Morning Star Ltd was registered on 1 July 2018, as a company with a constitution

Another version of this question is available here. Question 1 Morning Star Ltd was registered on 1 July 2018, as a company with a constitution limiting the shares that could be offered to 5 000 000 Ordinary shares (including all classes) and 2 000 000 preference shares. The company issued a prospectus dated 1 July 2018 inviting the public to apply for 3 000 000 Ordinary A class shares at $3.00 per share. The terms of the shares on issue are $1.50 on application, $1.00 on allotment and $0.50 to be called within six months of allotment before 31 December 2018. If the issue is oversubscribed the directors will make a pro-rata issue of shares and the excess application money will…

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Bombay Ltd acquired all of the shares of Portobello Ltd

Task Details On 1 July 2018, Bombay Ltd acquired all of the shares of Portobello Ltd, on a cum-div. basis, for $2,700,000. At this date, the equity and liability sections of Portobello Ltd’s statement of financial position showed the following balances:   Share capital — 400,000 shares $ 1,200,000 General reserve 350,000 Retained earnings 960,000 Revaluation surplus 60,000 Dividend payable 25,000   At 1 July 2018, Portobello Ltd’s assets included $46,000 of recorded goodwill. The dividend payable at acquisition date was subsequently paid in August 2018. At acquisition date, all the identifiable assets and liabilities of Portobello Ltd were recorded at amounts equal to fair value except for the following:     Carrying amount Fair value Land $500,000 $550,000 Inventory 45,000…

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Laurie Manufacturing Ltd., manufactures two types of Lawn Mowers

Laurie Manufacturing Ltd., manufactures two types of Lawn Mowers, Standard and Deluxe.  The company uses simple costing system and the two direct cost categories are materials and labor.  It also has one indirect cost pool and allocates indirect costs on the basis of machine hours.  Information related to the production in the year 2018 is as follows and the owner is concerned about the decline in the market share for the company’s Standard model. Laurie Manufacturing Ltd.   Standard Deluxe Units sold 3200 1800 Selling price $125 $200 Direct material cost per unit $30 $45 Direct manufacturing labor cost per hour $16 $16 Direct manufacturing labor-hours per unit 1.50 2.25 Production runs 40 85 Material moves 72 168 Machine setups 45…

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Ethan Ltd acquired all the issued shares

Topic: Consolidation worksheet Ethan Ltd acquired all the issued shares (ex div.) of Darren Ltd on 1 July 2017 for $110 000. At this date Darren Ltd recorded a dividend payable of $10 000 and equity of: Share capital $54 000 Retained earnings   36 000 Asset revaluation surplus   18 000 All the identifiable assets and liabilities of Darren Ltd were recorded at amounts equal to their fair values at acquisition date except for:   Carrying amount Fair value Inventories $ 14 000 $16 000 Machinery (cost $100 000)    92 500   94 000   The machinery was considered to have a further 5-year life. Of the inventory, 90% was sold by 30 June 2018. The remainder was sold…

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Super Retail Ltd (Super Retail) acquired

Super Retail Ltd (Super Retail) acquired 100% of the shares of New World Retail Ltd (New World Retail) on 1 July 2017. The cost of investment was $620 000. At that date the capital and reserves of New World Retail were: Share capital    $260 000 Retained earnings $200 000   At the date of acquisition all assets of New World Retail were considered to be fairly valued, except for a plant that had a fair value $20 000 greater than its carrying amount. The cost of the plant was $100 000 and it had accumulated depreciation of $60 000. The plant had original estimated useful life of 10 years.   During financial year 01/07/2017-30/06/2018, New World Retail sold $30 000…

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The Accountant for Pix Photographic supply Ltd

Question 1: Activity based costing The Accountant for Pix Photographic supply Ltd has estimated the following activity cost pools and activity drivers for the coming year:   Activity Budgeted overhead cost $ Activity driver Required level for activity driver Cost per unit of activity driver Machine setups 300,000 No. of setups 100 $3,000 per setup Material Handling 150,000 Weight of raw material 50,000 kg $3 per kg Hazardous waste control 75,000 Weight of hazardous chemicals used 10,000 kg $7.50 per kg Quality control 112,500 No. of inspections 1,000 $112.50 per inspection Other overhead costs 300,000 Machine hours 20,000 $15 per machine hour Total 937,500   An order for 1,000 boxes of film development chemicals has the following production requirements:   Machine…

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ACT204 – Long Service Leave, Share capital and Accounting for Lease

