During June 2020, the following transactions occurred in Michael Ltd. Revenue earned on credit, $869,250. Sales returns, $18,050 Cash collected from Accounts receivable, $875,000. Accounts Receivable has a debit balance of $637,167 and Allowance for Doubtful Debts has a credit balance of $9,075 at 1 June 2020. Ignore GST. Based on percentage of net credit sales method and past experience, the firm’s bad debts expense for June has been estimated at 1% of its net credit sales. Ignore GST. Required: Prepare general journal entries to record the transactions in June. Determine the bad debt expense for June and prepare necessary adjusting entries to adjust the bad debts expense. Prepare the relevant parts of the balance sheet that show…Details
The cash at bank ledger at SunBoost Ltd. has a debit balance of $37,932 at the end of 31 March, while the bank statement prepared at 31 March has a credit balance of $50,580. The following information is produced by comparing the records of the SunBoost Ltd with the bank statement for March. Deposits of $6,270 is not reflected on bank statement Cheques of $18,703.5 is not presented to the bank A bank fee of $75 is charged by the bank Interest earned on bank account is $37.5 A dishonoured cheque was received from a client Eric S., $1,950 A note receivable of $1,932 was collected from a customer. It was paid via electronic transfer. Cheque issued for advertising expense should…Details
David Smith owns a car hiring business operating under the name Go Drive. The unadjusted trial balance of Go Drive at 31 May 2020 is shown below (ignore GST). Go Drive Trial Balance As at 31 May 2020 Account Debit Credit Cash at bank 48,825 Accounts receivable 54,600 Fuel supplies 8,460 Prepaid advertising 5,970 Prepaid insurance 5,400 Office Furniture 24,000 Motor vehicles 862,500 Accumulated Depreciation – Vehicle 165,000 Accounts payable 31,200 Accrued interest 4,500 Unearned revenue 33,390 Loan payable 283,000 David S., Capital 423,010 David S., Drawings 60,900 Car hire revenue 299,200 Wages expense 122,430 Fuel and oil expense 23,520 Electricity expense 15,000 Mis. Expenses 7,695 1,239,300 1,239,300 The entity prepares financial statements every month. The information below…Details
X Ltd produces a large number of products including the A and the B. The A is a complex product of which 2,000 are made and sold in each period. The B is a simple product of which 50,000 are made and sold in each period. The A requires one direct labour hour to produce and the B requires 0.6 direct labour hours to produce. X Ltd employs 24 salaried support staff and a direct labour force that works 800,000 direct labour hours per period. Overhead costs are £1,000,000 per period. The support staff are engaged in three activities – 12 staff engaged in receiving 50,000 consignments of components per period, Six staff engaged in receiving 20,000 consignments of raw materials…Details
May Limited manufactures expresso machines. Each machine has a wholesale price of £350. Variable costs of manufacture are £112 per machine. Because of increased competition, the sales director has reduced the level of sales that the company can realistically expect to make. The actual sales level in 2018 was 2650 machines, but the budget for 2019 is only 2150 machines. Fixed costs for the year are budgeted at £660 000.
- Calculate the total contribution that can be expected at a sales level of 2150 machines.
- Calculate the break-even point in units (to nearest whole unit).
- Calculate the break-even point in units if the selling price were to be increased by 15% (to nearest whole unit)
ABC Ltd acquires 100 per cent of RedCarpet Ltd on 1 July 2021. ABC Ltd pays the shareholders of RedCarpet Ltd the following consideration:
|Plant and equipment||fair value $125 000; carrying amount in the books of ABC Ltd $85 000|
|Land||fair value $150 000; carrying amount in the books of ABC Ltd $100 000|
There are also legal fees of $95 000 involved in acquiring RedCarpet Ltd.
On 1 July 2021 RedCarpet Ltd’s statement of financial position shows total assets of $300 000 and liabilities of $150 000. The fair value of the assets is $400 000.
Has any goodwill been acquired and, if so, how much?
An asset having a cost of $200 000 and accumulated depreciation of $40 000 is revalued to $240 000 at the beginning of the year. Depreciation for the year is based on the revalued amount and the remaining useful life of eight years. Shareholders’ equity, before adjusting for the above revaluation and subsequent depreciation, is as follows:
|Share capital||600 000|
|Revaluation surplus||90 000|
|Capital profits reserve||170 000|
|Retained earnings||140 000|
|Total||1 000 000|
Prepare journal entries to reflect the revaluation of the asset and the subsequent depreciation of the revalued asset. Which of the equity accounts would be affected directly or indirectly by the revaluation?
InvisiGuard Ltd sells security doors. Majority of its sales are on credit except small amount of cash sales each year. The accounting records at 30 June 2019 reveal the following. Ignore GST. Credit sales (for the year of 2019) $2,100,000 Cash sales (for the year of 2019) 20,000 Credit sales returns and allowances (for the year of 2019) 80,000 Accounts receivable (balance at 30 June 2019) 593,000 Allowance for doubtful debts (credit balance at 30 June 2019) 2,800 The company’s yearly bad debts expense had been estimated at 2.5% of net credit sales revenue in the past. The management of InvisiGuard Ltd has decided to compare the current method with an ageing of accounts receivable method. The following analysis…
Club York is located in the center of Sydney. In a major refurbishment, it purchased a new sound system and a new lighting system on 1 March 2019. The sound system cost $35,000 to purchase and $4,500 to install. The lighting system cost $55,000. The sound system has a useful life of 8 years and residual value $500. The lighting system has a useful life of 5 years and no residual value. Both are depreciated on a straight-line basis. Club York’s accounting period ends on 30 June each year. It has adopted straight-line method of depreciation. Required: What is the cost and the carrying value for the assets discussed above as at 30 June 2019? Would Club York’s profit be…
XY Ltd’s sells T-shirts. It uses the periodic inventory system. It’s inventory at the beginning of the month June and all purchases during the month of June 2019 are provided as below. Ignore GST.
|Units||Total cost ($)|
A physical count on 30 June verified that 975 units were on hand.
- Determine the Ending inventory and Cost of Sales for the month of June, using the FIFO costing method.
- If all inventories are sold in the same price of $50, prepare the relevant part of the income statement for the month of June.
The following information is produced by comparing the cash deposits and withdrawals recorded by the M&N Windows Ltd for the month with their most recent bank statement received at 30 June 2019: a. M&N Windows Ltd’ cash at bank ledger at 30 June 2019 is: $75,864 b. Credit balance as per bank statement as at 30 June 2019 is: $101,160 c. Bank statement shows an electronic transfer from a customer of $3,864 d. Deposits in transit, $12,540 e. Interest earned on bank account, $75 f. Unpresented cheques, $37,407 g. Service charge included in bank statement, $150 h. Cheque for insurance expense, $5,370 incorrectly recorded in books as $5,910 i. A dishonoured cheque written by a client Jim Smith, $3,900 The entity…
Jim’s Cleaning Services prepares financial statements at the end of each month. The following information is in relation to the month of July. 1. On 1 July, rent of $3,600 for the 6-month period ending 31 December is paid. 2. A 1-year insurance policy is purchased on 1 July for $1,560. 3. On 10 July, the Cross Hotel paid the business $2,800 in advance for doing their cleaning for the next 3 months. 30% of the cleaning work has been provided in the month of July. 4. The cleaning supplies of $2,340 was purchased on 15 July. The supplies account had a $260 debit balance on 1 July and $220 of supplies are on hand as at 31 July. 5. The…