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Assessment Submission Sheet
Course FNS40617 Certificate IV in Accounting and Bookkeeping
Unit FNSACC414 Prepare Financial Statements for Non-reporting Entities
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Student Name
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Please read and sign this assessment coversheet and submit it together with your assessment to your Assessor by the due date.
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Assessment Items Result
Task 1 Assignment S NS
Task 2 Assignment S NS
Final Result for this unit C NYC
Student Declaration: I declare that I have been assessed in this unit, and I have been advised of my result. I am also aware of my appeal rights. Assessor Declaration: I declare that I have conducted a fair, valid, reliable and flexible assessment with this student, and I have provided appropriate feedback
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Task 1
Assessment Instructions
This is an individual assessment. You are required to answer a series of questions.
You must answer all of the questions below and include examples where appropriate. Please ensure that you have answered each question with an appropriate level of detail. If you need help understanding any questions, ask your assessor to explain.
To be deemed competent you will need to successfully demonstrate the following:

  • You must complete and successfully answer all questions.

Question 1
After a trial balance had been extracted the following errors were discovered:

  1. Cheque drawn for $44 including GST for cash purchases of inventory entered as $55 including GST.
  2. Salaries in the journal correctly shown as $862, but incorrectly posted as $682 (bank account correct).
  3. Cash sales invoices totalled in sales account as $247.19, whereas the correct total was $244.19 (bank account correct)
  4. Credit note for accounts receivable J.Jones incorrectly recorded as $22 including GST instead of the correct amount of $33 including GST

Required:
Show how each error may be corrected.

Please answer Question 1 here.

Question 2
The assets and liabilities of the business of Fast Bucks at 1 July 2017 Consisted of:

Plant & Equipment $16,000
Accumulated Depreciation – Plant & Equipment 6,000
Accounts Receivable 4,000
Inventory 5,000
Bank 2,000
Prepaid Expenses (Rent) 200
Accounts Payable 3,000
Accrued Expenses (Wages) 500

The following summary of the cash transactions during the year was prepared from the available records of Fast Bucks:

Receipts Payments
Accounts Receivable 25,000 Accounts Payable 15,000
Capital 2,000 New Plant 3,000
Bank Loan (repayable 15/07/2020) 3,000 Drawings 10,000
Cash sales 20,000 Interest on Loan 200
Rent 4,000
Advertising 1,400
Wages 5,000
50,000 38,600

At 30 June 2018 accounts receivable owed $3,300 and accounts payable were owed $4,000. Inventory was valued at $6,000. Prepaid rent was $400 and accrued wages $300. It was considered that $2,000 depreciation on plant and equipment should be provided for and that $300 of book debts should be written off. A further $300 of book debts is considered doubtful as to collection. (All figures exclusive of GST).
Required:

  1. Prepare Income Statement for the year.
  2. Prepare a Balance Sheet as at 30 June 2018.
Please answer Question 2 here.

Question 3
Use the details in the following trial balance as at 30 June 2018 to construct an income statement and a statement of financial position. Inventory at 30 June 2018 is $12 000.

$ $
Land and buildings 80000
Motor vehicles 40000
Fixtures and fittings 880
Inventory 1 July 2017 15000
Accounts receivable 1100
GST input tax credit 231
Bank 31079
Accounts payable 1430
GST payable 268
Capital 1 July 2017 156870
Drawings 832
Sales 12730
Discount received 32
Purchases 1170
Stationery 290
Wages 700
Discount allowed 48
171330 171330
Please answer Question 3 here.

Question 4
Billy Bonker had the following recorded information for the year ended 30 June 2018.
Cash at bank at the start of this financial year was $20000.
Indicate which items are to be included in a statement of cash flows and for these items indicate whether they are cash flows from operating (O), investing (I) or financing (F).

Included in statement
(yes/no)
Operating/
investing/
financing
Credit sales
Credit purchases
Depreciation of equipment
Interest paid
Cash paid to suppliers
Office expenses paid
GST paid
Interest received
Salaries and benefits paid to employees
Salaries owed, not yet paid
Cash from accounts receivable
Value of equipment on hand
Owners paid additional capital in cash
Cash received from the sale of assets
Profit on sale of motor vehicle

Question 5
Billy Bonker has provided you with all his financial data for the financial year ending 30 June 2018 and has asked if you could construct a statement of cash flows using the categories of operating, investing and financing, where appropriate. Some of the data he has provided you may not be necessary for the statement of cash flows.

$
Cash at bank 1/7/17 $20000
Credit sales $95000
Credit purchases $110980
Depreciation of equipment $4333
Interest paid $7280
Cash paid to suppliers $23000
Office expenses paid $9999
GST paid $1245
Interest received $1455
Salaries and benefits paid to employees $23567
Salaries owed, not yet paid $11432
Cash from accounts receivable $19980
Value of equipment on hand $45500
Owners paid additional capital in cash $46000
Cash received from the sale of assets $13350
Profit on sale of motor vehicle $1099
Please answer Question 5 here.

