Georgie Smythe commenced business as a mechanical engineer trading as GS Engineering. She has provided the first month’s business transactions for March 2017.

a) You are required to record the following transactions into the transaction analysis chart (template provided).

March

1                     Invested $80,000 of her own funds into a business bank account and took out a personal loan for $20,000, also deposited into the business account.

2                        Purchased a small property located in an industrial estate for $250,000.

Georgie paid a 10% deposit and the balance was financed through a mortgage with Gotcha Banking Corporation.

3                     Georgie purchased engineering equipment for $10,000 cash.

A three-month subscription for specialist engineering software was purchased for $2,400 cash.

4                     Office furniture and fittings were purchased for $3,000 cash.

Paid $2,400 for professional indemnity insurance for 12 months.

5                         Georgie purchased computer equipment for $15,000 cash and a motor vehicle for $24,000 was acquired on 90 days credit terms.

6                     Georgie invoiced her first client $2,000 for a day’s project work.

7                       Office stationery was purchased for $1,200 on 30 day credit terms.

8                    Georgie contributed tools and equipment valued at $6,500 to the business.

15                Invoiced clients $4,800 for services performed.

17               Received full payment from her first client.

18                Hired an assistant on a casual contract basis.

21                Invoiced clients $7,200 for work performed.

Georgie withdrew $1,500 for personal use.

23                    Paid wages to assistant totalling $1,600, $400 of which was deducted for

PAYG tax.

24               Received $2,300 from credit customers.

26                Paid telephone for bill for March of $270.

28       Invoiced clients for work performed $8,400

30       Paid wages to assistant totalling $1,800, $500 of which was deducted for PAYG tax and will be remitted to the Australian Tax Office in the future.

31        Paid motor vehicle expenses for the month totalling $240.

Received $2,500 from credit customers.

Georgie withdrew $2,200 from the business, of which, $1,200 was for a one-off payment for professional membership joining fees to Engineers Australia, the relevant professional body, and $1,000 for landscaping at her private residence.

Made a part payment of $200 for the office stationery.

 

 

Additional information:

  • As at 31 March $400 of office supplies had been consumed.
  • As at 31 March $950 interest has accrued on the mortgage.
  • Utilities owing at balance date are $375
  • Motor vehicle is depreciated at 20% per annum straight line.
  • Computer equipment is depreciated at 30% per annum reducing balance.
  • Engineering tools and equipment are depreciated at 15% per annum straight line.
  • Furniture and fittings are depreciated at 10% per annum straight line.
  • Assume a full month for depreciation and no residual value.
  • Round to nearest dollar.

b. Prepare the fully classified Income Statement and Balance Sheet for March 2017 for GS Engineering.

c. Advise Georgie on the differences between straight line and reducing balance depreciation methods and explain the impact on the income statement over the asset’s life. How does a business determine which is the appropriate depreciation method to use? (Ignore tax implications) (up to 500 words)

Click on Buy Solution and make payment. All prices shown above are in USD. Payment supported in all currencies. Price shown above includes the solution of all questions mentioned on this page. Please note that our prices are fixed (do not bargain).

After making payment, solution is sent within 2 to 5 minutes on your Email ID. But it may take up to 1 hour in case of high load on server. Solution is available in Word or Excel format unless otherwise specified.


If your question is slightly different from the above question, please contact us at info@myassignmentguru.com with your version of question.