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Peakhurst Limited had the following trial balance at 1 January 2016

Question 1 Peakhurst Limited had the following trial balance at 1 January 2016: Debit $ Credit $ Cash 200 000 Accounts receivable 600 000 Inventory 700 000 Prepaid insurance 60 000 Prepaid rent 50 000 Equipment 1 000 000 Allowance for doubtful debt 20 000 Accumulated depreciation 200 000 Accounts payable 500 000 Revenue received in advance 100 000 Income tax payable 500 000 Loan 570 000 Share capital 400 000 Retained profits 320 000 2 610 000 2 610 000   You are given the following additional information for the year ended 31 December 2016: Bad debts of $8000 were written off. It was decided that allowance for doubtful debts should be 4 per cent of accounts receivable.   Required:…

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South Hampton University is preparing its budget for the upcoming academic year

Question 1 South Hampton University is preparing its budget for the upcoming academic year. This is a specialised private university that charges fees for all degree courses. Currently, 30,000 students are enrolled on campus. However, the university is forecasting a 5 per cent growth in student numbers in the coming year, despite an increase in fees to $3,000 per subject. The following additional information has been gathered from an examination of university records and conversations with university managers:   South Hampton is planning to award scholarships to 200 students, which will cover their fees. The average class has 80 students, and the typical student takes 4 subjects per semester. South Hampton operates 2 semesters per year. The average academic staff salary…

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Cotton On Ltd. currently has the following capital structure

Question 1 Cotton On Ltd. currently has the following capital structure: Debt: $3,500,000 par value of outstanding bond that pays annually 10% coupon rate with an annual before-tax yield to maturity of 12%. The bond issue has face value of $1,000 and will mature in 20 years. Ordinary shares: $5,500,000 book value of outstanding ordinary shares. Nominal value of each share is $100. The firm plan just paid a $8.50 dividend per share. The firm is maintaining 4% annual growth rate in dividends, which is expected to continue indefinitely. Preferred shares: 45,000 outstanding preferred shares with face value of $100, paying fixed dividend rate of 12%. The firm’s marginal tax rate is 30%.   Required: Calculate the current price of the…

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At 30 June 2019, Beta Ltd had the following deferred tax balances

Question 1 At 30 June 2019, Beta Ltd had the following deferred tax balances:   Deferred tax liability                      $18,000 Deferred tax asset                          15,000   Beta Ltd recorded a profit before tax of $80,000 for the year to 30 June 2020, which included the following items:   Depreciation expense – plant      $7,000 Doubtful debts expense                3,000 Long-service leave expense          4,000   For taxation purposes the following amounts are allowable deductions for the year to 30 June 2020:   Tax depreciation – plant               $8,000 Bad debts written off                     2,000   Depreciation rates for taxation purposes are higher than for accounting purposes. A corporate tax rate of 30% applies.   Required: Determine the taxable…

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Asia Pacific Ltd started operating on 1 July 2017 with 12 employees

Question 1 Asia Pacific Ltd started operating on 1 July 2017 with 12 employees. Three years later all of those employees were still with the company. On 1 July 2019 the company hired 15 more people but by 30 June 2020 only 10 of those employed at the beginning of that year were still employed by Asia Pacific Ltd. All employees are entitled to 13 weeks’ long-service leave after a conditional period of 10 years of employment with Asia Pacific Ltd. At 30 June 2020 Asia Pacific Ltd estimates the following: The aggregate annual salaries of all employees hired on 1 July 2017 is now $1,200,000. The aggregate annual salaries of all current employees hired on 1 July 2019 is now…

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Cena Ltd purchased 75% of the capital of Lesnar Ltd for

Cena Ltd purchased 75% of the capital of Lesnar Ltd for $250 000 on 1 July 2003. At this date the equity of Lesnar Ltd was: Share capital   $ 100 000 General reserve        60 000 Retained earnings        40 000 At this date, Lesnar Ltd had not recorded any goodwill, and all identifiable assets and liabilities were recorded at fair value except for the following assets:   Carrying amount Fair value Inventory $ 70 000 $ 100 000 Plant (cost $170 000)  150 000    190 000 Land    50 000    100 000 The plant has a remaining useful life of 10 years. As a result of an impairment test, all goodwill was written off in…

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Hi Tech Products manufactures three (3) types of CD players

