ACCT6002 Accounting Fundamentals Assessment 2 Answer
|Subject Code and Name||ACCT6002 Accounting Fundamentals|
|Assessment||Assessment 2 - Case Study|
|Length||(1,500 words +/- 10%)|
g) Interpret, understand and analyse financial statements for decision making, and communicate their significance to accounting and non-accounting professionals.
The purpose of this assessment is to apply the conceptual and technical aspects of accounting and prepare relevant business financial statements. Students are expected to contenxtualise and evaluate accounting information presented in statements for decision making purposes. Each question uses realistic data and the professional practices similar to that found in workplaces.
- Students will work individually to prepare a response to ALL of the questions listed in the assessment.
- You must submit your assessment in one Excel file. Any submission in other file types will not be marked.
- The Excel file needs to be submitted through the submission link available on the Blackboard.
- Each question (including all sub-questions) should be presented in a single worksheet. As there are 5 questions in this assessment, your Excel file should contain 5 worksheets in total.
Question 1: Journal Entries
The Telescope Factory is a retail business that purchases telescopes from suppliers and sell them to customers at a higher price. The business is registered for GST and uses perpetual inventory system. The following transactions occurred during May 2020.
|Purchased 500 telescopes on credit for $385 each (including GST) from Optics Central, terms 5/15, n/30.|
|May-06||Sold 270 telescopes on credit to Astronomy Alive for $520 each plus GST; terms 5/10, n/30.|
|May-10||Received credit for the 8 damaged telescopes returned to Optics Central.|
|May-11||Paid Optics Central for the purchase of telescopes on 1st May.|
|May-13||Astronomy Alive returned 5 telescopes as they were defective. Credit|
was granted for returned products.
Received payment from Astronomy Alive for the sales 6th May.
The Telescope Factory's chart of accounts contained the following accounts: Cash at Bank, Inventory, Accounts Receivable, GST Receivable, Accounts Payable, GST Payable, Sales, Sales Return and Allowances, Discount Received, Discount Allowed, Cost of Sales.
Prepare journal entries for the above transactions for the month of May 2020 for The Telescope Factory.
Question 2: Calculation of Cost of Goods Sold
Mckern Corner Store is a retailer that uses perpetual inventory method. The business operates on a cash only basis. All sales returns from customers result in the goods being returned to inventory; the inventory is not damaged. You are provided with the following information for Mckern Corner Store. for the month of March 2020.
|Date||Description||Quantity||Unit Cost||Selling Price|
Using moving average cost flow assumption, calculate (i) cost of goods sold (ii) ending inventory, and (iii) gross profit. Use the template provided on the next page to answer this question.
|Purchases||Cost of Goods||Balance|
Issued Unit Cost
|Balance Unit number||Unit Cost|
Total Cost of Sale: $
Ending Inventory: $
Question 3: Preparation of Adjusted Trial Balance
Rebecca Smith operates a small retail store. The unadjusted trial balance of Rebecca's Retail Store is shown below.
Rebecca’s Retail Store Unadjusted Trial Balance As at 30th June 2020
|Account||Debit ($)||Credit ($)|
|Cash at Bank||39,000|
|Accumulated Depreciation – Motor Vehicle|
|Unearned Rent Revenue||6,600|
|Rebecca Smith, Capital||31,780|
Rebecca Smith, Drawings
Sales Returns and Allowances
|Purchases Returns and Allowances|
The following additional information was not considered while preparing unadjusted trial balance:
- The Sales Revenue account includes $1,300 for the services to be provided in July 2020.
- Interest on Bank Loan @ 6% per annum is payable half-yearly on 1st March and 1st September every year. The last interest payment made by the business was on 1st March 2020.
- The unused office supplies on hand totalled $1,280.
- Estimated depreciation on the motor vehicle is $2,000.
- Prepaid insurance is 1-year policy starting from 1st May 2020.
- Half of the unearned revenue has been earned.
Prepare adjusted trial balance using the template provided over the page.
Note: In addition to those accounts listed in unadjusted trial balance, the chart of accounts of Rebecca's Retail Store contains the following accounts: Interest Payable, Unearned Sales Revenue, Rent Revenue, Office Supplies Expense, Depreciation Expense, Insurance Expense.