Question 6
Dover Manufacturing provides the following information in regards to its operations for the year ended 30 Jun 2018:

Income statement for year ended 30 June 2018
Sales 847,800
Less Cost of goods sold 383,900
Gross profit 463,900
Less operating expenses 14,700
Salaries and wages 111,800
Depreciation – Plant 18,300
Doubtful debts 800
Other operating expenses 261,500
Net profit 72,300
A comparison of the current assets and current liabilities (excluding bank) for the years ended 30 June 2017 and 30 June 2018 revealed:
2017 2018
Current assets
Accounts receivable 91,000 88,000
Prepayments 7,000 8,000
Inventory 52,000 57,000
Current liabilities
Accounts payable 69,000 76,000
Accruals 8,000 7,000
Additional information

  1. All changes in the current assets and current liabilities are the result of operating activities.
  2. The cash flow statement shows net cash from operating activities of $94,400

Prepare a reconciliation of cash flows from operating activities to net profit.

Please answer Question 6 here.

Question 7

  1. Use the income statement and statement of financial position below and calculate the following ratios. Please also briefly explain each ratio and an interpretation of these ratios on these accounts.
  • Gross profit ratio
  • Net profit ratio
  • Current ratio
  • Quick ratio
  • Inventory turnover ratio
  • Accounts receivable turnover ratio
Please answer Question 7 Part (a) here.

 

Income statement of Shock Radios
for the year ending 30 June 2018
$ Budget $ Actual
Sales (all on credit) 394000 327260
Less Cost of goods sold
Opening Inventory 27600 27600
Purchases 236400 176720
Customs duty 5700 4840
Less Closing inventory 29000 27900
Gross profit 153300 146000
Add Other income
Rent income 13800 14000
Less Operating expenses
Selling and distribution
Advertising 4600 5950
Sales salaries 32800 31600
General and administrative
Office salaries 22000 24700
Rates and taxes 8400 7970
Light and power 5900 7130
Printing and stationery 12400 10800
Depreciation – building 2900 2900
Depreciation – Furniture and equipment 6800 6360
General expenses 5500 6200
Financial expenses
Bad debts 900
Interest expense 1700 590
Net profit 63200 55800

.

Statement of financial position of Shock Radios
As at 30 June 2018
$ $
Current assets
Cash at bank 29000 27900
Accounts receivable 21300 23420
Inventory 38700 28840
Non-current assets
Land and buildings 275000 275000
Less Accumulated depreciation 9800 9800
Plant and machinery 78900 74300
Less Accumulated depreciation 15600 14300
Total assets 417500 405360
Current liabilities
Accounts payable 29400 27260
Total liabilities 29400 27260
Net assets 388100 378100
Owner’s equity
Capital 339900 339900
Add Net profit 63200 55800
Less Drawings 15000 17600
Total owner’s equity 388100 378100

 

  1. Who do you think may conduct the ratio analysis in a business and who do you think may use its results? Explain your answer.
Please answer Question 7 Part (b) here.
  1. What are the advantages and disadvantages of ratio analysis?
Please answer Question 7 Part (c) here.

Question 8
By using the data in the following statement of financial position, you are required to prepare five (5) graphs to help explain the data.

  1. Two pie charts to explain the actual results of the non-current assets, one represented by

dollars ($) and one represented by percentages (%).

  1. A vertical bar graph to explain the actual results of current liabilities.
  2. A horizontal bar graph to explain the actual results of current assets.
  3. A line graph plotting the actual results and the budgeted results.
You may present the graphs in this answer box, however, it is highly recommended that you attach the Excel file you have completed.

Statement of financial position
of Dianne’s Pottery Pty Ltd
as at 30 June 2018

Actual results
$
Budgeted figures
$
Current assets
Cash and cash equivalents 35000 35600
Trade and other receivables 32500 45000
Inventories 172000 182000
Total current assets 239500 262600
Non-current assets
Trade and other receivables 20000 20000
Available for sale investments 50000 65000
Property, plant and equipment 510000 520400
Goodwill 28000 28000
Other intangible assets 0 50000
Total non-current assets 608000 683400
Total assets 847500 946000
Current liabilities
Trade and other payables 38200 41500
Short-term borrowings 81200 100000
Current portion of long-term borrowings 15000 30000
Current tax liabilities 21500 35000
Short-term provisions 21000 30000
Total current liabilities 176900 236500
Non-current Liabilities
Long-term borrowings 109000 120000
Deferred tax liabilities 2650 2650
Long-term provisions 10000 11000
Total non-current liabilities 121650 133650
Total liabilities 298550 370150
Net assets 548950 575850
Equity
Share capital 300000 300000
Reserves 80000 80000
Retained earnings 168950 195850
Total equity 548950 575850

Task 2
Assessment Instructions
This is an individual assessment. You are required to answer a series of questions.
You must answer all of the questions below and include examples where appropriate. Please ensure that you have answered each question with an appropriate level of detail. If you need help understanding any questions, ask your assessor to explain.
To be deemed competent you will need to successfully demonstrate the following:

  • You must complete and successfully answer all questions.

