Reference no: EM131626662

Part A: 1 Question

Question 1

McDonalds Limited
Balance Sheet as at 1 July 2015
Assets			Liabilities
Current Assets			Current Liabilities
Cash	43900		Accounts Payable	28600
Accounts Receivable	27800		Accrues salaries	7100
Inventory	17500		Total current liabilities	35700
Prepaid Rent	6000
Total Current Assets	95200		Non-current liabilities
			Long term loan	75000
			Total Liabilities	110700
Non-Current Assets
Plant and Equipment	275000		Shareholder's equity
Accumulated depreciation	-65000		Share capital	150000
Investment	20000		Retained profits	64500
Total non-current assets	230000		Total shareholder's equity	214500
Total Assets	325200		Total Liabilities and shareholder's equity	325200

The following transactions occurred for McDonalds Ltd for the year ending 30 June 2016:

A. Issued additional share capital for $5000 cash
B. Received $26 800 from accounts receivable
C. Paid accrued salaries owing
D. Purchased $62 000 inventory for cash
E. Paid $16 900 to accounts payable
F. Borrowed $70 000 on 1 January at 10% interest p.a. on 30 June interest on the loan was still outstanding.
G. Purchased $39 000 inventory on credit
H. Sold inventory costing $31 200 for $82 000 cash
I. Sold inventory on credit for $153 000. Cost of inventory sold was $63 400
J. On 2 March paid $31 200 rent for the next 12 months
K. Dividends declared and paid totalled $5000
L. Paid wages expense of $35 000; on 30 June 2016 wages of $9100 had been earned but not paid
M. Interest receivable on investment is $1500
N. Depreciation on plant and equipment is calculated using straight line method at 20% p.a.
O. Received $4000 in June for services to be provided in July
P. Paid administration expenses $12 200

Required:
a. Prepare journal entries for the above transactions
b. Prepare ledgers
c. Prepare closing entries
d. Prepare a 10-cloumn worksheet
e. Prepare an Income Statement for the year ending 30 June 2016 and Balance Sheet as at 30 June 2016 for McDonalds Ltd.

Part B:

1. Describe four principles of Accounting. (Relevance, Comparability, Materiality and Conservatism).

2. Explain the difference between the periodic inventory system and the perpetual inventory system.

3. List four important users of financial accounting and describe the use that each user would make of the information.

4. What accounting profession would you like to pursue after your graduation? What is "Big Four" in Accounting? What are the functions of these "Big Four"?