QUESTION 1 Bugs Bunny is the owner and manager of Bunny Enterprise, a business establishment selling...

  
 

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QUESTION 1 Bugs Bunny is the owner and manager of Bunny Enterprise, a business establishment selling electrical goods in the city of Looney Tunes. All sales are on credit and are based on a 40% markup on cost price. All collections are received in the month following the sales. The opening balances of selected assets, liabilities and equity of the business as at 1 June 2021 are shown in the worksheet on page 3. As at 1 June 2021: The current ratio of Bunny Enterprise was 2.2 and its quick ratio was 1.3. • The plant and equipment had a carrying amount of $288,000. ● . Accrued expenses of $76,000 include 6 months of unpaid utilities amounting to $18,000. • Unearned revenue relates an advance payment from a customer for electrical goods to be delivered equally over the months of June and July 2021. • The bank loan represents 60 monthly instalments. The final instalment is expected to be paid in May 2026. During the month ended 30 June 2021, the following events/transactions occurred: June 4 7 9 11 Paid half of the unpaid utilities upon receiving a warning notice from the utility company. The remaining outstanding balance will be paid in July 2021 and August 2021. Paid monthly loan instalment. Bunny Enterprise made a payment for Bugs Bunny's personal holiday expenses $2,000. The owner will reimburse the business in 30 days' time. Bugs Bunny took out $5,000 of electrical goods from the store for personal use. 16 22 29 30 30 Purchased additional computers for office use $12,000 on credit. Secured a $210,000 contract to sell electrical goods to a new customer in July 2021. Recorded June 2021 payment from customers, less $20,000 bad debt. Electrical goods costing $250,000 were delivered to customers during the month of June 2021. The bank paid $200 interest into the bank account of Bunny Enterprise. Additional information: On 1 October 2020, Bunny Enterprise purchased a 12-months insurance plan to protect the assets of the business with effect from 1 November 2020. The prepaid expenses of $20,000 as at 1 June 2021 represents the unutilised portion of that insurance plan. The monthly utilities incurred by Bunny Enterprise is $3,000. Date: June 1 Cash at bank 199,000 Bunny Enterprise depreciates its plant and equipment using the straight-line method over a useful life of 5 years with no residual value. Depreciation for all plant and equipment items will only commence in the month following the purchase. Required: (a) In the following Worksheet. (ii) Enter all applicable transactions for the month of June 2021, including all necessary month-end adjustments. Accounts Prepaid receivables expenses 405,000 20,000 Inventory A Plant and equipment 360,000 Accumulated depreciation B Accounta Accrued Unearned Bank payables expenses revenue loan 328,000 76,000 C D Capital 600,000 Profit & Loss No QUESTION 1 Bugs Bunny is the owner and manager of Bunny Enterprise, a business establishment selling electrical goods in the city of Looney Tunes. All sales are on credit and are based on a 40% markup on cost price. All collections are received in the month following the sales. The opening balances of selected assets, liabilities and equity of the business as at 1 June 2021 are shown in the worksheet on page 3. As at 1 June 2021: The current ratio of Bunny Enterprise was 2.2 and its quick ratio was 1.3. • The plant and equipment had a carrying amount of $288,000. ● . Accrued expenses of $76,000 include 6 months of unpaid utilities amounting to $18,000. • Unearned revenue relates an advance payment from a customer for electrical goods to be delivered equally over the months of June and July 2021. • The bank loan represents 60 monthly instalments. The final instalment is expected to be paid in May 2026. During the month ended 30 June 2021, the following events/transactions occurred: June 4 7 9 11 Paid half of the unpaid utilities upon receiving a warning notice from the utility company. The remaining outstanding balance will be paid in July 2021 and August 2021. Paid monthly loan instalment. Bunny Enterprise made a payment for Bugs Bunny's personal holiday expenses $2,000. The owner will reimburse the business in 30 days' time. Bugs Bunny took out $5,000 of electrical goods from the store for personal use. 16 22 29 30 30 Purchased additional computers for office use $12,000 on credit. Secured a $210,000 contract to sell electrical goods to a new customer in July 2021. Recorded June 2021 payment from customers, less $20,000 bad debt. Electrical goods costing $250,000 were delivered to customers during the month of June 2021. The bank paid $200 interest into the bank account of Bunny Enterprise. Additional information: On 1 October 2020, Bunny Enterprise purchased a 12-months insurance plan to protect the assets of the business with effect from 1 November 2020. The prepaid expenses of $20,000 as at 1 June 2021 represents the unutilised portion of that insurance plan. The monthly utilities incurred by Bunny Enterprise is $3,000. Date: June 1 Cash at bank 199,000 Bunny Enterprise depreciates its plant and equipment using the straight-line method over a useful life of 5 years with no residual value. Depreciation for all plant and equipment items will only commence in the month following the purchase. Required: (a) In the following Worksheet. (ii) Enter all applicable transactions for the month of June 2021, including all necessary month-end adjustments. Accounts Prepaid receivables expenses 405,000 20,000 Inventory A Plant and equipment 360,000 Accumulated depreciation B Accounta Accrued Unearned Bank payables expenses revenue loan 328,000 76,000 C D Capital 600,000 Profit & Loss No

Answer rating: 100% (QA)

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