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. (Everything 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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