ACCT6002 Accounting Fundamentals Assessment 2 Answer

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	Explain the accounting cycle and apply double entry accounting principles to process transactions. 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:

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.

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.

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

ACCT6002 Accounting Fundamentals Assessment 2 Answer

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