years and a residual value of $3 000. Received $60 000 from debtors and paid creditors $40 000. During the year paid $8 200 cash for vehicle running expenses. Declared a dividend of 12.5 cents per share. Electricity bills for the first three quarters of the year were paid totalling $1 820. The manager has estimated that the bill for the last quarter will be $690, but as yet is has not been received. 10 11 12 13 The company expects to have to pay $7 000 tax on the profits for the year. 14 each are issued to shareholders based on the amount in retained profits. Interest on the loan is paid on 30 June 2017. A transfer of $5 000 to a general reserve is made and 20 000 bonus shares valued at $1 15 Prepare the general journal entries to record the transactions that occurred during the year and also record all the accrual accounting adjustments that are necessary to determine profit for the year ended 30 June 2017. [25 marks] ABC Ltd imports designer spectacle frames and sclls them to optometrists. The assets, liabilities and shareholders' equity balances of the business at 30 June 2016 are shown on the attached worksheet. (70 marks] The following information about ABC Ltd is available: The business has an accounting period of one year. It determines profit or loss for each year following proper accrual principles. The opening balance in the prepayment's column relates to 6 months insurance for the period July 2016 to December 2016. The balance in the accrual column relates to electricity owing for June 2016. ас On 1 January 2016 ABC Ltd borrowed $25 000 from Robin Banks and agreed to pay 12% interest per annum in arrears for 3 years. It is an interest only loan where the principal will be repaid in full at the end of the 3 years. The interest is paid on 30 June each year. The motor vehicle owned by the business on 30 June 2016 has an expected life of 4 years, and an expected residual value at the end of that time of $2 000. The company has 40 000 shares issued when the business began for $1 per share. O Time Remaining Show Han Here is a summary of the transactions that took place during the year ended 30 June 2017: In July 2016 the company delivered a special order to a customer. The special order had previously been paid for in May 2016 column. These special frames had cost ABC Ltd $1 000. Received 80% of the amounts owing from debtors. Purchased frames on credit for $ 35 000. see the opening balance in the uncarned revenue 3 4 Paid tax owing from the previous year and also paid dividends to shareholders that had been declared at the end of the previous year. Paid accrued expenses from previous year. On I January 2017 paid a reduced annual insurance premium $5 400 Credit sales of frames totalled $64 000, while cash sales totalled $5 000. (The frames sold during the year had cost the business $32 000). A second delivery vehicle was bought on 1 July 2016 for S 15 000 cash. It is expected to have a useful life of four years and a residual value of $3 000. Received $60 000 from debtors and paid creditors $40 000. During the year paid $8 200 cash for vehicle running expenses. Declared a dividend of 12.5 cents per share. Electricity bills for the first three quarters of the year were paid totalling $1 820. The manager has estimated that the bill for the last quarter will be $690, but as yet is has not been received. 10 11 12 13 The company expects to have to pay $7 000 tax on the profits for the year. 14 each are issued to shareholders based on the amount in retained profits. Interest on the loan is paid on 30 June 2017. A transfer of $5 000 to a general reserve is made and 20 000 bonus shares valued at $1 15 Prepare the general journal entries to record the transactions that occurred during the year and also record all the accrual accounting adjustments that are necessary to determine profit for the year ended 30 June 2017. [25 marks]
Expert Answer:
Answer rating: 100% (QA)
On 30June 2016 All Amounts 1 For Prepaid Insurance 5400 per annum 2700 for six months Insurance remained same Insurance Dr 2700 To Prepaid Insurance 2... View the full answer
Posted Date:
Students also viewed these accounting questions
-
The following budgeted information about Reeves Co. is available for September 2010: Sales for September ..................... $2,700,000 Gross profit on sales .................... 40% Decrease in...
-
The basic accounting period is one year and all organizations report on an annual basis. It is common for large companies to report on a semi-annual basis, and some even report monthly. Interim...
-
The basic accounting period is one year and all organizations report on an annual basis. It is common for large companies to report on a semi-annual basis, and some even report monthly. Interim...
-
For the manipulator shown, find the twist coordinates f; at zero con- figuration and 9st (0) using the product of exponentials approach. Use the base and tool frames shown. (b) (10 points) Find efi0i...
-
Explain the importance of tollgates in the DMAIC process.
-
Turnbow Company, a telecommunications equipment company, has used the LIFO method adjusted for lower of cost or market for a number of years. Due to falling prices of its equipment, it has had to...
-
(a) To what angle \(\theta_{\max }\) does a coefficient of static friction of 1 correspond? (b) Put, in turn, a coin, a paper clip, a cell phone, and a comb on the cover of this book and tilt the...
-
Accountants have advocated two types of income statements based on differing views of the concept of income: the current operating performance and all- inclusive concepts of income. Required: a....
-
Which three design considerations to limit the scope of EIGRP queries are correct?
-
Goldie and Kurt want advice from your financial advising firm. They have provided the following information. They graduated from university four years ago and they have good jobs, but neither of them...
-
Write a program to calculate the greatest common divisor and lowest common multiplier of two integers given by user. Suppose the two input integers are a and b, the Greatest Common Divisor GCM is...
-
Explain how one would find the value of a nonconstant growth stock.
-
Think of a past job you have held. List three areas in which you, or some other person in the organization, could have benefited from having information generated by research. What would be the most...
-
Explain what is meant by horizon (terminal) date and horizon (continuing) value.
-
Provide an example of each of the following: Business Source Directories, Articles, Dictionaries and Encyclopedias, Marketing Directories, and Statistics and Reports.
-
What steps are taken to find a stock price using the corporate valuation model?
-
Discuss advantages and drawbacks of the policy intervention?
-
Perform the indicated operations. In designing a cam for a fire engine pump, the expression is used. Simplify this expression. (3) (3 4 32
-
Use the magnitudes (Richter scale) of the earthquakes listed in Data Set 16 in Appendix B. In 1989, the San Francisco Bay Area was struck with an earthquake that measured 7.0 on the Richter scale....
-
James Madison, the fourth President of the United States, was 163 cm tall. His height converts to the z score of -2.28 when included among the heights of all presidents. Is his height above or below...
-
Carbon monoxide is measured in San Francisco on five different days, and the mean of those five values is 0.62 parts per million. Four of the values (in parts per million) are 0.3, 0.4, 1.1, and 0.7....
Study smarter with the SolutionInn App