Question 1
‘Accuracy can be concerned with the matching of revenue with expenses.’ Explain this statement.

Please answer Question 1 here.

Question 2
Explain how external data may be used to check on the accuracy of internally recorded data. You may use an example in your explanation.

Please answer Question 2 here.

Question 3
What are the benefits, if any, of using charts/graphs and other illustrative tools in a report?

Please answer Question 3 here.

Question 4
Discuss techniques and methods of presenting financial data for non-reporting entities.

Please answer Question 4 here.

Question 5
Identify and describe the key features of financial legislation covering taxable transactions and reporting requirements.

Please answer Question 5 here.

Question 6

  1. What is accrual accounting and why is it the preferred method for most organisations? Discuss.
Please answer Question 6 Part (a) here.
  1. In the following situations, advise if the business is operating on an accruals basis or a cash basis. Explain your answer.
  • On 1st January 2018 Betty paid her rent for 12 months (in advance) and recorded as a rent expense the total payment in the same month.
  • On 22 February 2018 John received payment for services he rendered on 2 January 2018. In January John recorded the invoice he issued as income.
Please answer Question 6 Part (b) here.

Question 7
Describe different methods of calculating depreciation.

Please answer Question 7 here.

Question 8
After meeting at a convention recently, three sole traders P, Q and R discussed the restructuring of their businesses. It was agreed that P and Q would amalgamate their businesses and would acquire the business of R as a going concern.
The assets and liabilities of the separate businesses are agreed to be fair with the exception of the following adjustments:

P Land and Buildings, fair value $100,000
Q Accounts Receivable, fair value $14,000
R Land and Buildings, fair value $60,000

The bank account is to be excluded from the takeover assets.
The agreed values of the businesses of P and Q are $150,000 and $120,000 respectively and the agreed purchase consideration for R’s business is $110,000.
Overdraft facilities from the bank are available if needed.
The Balance Sheets of P, Q and R prior to the restructure were as follows:

P Q R
Capital 110,000 121,000 100,000
Land & Buildings 60,000 0 50,000
Plant & Machinery 40,000 35,000 25,000
Inventory 15,000 20,000 30,000
Accounts Receivable 10,000 15,000 5,000
Bank 15,000 56,000 10,000
Accounts Payable 30,000 5,000 20,000
140,000 126,000 120,000

Required:
Prepare general journal entries for the amalgamation of the businesses of P and Q.
Prepare general journal entries for the acquisition of the business of R.
Prepare a partnership Balance Sheet after completion of the above events.

Please answer Question 8 here.

Question 9
The following is the trial balance from the books of Song, Sung and Blue, sharing profits and losses equally.

Trial Balance as at 30 June
Accounts Receivable $84,000
Allowance for doubtful debts 1,130
Accounts Payable 69,330
Inventory 80,000
Fixtures and Fittings 14,400
Accumulated depreciation 1,440
Motor Vehicles 74,000
Accumulated depreciation 37,000
Bank 54,600
Profit and Loss (Net Profit) 67,100
Capital
  • Song
60,000
  • Sung
50,000
  • Blue
40,000
Current
  • Song
14,000
  • Sung
8,000
  • Blue
2,000
Drawing
  • Song
20,000
  • Sung
15,000
  • Blue
8,000
350,000

Further matters requiring adjustments are: Song, Sung and Blue are to be credited with salaries of $15,000, $17,500 and $20,000 respectively. Interest is to be credited on fixed capitals at 5% p.a. Interest is to be charged on drawings at 10% p.a.
The partners have each agreed to transfer $10,000 from their Current account to their Capital account.
Required:
Prepare the Profit and Loss Appropriation account.
Prepare the partnership Balance Sheet as at 30 June 2018.

Please answer Question 9 here.

Question 10
The Treasurer of the Leichhardt Tennis Club provides the following information for the year ended 30 June 2018:

Cash Receipts
Sales of refreshments 35,000
Members Subscriptions 12,000
Hire of Courts 4,000
Cash Payments
Wages 4,000
Refreshment purchases 18,700
Re-marking of tennis courts 4,100
General Expenses 2,200
Refreshments expenses 6,500
Bank loan interest 1,500
Assets & Liabilities as at: 01 July 2017 30 June 2018
Cash at bank 10,000 24,000
Refreshment Inventory 600 780
Subscriptions in arrears 120 40
Subscriptions in advance 400 300
Tennis Courts (net) 20,000 18,000
Refreshments equipment (net) 4,500 4,000
Bank Loan 15,000 15,000

Required:
Members Subscription account.
Refreshments Trading account.
A statement of Income & Expenditure.
A Trial Balance to ascertain Accumulated Funds at 1 July 2017.
Statement of Assets & Liabilities as at 30 June 2018.

Please answer Question 10 here.

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