Reference no: EM132576228

HA1020 Accounting Principles and Practices - Holmes Institute

Learning Outcome 1: Understand the logic and assumptions of accounting procedures;

Learning Outcome 2: Record business transactions in the journals and ledgers that make up a business accounting system;

Learning Outcome 3: Prepare financial statements; and

Learning Outcome 4: Analyse and interpret financial statements.

Question 1

(Note this question is 2 in the Pre-recorded Tutorial Questions) Peakhurst Limited had the following trial balance at 1 January 2016:

	Debit $	Credit $
Cash	200 000
Accounts receivable	600 000
Inventory	700 000
Prepaid insurance	60 000
Prepaid rent	50 000
Equipment	1 000 000
Allowance for doubtful debt		20 000
Accumulated depreciation		200 000
Accounts payable		500 000
Revenue received in advance		100 000
Income tax payable		500 000
Loan		570 000
Share capital		400 000
Retained profits		320 000
	2 610 000	2 610 000

You are given the following additional information for the year ended 31 December 2016:

a) Bad debts of $8000 were written off.

b) It was decided that allowance for doubtful debts should be 4 per cent of accounts receivable.

Required:

1) Prepare journal entries for these transactions.
2) Show the T-ledger accounts for the following for the year ended 31 December 2016:
a) accounts receivable
b) allowance for doubtful debts
c) bad debts expense

Question 2

(Note this question is 2 in the Pre-recorded Tutorial Questions)

a) Compare the periodic versus the perpetual system as a control device.
b) What sort of organisations are likely to use the periodic inventory system? What kind of organisations will prefer to use perpetual inventory system?
c) If management overstated the valuation of inventory, would it affect profit for the year?

Question 3

(Note this question is 3 in the Pre-recorded Tutorial Questions) Perform a bank reconciliation.
a) Reconcile Jack Steel's month end cash balance as of 31 Jul 2019
b) Based on your analysis, propose adjusting entries (if any). Transactions and balances:
• 31 Jul 2019 Bank Statement balance $ 58,791
• 31 Jul 2019 balance per Jack's records $ 57,371
• Jack received a payment that he has not deposited $ 250
• Jack issued a cheque payable to Pandora's Jewels to pay for a belated Mother's Day gift to his grandmother that has not been presented to the bank $ 1,612
• Bank charges for the month of July were $40
• Interest on bank balance credited to Jack's account $ 98

Question 4

(Note this question is 3 in the Pre-recorded Tutorial Questions)

Murrays Ltd. purchased a new bus for $200,000. The company expects the bus to be used for trips between Sydney and Canberra for 10 years, or 800,000 miles, with an estimated residual value of
$30,000 at the end of that time. During the 3rd year the bus was driven 96,000 miles. Calculate the depreciation expense for the 3rd year for each of the methods below. Show your solutions.

I. Straight-line
II. Diminishing balance at 20% p.a.
III. Units-of-activity

Question 5

(Note this question is 3 in the Pre-recorded Tutorial Questions)

Banksia Company completed the following transactions during 2018-2019. The annual accounting period ends 30 June 2019.

a) Purchased inventory on credit at cost of AUD 16,800; perpetual inventory system is used.
b) Received a customer deposit of AUD 18,000 from ABC Ltd for services to be rendered in the future.
c) Borrowed AUD 900,000 from the bank on 1 March 2019 by giving the bank a six-month, 9% interest bearing note payable.
d) Performed AUD 8,000 of the services paid for by ABC Ltd; the rest will be rendered in August 2019.
e) Received the electricity bill for AUD 24,200, which will be paid in early July.
f) On 1 June 2019 received rent in advance of AUD 21,600 from XYZ Ltd for a 3 month lease of premises from 1 June until 31 August 2019.
g) Wages accrued in the last weekly payroll amounted to AUD 23,000 and will be paid on 5 July 2019.

Required:

1) Prepare the journal entries for each of these transactions.

2) Prepare all adjusting entries required on 30 June 2019.

Attachment:- Accounting Principles and Practices.rar