Question 1

The following information was obtained from the financial records of Roger Ltd for the year ended 30 June 2020. Prepare the statement of profit or loss for the year ended 30 June 2020.

 

Retained earnings 1 July 2019 $90 000
Sales revenue from continuing operations for the year $600 000
Finance costs $20 000
Estimated income tax expense for the year ended 30 June 2020 $112 500
Interim dividends paid (ordinary shares) $100 000
Write off research and development costs $5 000
Share capital (1 million $2 shares) $2 000 000
Expenses from ordinary activities (excluding finance costs) $200 000

 

Required:

  1. Prepare the statement of profit or loss for the year ended 30 June 2020.
  2. Prepare statement of changes in equity for the year ended 30 June 2020.

Question 2

Selected information for two companies competing in the catering industry have been presented below.

 

Account             A Ltd                    B Ltd 
Current assets $55250 $83950
Non-current assets $125000 $149500
Current Liabilities $29300 $11750
Non-current Liabilities $44850 $72500
Equity $106100 $149200
Profit $37500 $26500

 

Required:

 

  1. Calculate the following ratios for A Ltd and B Ltd:
    1. Current ratio.
    2. Return on Assets (ROA).
    3. Return on Equity (ROE).
  2. From your calculations in part A, explain which entity is in a more favourable position.

 

 

Question 3

Everest Sports owned by Dean Jones sells sports equipment to schools and sporting clubs in Victoria. The following balances were reported in the Balance Sheet as at 30 June 2020.

 

Account Name Balance ($)
Cash at bank 19 700
Accounts receivable    1 400
Accounts payable        600
Capital – Tim Lane  20 500

 

Transactions for July 2020 were as follows:

July  2  Received $1400 from accounts receivable
3 Paid $500 of accounts payable
4 Paid rent for July $700
5 Sent invoice to customer $5600
7 Purchased office equipment for cash $2000
9 Recorded cash sales $800
10 Recorded credit sales $1500
14 Purchased office supplies for cash $330
23 Recorded cash sales $2000
31 Cash drawing by Dean Jones $800

 

Required:

Prepare worksheet entries for the business transactions for the month ended 31 July 2020.

 

                                                                               

Question 4

The Toowoomba Produce Suppliers packages and distributes three grades of animal feed. The material cost per tonne and estimated annual sales for each of the products are:

 

Product Material cost Estimated sales
Super Premium $16 1000 tonnes
Premium $12 1500 tonnes
Economy $10 2500 tonnes

 

The indirect cost of operating the machinery used to package all three products is $20 000 per year. In the past, prices have been set by allocating the indirect costs to products on the basis of estimated sales in tonnes. The resulting total costs (material costs plus allocated fixed overhead) are then marked up by 100 per cent.

Required

  1. Allocate total indirect cost to each product.
  2. Determine the total cost for each product.
  3. Calculate the selling price per unit for each product, using the method described for setting prices.
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