ACCT6002 Accounting Fundamentals Assessment 2 Answer

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Question :

ASSESSMENT BRIEF
Subject Code and Name
ACCT6002 Accounting Fundamentals
Assessment
Assessment 2 - Case Study
Individual/Group
Individual
Length
(1,500 words +/- 10%)
Learning Outcomes

  1. Explain the accounting cycle and apply double entry accounting principles to process transactions.
  2. Differentiate between periodic and perpetual inventory systems and apply appropriate accounting procedures.
e) Prepare an accounting worksheet, Income Statement, Statement of Changes in Equity and Balance Sheet for sole proprietors and partnerships.
g) Interpret, understand and analyse financial statements for decision making, and communicate their significance to accounting and non-accounting professionals.

Context:

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.

Submission Instructions:

  • 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.

Date
Details

May-01
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.

May-15

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.

Required

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
Apr-01
Opening Inventory
170
$18

Apr-02
Purchase
110
22

Apr-06
Sale
160

42
Apr-09
Sale return
12

42
Apr-09
Purchase
78
26

Apr-10
Purchase return
18
26

Apr-10
Sale
52

48
Apr-23
Purchase
106
29

Apr-30
Sale
116

54


Required

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

Date
Unit number

Unit Cost

Total
Unit no

Issued Unit Cost

Total
Balance Unit number
Unit Cost

Total
Apr-01

























































































Total Cost of Sale: $ 

Ending Inventory: $ 

Gross Profit:$ 

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

Accounts Receivable
10,000

Inventory
19,600

Office Supplies
3,200

Prepaid Insurance
2,280

Motor Vehicle
20,000

Accumulated Depreciation – Motor Vehicle



6,000
Accounts Payable

1,050
Unearned Rent Revenue

6,600
Bank Loan

45,000
Rebecca Smith, Capital

31,780


Rebecca Smith, Drawings


6,000

Sales Revenue

60,950


Sales Returns and Allowances


2,900

Purchases
24,500

Purchases Returns and Allowances



2,500
Salaries Expenses
18,600

Rent expense
6,000

Interest Expense
1,800

Total
153,880
153,880

The following additional information was not considered while preparing unadjusted trial balance:

  1. The Sales Revenue account includes $1,300 for the services to be provided in July 2020.
  2. 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.
  3. The unused office supplies on hand totalled $1,280.
  4. Estimated depreciation on the motor vehicle is $2,000.
  5. Prepaid insurance is 1-year policy starting from 1st May 2020.
  6. Half of the unearned revenue has been earned.

Required

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.

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Answer :

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Rebecca's Retail Store
Worksheet as at 30 June 2020

Unadjusted Trial Balance
Adjustments
Adjusted Trial Balance
Account Name
Dr
Cr
Dr
Cr
Dr
Cr
Cash at Bank
39,000