Problem 1: Long Service Leave Darwin Ltd has five employees. According to their particular employment award, long service leave can be taken after 12 years, at which time the employee is entitled to 10 weeks’ leave. If an employee were to leave before the completion of 12 years’ service, no entitlement would be paid. High-quality corporate bond rates exist with periods to maturity that exactly match the various periods that must still be served by the employees before LSL entitlements vest with them. The projected inflation rate for the foreseeable future is 2 per cent. The projected probabilities that the employees will stay long enough for the LSL to vest—that is, for a total of 12 years—are as follows:   Name…

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ACT502 Management Accounting – Beckett Pumps is a manufacturer of commercial and heavy industrial Pumps

Beckett Pumps is a manufacturer of commercial and heavy industrial Pumps. The firm’s two product lines are called Directlift and Gravity. The primary raw materials are flexible steel sheet, and 23cm x 60cm of plastic sheets. Each Directlift pump requires a 2/3 of a metre and a Gravity pump requires a one metre of steel sheet. Allowing for normal breakage, the company can cut either enough to make four Directlifts or two Gravity pumps from a single plastic sheet. Other raw materials are costly and treated as indirect materials. Jo Smith Beckett Pump’s accountant has gathered the following information in preparation for the company’s annual budget for the next year.   Sales in the fourth quarter of the current year are…

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MAA262 – Clear Ltd bottles and distributes mineral water

Question 1 Clear Ltd bottles and distributes mineral water from the company’s natural springs. The company markets two products: 1-litre disposable plastic bottles and 15 litre reusable plastic containers. Required For 2019, Clear Ltd’s marketing manager forecasted monthly sales of 320,000 1-litre bottles and 80,000 15-litre containers. Average selling prices are estimated at $0.20 per 1-litre bottle and $1.20 per 15 litres container. Prepare a revenues budget for Clear Ltd for the year ending 31 December 2019. Clear Ltd begins 2019 with 720,000 1-litre bottles in inventory. The manager of operations requests that 1-litre bottles ending inventory on 31 December 2019 be no less than 480,000 bottles. Based on sales projections as budgeted in requirement ‘a’ above, what is the minimum…

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One Beauty Ltd, Refresh Ltd and Nutrifresh Ltd

Question 1 Topic 2: Presentation of financial statements    You are the assistant accounting of One Beauty Ltd, a company specializes in distributing beauty products imported from Korea to beauty salons in Riverina regions. The trial balance of the company for the year ended 30 June 2019 includes the following accounts:   Debit Credit $ $ Sales revenue 1,106,000 Interest revenue 8,000 Cost of sales 524,000 Impairment loss – goodwill 5,000 Amortization expense – patent 18,000 Gains from sales of motor vehicles 10,000 Depreciation – motor vehicles 68,000 Doubtful debts expense 11,000 Interest expense 21,000 Office expense 85,000 Rental expense 17,000 Salaries 187,000 Selling expense 68,000 Miscellaneous expense 28,000 Proceeds from insurance claims 20,000 Income tax expense 39,000 Cash on hand…

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NewCat Ltd, a manufacturer and retailer for pet products

NewCat Ltd, a manufacturer and retailer for pet products, commenced operations on 1 July, 2018 by issuing 100 000 $2.00 shares, payable in full on application. There were no share issue costs. For the year ending 30 June 2019, the company recorded the following aggregate transactions:   $’000 Sales 4 265 Cost of sales 1 800 Other income 723 Administration charges 285 Selling and distribution expenses 130 Employee entitlement expenses — (selling) 95 Wages and salaries — (selling) 212 Wages and salaries — (admin) 210 Doubtful debts expense 120 Depreciation expense -to be calculated   Interest expense 160 Other borrowing expense 20 Income tax expense 120   The following additional information was noted during the preparation of financial statements for the…

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Paul services Trial Balance As At 30 June 2016

Paul services Trial Balance As At 30 June 2016 Account No Account Name Debit Credit 101 Cash at Bank 86840.00 105 Accounts Receivable 28950.00 115 Supplies 1870.00 120 Prepaid Insurance 3740.00 135 Office Furniture 46800.00 137 Acc. Depreciation. – Furniture 0.00 140 Office Equipment 93600.00 141 Acc. Depreciation – Equipment 0.00 145 Store Equipment 140400.00 146 Acc. Depreciation – Equipment 0.00 170 Automobile 187200.00 171 Acc. Depreciation – Automobile 0.00 201 Accounts Payable 57900.00 201 Interest Payable 86850.00 201 Unearned revenue 23400.00 201 Loan Payable 9360.00 201 Mortgage Payable 187200.00 201 Paul’s Capital 53857.00 201 Paul’s Drawings 187.00 201  Revenue 187000.00 201 Advertising Expense 1700.00 201 Automobile Expense 5775.00 201 Depreciation Expense – Furniture 0.00 201 Depreciation Expense – Equipment 0.00…

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