Question 1: Perpetual Inventory System with Returns During the year ended 30 June 2014, TooBakko Ltd sold each unit of its goods at $9. Purchases and sales of the goods are shown below. Ignore GST. 2013 July 1 Inventory on hand 200 units@ $5.00 each   30 Sales 120 units Aug. 25 Purchases 300 @ $5.25   30 Sales 250 units Sept. 3 Purchases 450 units @ $5.30   10 Purchases returns 50 damaged units from 3 September purchase   30 Sales 300 units Oct. 5 Purchases 300 units @ $5.40 Dec. 8 Purchases 250 units at $5.45 2014 11 Sales 500 units Feb. 21 Purchases 150 units @ $5.50 Marc 18 Purchases 100 units at $5.60 April 30 Sales 300…

Depreciation of Machinery In early July 2013 Admirable Ltd is considering the acquisition of some machinery for $1200 000 plus GST to be used in the manufacture of a new product. The machinery has a useful life of 10 years, during which management plans to produce 500 000 units of the new product. The residual value of the machinery is $100 000. The following projections were made in order to select a depreciation method to be used for the machinery: Year ended 30 June Units of output Repairs  and maintenance Profit  before depreciation 2014 2015 50 000 45000 $ 70000 60000 $350000 340000 2016 55000 90000 355000 2017 58000 95000 360000 2018 60 000 100000 380000 In calculating  the  profit  before …

Assume todays is 31 Oct 2018. James Banister, a computer software consultant, visited you, a financial advisor, to seek some suggestions and clarification with regards to his personal finance and financial markets. Question 1 (8 marks)   James plans to set up some savings for the higher education of his son, Jeffrey, who just celebrates his 12th birthday today. Suppose Jeffrey will enroll in a 4-year bachelor course on his 19th birthday and the first-year tuition will be due on the same day. The remaining three tuitions will be paid on his 20th, 21st and 22nd birthdays.   As of FY 2018/19, university tuition is, on average, $20,000 per annum (p.a.) as of FY 2018/19 and will grow by 2% p.a.,…

On The Beach manufactures swimwear and accessories for men and women.  They operate out of rented premises in Currumbin Creek Road where the factory is split into a manufacturing and storage area and a retail space. The business produces 4 products: One-piece swimsuits for women Board shorts for men Beach Towels Beach Bags   You, as the management accountant for the firm, have been asked to prepare a range of budgets for the 2019 year.  The following information has been gathered: Expected sales volume (number of units) to be sold during 2019: Sales One-piece Board shorts Towels Beach Bags January 2019 1,800 1,600 200 400 February 2019 1,400 1,100 180 300 March 2019 1,300 1,160 160 260 April 2019 1,000 1,000…

Pinto Limited has recently been subject to significant competition from overseas manufacturers with much lower costs.  To combat this, Pinto is considering a project that will see it move into a new product market considered riskier than its current operations.  The CEO has asked you to undertake a financial analysis of the proposed project using the details presented below and outline your recommendations in a short report.  As part of your financial analysis you will calculate NPV, IRR, payback period, discounted payback period and profitability index.   The project requires an upfront investment in plant and equipment of $15 million, which will be depreciated on a straight-line basis over the five-year life of the project.  The equipment is not expected to…

As a business advisor, your client James Romano operates a strawberry farm in the Dandenong mountains east of Melbourne and seeks your assistance in compiling monthly budgets for the 2020 financial year. He starts the year with $400,000 in the business bank account.   About the Strawberry Industry Strawberries are grown in Queensland during the winter months, and in Victoria during the summer. Australian consumers can enjoy domestically grown produce all year round, even though strawberries are seasonal.   Victorian growers can harvest strawberries for eight months of the year, with the vast majority available during the summer months. James estimates the following distribution of sales:   Distribution of sales Sep               Oct               Nov               Dec               Jan                Feb…

Everything Umbrella Inc. is considering producing a new type of umbrella. This new pocket-sized umbrella would fit into a coat pocket or purse. Prepare a table with three columns to include the following information: Classify the costs of this new product as direct materials, direct labor, manufacturing overhead, selling, or administrative. Classify the costs listed as either product costs or period costs. List of expenses incurred by Everything Umbrella Inc. Cost of advertising the product. Fabric used to make the umbrellas. Maintenance of cutting machines used to cut the umbrella fabric so it will fit the umbrella frame. Wages of workers who assemble the product. President’s salary. The salary of the supervisor of the people who assemble the product. Wages of…

Alba Ltd hires out equipment and furniture for parties. The unadjusted trial balance of the business appears as shown below.   ALBA LTD Unadjusted Trial Balance as at 30 June 2018   Account Debit Credit Cash at bank Accounts receivable GST receivable Prepaid insurance Party equipment Accumulated depreciation –          party equipment Furniture Accumulated depreciation – furniture Accounts payable GST payable E. Johns, Capital E. Johns, Drawings Hire fees revenue Salaries expense Rent expense Maintenance expense Electricity expense $ 5 200 2  400 3  300 1 200 31 400   47 300         18 310   26 500 5 700 3 100  1 400           $           17 600  …

Consolidated financial statements, rationale for adjustments Lead beaters Ltd acquired all the issued shares (cum div.) of Possum Ltd on 1 July 2014. At this date the shareholders’ equity of Possum Ltd was: Share capital – 100 000 shares General reserve Asset revaluation surplus Retained earnings $ 450 000 45 000 45 000 15 000   At 1 July 2014, the accounting records of Possum Ltd contained a dividend payable of $15 000. This dividend was paid in August 2014. All the identifiable assets and liabilities at acquisition date were recorded at amounts equal to their fair values except for:   Carrying amount         Fair value Plant (cost $290 000) $220 000 $227 500 Inventory 160 000 175 000   The plant was considered to have a further 4-year life. It was sold on…