ACC106 ATMC Task 2 Assignment Business Scenario and Instructions   1         Magic Mufflers  - Business Background   Introduction Magic Mufflers is a proprietorship of Mr Innis Hornet who established this new business on 1st June 2017. Magic Mufflers is a GST-registered muffler and exhaust business that specialises in a small range of high-performance mufflers and exhaust systems. The business sources its products from a number of suppliers and trade expos, and sells to car enthusiasts.   The business currently sells three types of mufflers: Sports SP, Retro RR, and Racer CC: Innis Hornet, sole proprietor, has established a reputable and growing business with and has employed four staff members. Being an astute businessperson, Innis is using Microsoft EXCEL software to maintain…

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This questions has two parts (Q 2.1 and Q 2.2), each part has sub parts and attempts to address various aspects related to budgeting. Please read the instructions carefully and answer each part.   Q2.1: (Maximum Marks = 15)   The following data has been estimated for Hamilton Limited, who commenced the business on January 1, 2018.   Estimated Sales: January $ 60,000 February $ 55, 000 Cash sales are estimated to be 30% of the total sales   Debtors are expected to pay: 40% in the month of sale 60% in the month after sales   Estimated purchases: January $ 35,000 February $ 39,000   All purchases are to be on credit and are to be paid for in the…

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(37 marks) Question 1: On 1 July 2016, Sisters Ltd acquired all of the issued shares of Brothers Ltd for $950 000.  At the acquisition date the equity of Brothers Ltd consisted of: Share capital $600 000 Reserves   120 000 Retained earnings   150 000 At the date of acquisition this equity reflected the fair values of all the identifiable assets and liabilities of Brothers Ltd. The following transaction occurred between the two entities during the financial year: On 1 July 2016 Brothers Ltd sold a motor vehicle to Sisters Ltd for $900 000. The motor vehicle had cost Brothers Ltd $1 500 000. It had been used for 5 years and had a carrying amount of $800 000 on…

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Sewing Easy Ltd has been in business for two years manufacturing sewing machines. It currently manufactures two models, the basic and advance. Last year, 2017 they made good profit and they were happy their business is running well. They are about to enter a new phase in their business, selling to an overseas buyer. However, they are a bit confused as to why the buyer is only interested to buy the advance model and not the basic or both. For product costing purposes the business uses the traditional costing system and machine hours to assign indirect cost to the sewing machines as they are fairly new in business and don’t want to spend too much money to implement a more refined…

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QUESTION 1. [6 + 4 + 6 = 16 Marks.]   a) This is a two period certainty model problem. Assume that Daisy Brown has a sole income from Fantasy Ltd in which she owns 15% of the ordinary share capital. Currently, she has no savings. In February, 2018, Fantasy Ltd reported net profits after tax of $600,000, and announced it expects net profits after tax for the current calendar year, 2018, to be 30% higher than last year’s figure. The company operates with a dividend payout ratio of 75%, which it plans to continue, and will pay the annual dividend for 2017 in late-May, 2018, and the dividend for 2018 in late-May, 2019. In late-May, 2019, Daisy wishes to spend…

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Question 1 (30 Marks)   The accounting profit before tax of Jameson Ltd for the year ended 30 June 2018 was $320,000. It included the following revenue and expense items:   Amortisation of development costs $30,000 Employee benefits expense 54,000 Carrying amount of plant sold 36,667 Depreciation expense - plant (15%) 40,000 Doubtful debts expense 12,000 Entertainment expense 14,220 Fines and penalties 7,200 Goodwill impairment 1,000 Insurance expense 24,000 Legal fees 4,200 Proceeds on sale of plant 30,000 Rent revenue 25,000 Royalty revenue (non-assessable) 3,500 Restructuring expenses 25,000   The draft statement of financial position as at 30 June 2018 included the following assets and liabilities: 2018 2017 Assets Cash 42,000 57,000 Accounts receivable 190,000 160,000 Allowance for doubtful debts (26,000)…

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Task 3: Department Variance Analysis                                                                                                   15 marks This task requires you to identify potential causes for variances in the operational profitability of the hotel’s banquets department. You are given an extract of the department’s financial performance report and also budget information (see blow). The report focuses on the aspects of performance that show the largest deviations from the budget: Sales revenues for banquet meals Costs relating to the one complimentary welcome drink served with each meal Costs relating to the major ingredient of the main course: Wagyu beef Kitchen labour costs* *Note: The majority of preparation time is spent on preparing and cooking the main ingredient, the Wagyu steak. At first glance it appears the sales revenue show…

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Hahndorf Ltd acquired 100% of the shares of Sarina Ltd on 1 July 2015 for $700,000, when the equity of Sarina Ltd consisted of: Share Capital                                  $500,000 General Reserve                                 80,000 Retained Earnings                             30,000 All identifiable assets and liabilities of Sarina Ltd were fairly valued at acquisition except the machinery, which had a fair value of $140,000. The machinery had a further 7-year life with depreciation based on the straight-line method. Selected financial information for both companies at 30 June 2018 is as follows:                                                                                         Hahndorf Ltd       Sarina Ltd Sales revenue                                                                   $1,000,000       $800,000 Cost of sales                                                                           (600,000)     (600,000) Gross profit                                                                               400,000         200,000 Dividend received from Sarina Ltd                                        30,000              - Management fee received                                                       26,500              - Gain on sale of…

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Question 1 a). *Your grandfather put some money in an account for you on the day you were born. You are now 18 years old and are allowed to withdraw the money for the first time. The account currently has $3996 in it and pays a 5% interest rate. How much money would be in the account if you left the money there until your 25th birthday? What if you left the money until your 65th birthday? How much money did your grandfather originally put in the account? (1 X 3 = 3 Marks) Question 2 Consider the following alternatives: $100 received in one year; $200 received in five years; $300 received in 10 years. Rank the alternatives from most valuable…

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