Question 1 Hi Tech Products manufactures three (3) types of CD players: Cheap, Econo and Deluxe. Hi Tech uses an activity-based product costing system. The company has identified five (5) activities. Each activity, its cost and related activity driver are identified below:   Activity                             Activity Cost     Activity Driver Material handling     $225 000     Number of parts Material insertion     $2 475 000     Number of parts Automated machinery     $840 000     Machine hours Finishing     $170 000     Labour hours Packaging     $170 000     Orders shipped Total manufacturing cost                                $3 880 000   The following information pertains to…

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“Quick Kip” is a pet store specialising in cat beds

“Quick Kip” is a pet store specialising in cat beds. The store is owned and operated by Kat Knapp. The following adjusted trial balance has been prepared at year end but is not in the correct order. Quick Kip – TRIAL BALANCE AS AT 30 JUNE 2020 Debit ($) Credit ($) Cash 16,000 Advertising Expense 1,200 Depreciation Expense – Equipment 4,200 Freight Outwards 3,750 Allowance for Doubtful Debts 3,100 Insurance Expense 3,600 Inventory (1 July 2019) 43,000 General Expense 2,800 Loan Payable 32,000 Rent Expense 6,600 Equipment 16,000 Sales Returns 400 Accumulated Depreciation – Equipment 5,400 Prepaid Rent 1,500 Delivery Van 24,000 Purchases Returns 5,200 Accumulated Depreciation – Delivery Van 4,800 Accounts Payable 22,250 Sales Staff Wages Expense 19,000 Freight Inwards…

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Great Explorations” is a shop which sells hiking gear, including backpacks

Accrual Accounting “Great Explorations” is a shop which sells hiking gear, including backpacks, hiking shoes and tents. It is owned and run by Nellie Bly. The following trial balance has been prepared at year end: GREAT EXPLORATIONS TRIAL BALANCE AS AT 30 JUNE 2020 Debit ($) Credit ($) Cash on Hand 12,500 Accounts Receivable 16,000 Inventory (30 June 2020) 32,500 Prepaid Shop Rent 24,000 Shop Shelving 120,000 Accum. Depreciation Shop Shelving 40,000 Bank Overdraft 6,000 Accounts Payable 9,300 N. Bly, Capital (1 July 2019) 141,700 N. Bly, Drawings 12,500 Sales 256,800 Sales Returns & Allowances 1,200 Discount Received 1,800 Cost of Sales 128,000 Sales Staff Salaries Expense 42,000 Advertising Expense 1,800 Discount Allowed 240 Freight Outwards 360 Interest Expense 1,400 Council…

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The Dowell Company produces and sells brooms

Given: The Dowell Company produces and sells brooms. Their present sales volume is 500Kpa., and each broom sells for 0.5$.

Required: If their fixed expenses are 80K$pa. And unit variable cost is 0.3$, calculate the following:

a) The total profit for the year, and the break-even point amount.

b) The new profit if both the fixed costs, and the sales volume increase by 10%,

c) Starting with the values in the given paragraph, what would the new break-even point quantity be, if there was a 10% increase in the selling price, and a 20K$ increase in fixed expenses.

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FREE – Which of the following is an example of good internal control over cash

Which of the following is an example of good internal control over cash? Select one:

a. The accounts receivable clerk is responsible for the preparation of weekly bank reconciliations.

b. The accounts payable clerk is responsible for paying all accounts outstanding and can approve payment of accounts of less than $5,000.

c. The wages clerk is responsible for the preparation of wages and salaries payments. The wages are electronically transferred to employee’s bank accounts and are approved by the accountant.

d. The accountant is responsible for approving the purchase of all goods and services, and signs all cheques when payment is due.

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Laura Golarsa’s Asset and Liabilities

Income Statement and Balance Sheet  Laura Golarsa’s Asset and Liabilities as at June 30 are outlined in the post-closing trial balance below.   Debit Credit Cash at Bank $2,700.00   Inventory (at cost) $4,000.00   Accounts Receivable $3,100.00   Plant & Equipment $6,600.00   Accumulated Depreciation: Plant & Equipment   $2,640.00 Motor Vehicles $18,000.00   Accumulated Depreciation: Motor Vehicles   $4,500.00 Land & Buildings $225,000.00   Accrued Expenses Payable   $530.00 Bank Loan   $51,730.00 Capital: Laura Golarsa   $200,000.00   $259,400.00 $259,400.00   Laura Golarsa estimates that her sales for the next three months will be as follows: July August September $30500 $35800 $40850 Selling price is firmly established a cost plus 75% Markup, with 80% of sales on credit.…

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