Reference no: EM131199377

Part A - Accounting Principles Assignment-

Q1. Smith Catering Service completed the following transactions during its first month of operations for July 2016:

a. Smith Catering Service commenced operations by receiving $12000 cash and a generator (non-current asset) valued at $22000.

b. Paid office rent, $1200. This rent isn't paid in advance.

c. Prepaid insurance for $1400.

d. Completed a large catering service, billed the customer for $3000 and received a promise to collect the $3000 within one week.

e. Paid employee salary, $1400.

f. Paid $600 cash for supplies.

g. Received $24000 cash for performing catering services.

h. Collected $1200 in advance for catering service to be performed later.

i. Collected $3000 cash from a customer on credit.

j. Owner withdrew cash of $4200.

k. Purchased $400 for fuel for the generator on credit.

l. Performed catering services on credit, $1800.

m. Paid $400 on account.

n. Performed catering services for a customer and received $1600 cash.

Requirements:

1. Record each transaction in the journal. Key each transaction by its letter. Explanations aren't required.

2. Post the transactions that you recorded in Requirement 1 in the T-accounts (all).

3. Enter the trial balance in the worksheet (including Income statement and Balance Sheet columns) for the month ended 31 July 2016. Complete the worksheet using the adjustment data given at 31 July:

i. Accrued salary expense, $1400.

ii. Depreciation expense, $120.

iii. Prepaid insurance expired, $500.

iv. Supplies on hand, $400.

v. Unearned service revenue earned during July, $1000.

4. Prepare Smith Catering Service's income statement and statement of changes in equity for the month ended 31 July 2016, and the classified balance sheet as at that date.

5. Journalise and post the adjusting entries, beginning with i.

6. Journalise and post the closing entries.

7. Prepare a post-closing trial balance as at 31 July 2016.

Q2. Perfect Ltd's financial year runs from 1 July to 30 June. The following information regarding inventory transactions is available for the month of July 2016:

Required: Determine the correct balances at 31 July for Merchandise inventory and Cost of goods sold under each of the following inventory methods: (a) FIFO, (b) LIFO and (c) weighted-average. (For the purposes of the question, please ignore GST).

Part B - Written Assignment

Q1. Globally food price has increased during the past year. It is in this context answer the following questions:

(a) Explain why the law of demand applies to food just as it does to all other goods and services.

(b) Explain how the substitution effect influences food purchases. Provide some examples of substitutions that people might make when the price of food rises and other things remain the same.

(c) Explain how the income effect influences food purchases and provide some examples of the income effect that might occur when the price of food rises and other things remain the same.

Word limit: 600 words

Q2. Prices of houses in Australian metropolitan cities, particularly in Darwin, Sydney and Melbourne are on the rise in recent year, which is mainly due to surging land prices. It is in this context, answer the following questions:

(a) Why is the land price rising in the metropolitan cities and what are the major drivers of rising house prices in these cities.

(b) Using an appropriate diagram, explain your answer in part (a) above.

(c) Is the supply of land in in the metropolitan cities perfectly inelastic? Why? Discuss.

Word limit: 600 words

Q3. Some Australian state and territory governments have banned or are planning to ban plastic shopping bags due to negative externalities rising from their excessive use. (a) Describe the externality that arises from plastic containers and bags. What is the best way to avoid or regulate externalities? Discuss.

(b) Draw a graph to illustrate how plastic containers and bags create welfare loss.

Word limit: 600 words.