Appendix 1 ACC220 - Assignment 1 - Additional information You are the new Financial Controller of...

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Appendix 1 ACC220 - Assignment 1 - Additional information You are the new Financial Controller of MyJones Limited and have been asked to review the following information to determine if any adjustments need to be made to the financial statements. The first step is to set log into learn.xero.com and use Blank Slate Limited and change the company name to My Jones Limited and add your student number. Once you have set up the company then the enter the Trial Balance below. My Jones Limited Trial balance as at 31 May 2021 Dr Sale of goods Other operating revenue Cost of goods sold Selling expenses Administration expenses Restructuring and store exit costs Finance costs Income tax (expense)/benefit Cash and cash equivalents Trade and other receivables Inventories Derivative financial instruments Property, plant and equipment Intangible assets Derivative financial instruments Other non-current assets Trade and other payables Provisions Deferred income Derivative financial instruments Current tax liabilities Other liabilities Borrowings - Non-Current Provisions Deferred income Deferred tax liabilities Derivative financial instruments Contributed equity Accumulated losses Reserves 1,336,194 822,832 281,109 12,458 11,525 10,041 47,450 31,114 346,940 5,688 383,487 467,604 101 4,228 163,115 3,923,886 Cr 2,345,057 153,576 372,653 64,386 8,295 132 5,280 373 86,134 12,273 80,158 54,869 3 738,759 1,938 3,923,886 If you determine that adjustments are required, you are to enter these adjustments in June 2021. Additional information: 1. After a review of inventory - inventory which cost $19,500 had a net realisable value of 30% less than cost; 2. There was a flood in one of the warehouses. Inventory costing $12,100 cannot be sold due to the water damage. 3. You have reviewed the Company's loan liabilities and you have found that an amount of $7,450 has been classified as Non-current when it is due for payment in May 2022. 4. On 15 June, MyJones made a sale to Bondi Traders for a total of $5,750 on account. MyJones mark-up on cost is 100%. These goods were returned by Bondi Traders on 29 June 2021, but this transaction has not yet been recorded. 5. The Company's policy with respect to bad debts is that the Allowance for Doubtful Debts should be 22% of the Trade receivables balance. 6. During the year, the company developed a new brand strategy "Shop to you drop". The costs incurred were $17,000 on salaries and $5,000 in other costs such as artwork, consumer surveys etc. These costs have been capitalised as an intangible asset as the previous financial controller wanted to maintain the profitability of the company. 7. On 30 June, 2021, My Jones undertook a review of its Intangible assets. Goodwill, with a carrying value at 30 June 2021 of $14,300, was determined to have suffered an impairment loss of $6,000. 8. MyJones has been involved in a project to develop a smart sensor to be attached to merchandise that is invisible to the eye, with the aim of reducing the losses due to theft as well as sell this to other retailers. It started the project in August 2020. Between the starting date and 31 January 2021, the company spent $17,400 on the project. At 30 June 2021, there was no indication that the project would be commercially feasible, although the company had made significant progress and was sufficiently sure of future success that it was prepared to outlay more funds on the project. a. After spending a further $7,000 during February 2021, the company had built a prototype that appeared to be successful. b. The prototype was demonstrated to a number of engineering companies during April 2021, and several of these companies expressed interest in the further development of the device. c. Convinced that it now had a product that it would be able to sell, the company spent a further $4,000 during May 2021 adjusting for the problems that the engineering firms had pointed out. d. On 1 June 2021, the company applied for a patent on the device, incurring legal and administrative costs of $500. The patent had an expected useful life of 5 years and was renewable for a further 5 years upon application. e. All of these costs have been capitalised as an "R&D" intangible asset. 9. MyJones entered into a 5-year agreement to lease an item of equipment from Cannards Leasing Ltd on 1 July 2020. The equipment has a fair value of $67,000 at the inception of the lease and it is expected to have an economic life of 5 years, after which time it will have a residual value of $6,000. The lease agreement details are as follows: - Length of lease Commencement date Annual lease payment, payable 30 June each year commencing 30 June 2021 Residual value at the end of the lease term Interest rate implicit in the lease $ LALA $ 5 years 1 July 2020 15,000 6,000 6% This transaction has not been entered into the financial statements as at 30 June 2021. You are requested to journalise this transaction including the first lease payment for the period to 30 June 2021 and any other related journal entries. Calculations to the nearest dollar. Appendix 1 ACC220 - Assignment 1 - Additional