Reference no: EM131618920

QUESTION 1: General Journal, General Ledger, Trial Balance

Paul is the sole proprietor of Auldana Custom Concrete Foundations (ACCF), a specialist construction company.  The following is a list of transactions that took place during the month of May 2016.

May 1 - The business purchased additional equipment costing $22,400 by increasing the loan with the bank.

May 5 - The construction of a housefoundation was completed and the client was invoiced.  The client paid $8,500 in cash and agreed to pay the remaining $33,500 over the following ten months.

May 10 - Paul withdrew $1,200 cash for personal use.

May 15 - An Advertising Bill for $1,680 was paid for in cash.

May 17 - Paul hurt his wrist at work and visited his local Doctor. The consultation cost $65, which he paid for using his own credit card.

May 23 - The business paid $750 off the loan owed for the purchase of equipment on May 1.

May 29 - The business received $3,350 from the debtor relating to the transaction on May 5.

REQUIRED:

a. Prepare the General Journal entries were required to record each transaction. Include a narration (explanation) for each journal entry.

b. Post the journals from (a) above to the General Ledgers provided, ensuring a balance for each ledger is included.

c. Complete the attached Adjusted Trial Balance provided for the account balances calculated in the General Ledger from (b) above.

QUESTION 2: Balance Day Adjustments

This is not a typo. Q1 was included in Part A of the assignment, which now continues in Q2.

Below is the unadjusted Trial Balance for Auldana Custom Concrete Foundations as at 30^th June 2016.

NOTE: Please use this trial balance to complete the question (NOT the trial balance you completed in Part Aof the assignment).

AULDANA CUSTOM CONCRETE FOUNDATIONS UNADJUSTED TRIAL BALANCE AS AT 30 June 2016
	Debit ($)	Credit ($)
Cash at Bank	14037
Accounts Receivable	47046
Inventory	140400
Prepaid Insurance	4914
Office Supplies on hand	3 276
Furniture & Fittings	21030
Accumulated Depreciation - Furniture &Fittings		11 934
Equipment	69200
Accumulated Depreciation -  Equipment		18720
Accounts Payable		27027
Loan Payable		120275
Paul's ACCF - Capital		54972
Paul's ACCF - Drawings	29280
Sales Revenue		706800
Sales Returns and Allowances	9924
Cost of Sales	412308
Discount received		12957
Freight inwards	9360
Sales Salary Expense	68328
Delivery Expense	18252
Advertising Expense	28590
Rent Expense	28 548
Office Salaries Expense	33750
Electricity Expense	7656
Discount Allowed	6 786
Totals	952685	952685

On the next page is Paul's information related to the year that ended 30 June 2016.

(1) A count of the stationery room showed that Office Supplies on hand at 30th June 2016 were $2 793.

(2) Both the Furniture & Fittings and the Equipment will be used evenly over their useful lives. The expected total useful lives and residual values of both assets is as follows:

	Estimated Useful life	Estimated Residual
Furniture & Fittings	8 years	$1030
Equipment	10 years	$0

(3) In order to allow for cash flow fluctuations, the bank has approved a $15,000 overdraft facility for Paul's business bank account.

(4) Office Salaries which are payable but not recorded as at 30th June are $1 125.

(5) The balance in the Prepaid Insurance account represents a 12 month insurance policy that commenced on 1^st March 2016.

(6) $6500 of the recorded Sales Revenue is for deposits made for foundations which will not be installed until July/August 2016.

(7) As of 30th June 2016, Paul has estimated that3% of his Accounts Receivable will not be collected.

REQUIRED: As it is now the end of the financial year, you have to undertake the following work for Paul:

a. Prepare any necessary Balance Day Adjustment Journals for ACCF. Include a brief narration (explanation) for each journal entry.

b. Post the journals from (a) above to the General Ledgers provided.

c. Complete the Adjusted Trial Balance provided for the account balances calculated in the General Ledgers from (b) above.

QUESTION 3: Financial Statement

The following Trial Balance for Paul's Recycled Books has been prepared at year end by Paul, but he realises it is not in the correct order.

REQUIRED: Using the Trial Balance provided below, prepare the following for the period in question:

1. Fully classified Balance Sheet

2. Statement of Changes in Equity                           

Paul's Recycled Books TRIAL BALANCE AS AT 30 JUNE 2016
	Debit ($)	Credit ($)
Shop Furniture & Fittings	24375
Accounts Receivable	45 066
Accumulated Depreciation - Shop Furniture & Fittings		8395
Rent Expense - Admin	3 650
Cash at Bank	47 753
Advertising Payable		3 901
Sales		545 385
Electricity Expense	1 443
COGS	386 210
Negan, Capital		43 810
Depreciation Expense - Shop Furniture & Fittings	3 550
Freight Inwards	2 945
Rent Expense - Store	25 225
Accounts Payable		14995
Discount Allowed	3 580
Inventory	20 335
Salaries Expense - Store	33 400
Loan Payable		32400
Allowance for Doubtful Debts		1 000
Prepaid Advertising	1 470
Interest Payable		550
Advertising Expense	635
Sales Equipment	14 500
Interest Expense	395
Doubtful Debts Expense	1 000
Paul, Drawings	17600
Sales Returns & Allowances	6705
Discount Received		3 026
Salaries Expense - Admin	13 725
Totals	653562	653562

The loan is payable in equal amounts over 36 months.

QUESTION 4: Accounting Concepts

You are employed as a graduate accountant in a mid-tier accounting firm.  One of the partners has asked you to review the following cases where a client has violated at least one of the assumptions, concepts or definitions you studied at university. The partner has asked for a written report in your own words (using references where appropriate), to please explain:

a) Which concept or assumption has been violated, and;

b) What the correct treatment should be.

i. The owner of a farming property argued that the value of a public road running past his land should be included among the farm's assets. He felt this was right because the road made it quicker and easier for him to transport his products. "This means that the road is an asset to the farm," he said.

ii. Jayne, an owner of a children's party business took party supplies home for her own personal use. She recorded this as a debit to Supplies Expense and credit to Supplies in the business's books.

QUESTION 5: Cash Flow Statement

Below are the summarised cash flow statements for two businesses. Comment in your own words using referencing where appropriate on which one has a healthier cash flow situation and justify your answer by explaining the significance of each of the three types of cash flows for each business:

	Cheap as Smith's	Sniggles
Cash flow from Operating Activities	(12500)	11800
Cash flow from Investing Activities	18500	(6 200)
Cash flow from Financing Activities	(3500)	(6800)
Net increase / (decrease) in cash held	2 500	(1 200)
Cash at the beginning of the year	3900	7 300
Cash at the end of the year	6 400	6 100

Attachment:- Assignment Files.rar