Company Accounting (ACC20013)
Assignment 1: Annual Reports
Paradise Ltd is involved in the computer services industry. Rental vehicles are used for delivery and service of computers. The company’s head office, which houses its administrative staff, is located on a prime piece of real estate in the local township. The following unadjusted trial balance is for the year ended 30 June 2017:

Paradise LTD
Unadjusted Trial Balance
as at 30 June 2017
Debit Credit
Bank overdraft            178,050
Vehicle rental expenses              72,000
Cash at bank                 7,500
Investment in government bonds            150,000
Goodwill              24,000
Interest revenue                 4,800
Insurance expense                 3,000
Land            230,000
Buildings         1,000,000
Office furniture and equipment            127,000
Retained earnings (1/7/16)              83,000
Revaluation surplus              15,000
Accumulated depreciation – office furniture and equipment              23,000
Accumulated depreciation – buildings            100,000
Allowance for doubtful debts              14,700
Cost of sales            197,400
Advertising expense              12,300
Sales returns and allowances                 8,700
Sales            478,120
Mortgage payable              90,000
Inventory            106,000
Share capital (called to $1 per share)         1,140,000
General reserve              18,000
Interest expense on overdraft              11,300
Discount received              11,250
Discount allowed              12,000
Fees revenue              17,900
Proceeds on sale of furniture              13,000
Carrying amount of furniture sold                 5,000
Accounts payable            133,900
Accounts receivable            225,400
Salaries of sales staff              60,000
Administrative wages              68,620
Calls in arrears (25c per share)                 2,000
Calls in advance (25c per share)                 6,000
Interest expense on mortgage                 4,500
        2,326,720         2,326,720

 

Additional information:
The following adjustments are required before preparation of Paradise Ltd’s financial statements for the year:
(i) Depreciation to be provided on a straight-line basis on buildings at 5% p.a. and on office furniture and equipment at 10% p.a. The sale of office furniture occurred at the beginning of the current financial year.
(ii) Goodwill is considered not to be impaired.
(iii) Management was informed that a particular debtor had become bankrupt and the full account of $12 000 needs to be written off.
(iv) The Allowance for Doubtful Debts account needs to be adjusted to 8% of accounts receivable, after considering the adjustment in item iii above.
(v) Current income tax expense (and tax liability) for the year is estimated to be $8000.
(vi) Accrued wages to staff: sales $1500, administrative $2000.
(vii) Vehicle rental paid in advance at 30 June 2017 amounted to $30 000.
(viii) Shares with calls in arrears are to be forfeited, any reserve being retained by the company.
(ix) A dividend of 3c per share is declared on shares remaining after considering item viii.
(x) Land is to be revalued upwards to its fair value of $250 000.
(xi) Transfer $10 000 from the general reserve to retained earnings.

Required
In preparing the financial statements for this assignment, you are advised to comply with AASB standards and the requirements in the Australian Corporations Legislation when determining the structure and presentation requirements for the financial reports.

A. Prepare the journal entries required by items i to xi above. (15 marks)
B. Prepare the adjusted trial balance as at 30 June 2017. (15 marks)
C. Prepare the statement of profit or loss and other comprehensive income (30 marks)
with expenses classified by function for the year ended 30 June 2017.
(E
verything required to be presented on the face of the financial statements, no notes required)
D. Prepare the statement of change in equity for the year ended 30 June 2017.
(10 marks)
E. Prepare the company’s statement of financial position as at 30 June 2017. (30 marks)

Instructions:
This assignment will refresh your accounting knowledge and helpful for the better understanding company accounting unit. You MUST complete and submit this assignment individually. Academic staff member will make the assignment out of 100 and convert your marks out of 10.

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