information You are the new Financial Controller of MyJones Limited and have been asked to review the following information to determine if any adjustments need to be made to the financial statements. The first step is to set log into learn.xero.com and use Blank Slate Limited and change the company name to My Jones Limited and add your student number. Once you have set up the company then the enter the Trial Balance below. My Jones Limited Trial balance as at 31 May 2021 Dr Sale of goods Other operating revenue Cost of goods sold Selling expenses Administration expenses Restructuring and store exit costs Finance costs Income tax (expense)/benefit Cash and cash equivalents Trade and other receivables Inventories Derivative financial instruments Property, plant and equipment Intangible assets Derivative financial instruments Other non-current assets Trade and other payables Provisions Deferred income Derivative financial instruments Current tax liabilities Other liabilities Borrowings - Non-Current Provisions Deferred income Deferred tax liabilities Derivative financial instruments Contributed equity Accumulated losses Reserves 1,336,194 822,832 281,109 12,458 11,525 10,041 47,450 31,114 346,940 5,688 383,487 467,604 101 4,228 163,115 3,923,886 Cr 2,345,057 153,576 372,653 64,386 8,295 132 5,280 373 86,134 12,273 80,158 54,869 3 738,759 1,938 3,923,886 If you determine that adjustments are required, you are to enter these adjustments in June 2021. Additional information: 1. After a review of inventory - inventory which cost $19,500 had a net realisable value of 30% less than cost; 2. There was a flood in one of the warehouses. Inventory costing $12,100 cannot be sold due to the water damage. 3. You have reviewed the Company's loan liabilities and you have found that an amount of $7,450 has been classified as Non-current when it is due for payment in May 2022. 4. On 15 June, MyJones made a sale to Bondi Traders for a total of $5,750 on account. MyJones mark-up on cost is 100%. These goods were returned by Bondi Traders on 29 June 2021, but this transaction has not yet been recorded. 5. The Company's policy with respect to bad debts is that the Allowance for Doubtful Debts should be 22% of the Trade receivables balance. 6. During the year, the company developed a new brand strategy "Shop to you drop". The costs incurred were $17,000 on salaries and $5,000 in other costs such as artwork, consumer surveys etc. These costs have been capitalised as an intangible asset as the previous financial controller wanted to maintain the profitability of the company. 7. On 30 June, 2021, My Jones undertook a review of its Intangible assets. Goodwill, with a carrying value at 30 June 2021 of $14,300, was determined to have suffered an impairment loss of $6,000. 8. MyJones has been involved in a project to develop a smart sensor to be attached to merchandise that is invisible to the eye, with the aim of reducing the losses due to theft as well as sell this to other retailers. It started the project in August 2020. Between the starting date and 31 January 2021, the company spent $17,400 on the project. At 30 June 2021, there was no indication that the project would be commercially feasible, although the company had made significant progress and was sufficiently sure of future success that it was prepared to outlay more funds on the project. a. After spending a further $7,000 during February 2021, the company had built a prototype that appeared to be successful. b. The prototype was demonstrated to a number of engineering companies during April 2021, and several of these companies expressed interest in the further development of the device. c. Convinced that it now had a product that it would be able to sell, the company spent a further $4,000 during May 2021 adjusting for the problems that the engineering firms had pointed out. d. On 1 June 2021, the company applied for a patent on the device, incurring legal and administrative costs of $500. The patent had an expected useful life of 5 years and was renewable for a further 5 years upon application. e. All of these costs have been capitalised as an "R&D" intangible asset. 9. MyJones entered into a 5-year agreement to lease an item of equipment from Cannards Leasing Ltd on 1 July 2020. The equipment has a fair value of $67,000 at the inception of the lease and it is expected to have an economic life of 5 years, after which time it will have a residual value of $6,000. The lease agreement details are as follows: - Length of lease Commencement date Annual lease payment, payable 30 June each year commencing 30 June 2021 Residual value at the end of the lease term Interest rate implicit in the lease $ LALA $ 5 years 1 July 2020 15,000 6,000 6% This transaction has not been entered into the financial statements as at 30 June 2021. You are requested to journalise this transaction including the first lease payment for the period to 30 June 2021 and any other related journal entries. Calculations to the nearest dollar.

Answer rating: 100% (QA)

Account title Debit Credit 1 Bad debts expense 5850 Allowance for bad debts 2 Accumulated losses 12100 Inventories 3 Borrowingsnon current 7450 Borrowingscurrent 4 no entry 5 Bad debts expense 6845 Al... View the full answer