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This assessment consists of six (6) questions and is designed to assess your level of knowledge of the key topics covered in this unit.
Question 1 ( 7 marks)
Assume at 30 June 2020, Assets, Liability, Equity, Income and Expense amounts for ABC Building Renovation are presented below:
Required:
Prepare a Balance Sheet in narrative (vertical) format as at 30 June 2020.
Question 2 (7 marks)
PM Consultants operates a number of Consultancy firms (Perth and Adelaide). The following information is relating to a number of accounts presented in the Trial Balance of PM Consultants (post adjustments) for the year ending 30th June 2020.
Accounts | $ |
Accounts payable | 85 000 |
Telephone expense | 35 000 |
Service revenue | 750 000 |
Buildings | 650 000 |
Office equipment | 18 000 |
Cash at Bank | 71 020 |
Advertising expense | 28 000 |
Accounts receivable | 108 000 |
Salaries & Wages | 200 500 |
Mortgage payable | 900 000 |
Office supplies | 38 000 |
Capital | 400 000 |
Office materials expense | 137 565 |
Drawings | 67 500 |
Land | 360 000 |
Rent expense | 65 350 |
Utilities (gas/water, etc.) | 39 500 |
Required:
- From the information provided, prepare the Income Statement for PM Consultants (5 marks)
- In your own words discuss the difference between profit or loss and comprehensive income. (2 marks)
(Number of words limit 100 – 150)
Question 3 (11 marks)
The following information about Melbourne Corp. applies to the entity for the year ended 30 June.
|
|
Payment to suppliers | 170 000 |
Receipts from owners | 399 000 |
Receipts from long-term borrowing | 365 000 |
Payment of rates | 150 000 |
Payment of wages | 130 000 |
Purchase of land | 120 000 |
Repayment of long-term borrowing | 185 000 |
Receipts from customers | 620 000 |
Payment for equipment | 200 000 |
Depreciation on equipment | 110 000 |
Required:
- a)What was Melbourne Corp.’s cash flow from the following activities? (8 marks)
- Operating activities
- Investing activities
- Financing activities
- b)In your own words, outline and briefly discuss some cash-flow warning signals. (3 marks
Question 4 (11 marks)
XYZ Co Ltd had the following comparative current assets and current liabilities:
30 June 2020 30 June 2019
Current assets
Cash $ 30,000 $ 30,000
Marketable securities 40,000 10,000
Accounts receivable 55,000 95,000
Inventory 110,000 90,000
Prepaid expenses 35,000 20,000
Total current assets $270,000 $245,000
Current liabilities
Accounts payable $120,000 $110,000
Salaries payable 40,000 30,000
Income tax payable 20,000 15,000
Total current liabilities $180,000 $155,000
During 2020, credit sales and cost of goods sold were $450,000 and $250,000,
respectively. Net cash provided by operating activities for 2020 was $134,000
Required:
- a)Calculate the following financial ratios for XYZ Ltd for the year of 30 June 2020 (7marks)
- Current ratio
- Quick ratio
- Receivables turnover
- b)In your own words and with reference to cash sufficiency ratios, discuss the role(s) that an entity’s cash flow data can play in analysing the entity’s financial performance (4 marks)
Question 5 (7 marks)
Journalise the following business transactions in general journal form. Identify each transaction by number.
- Received $35,000 from shareholders.
- Purchased equipment for $45,000, paying $15,000 in cash and giving a promissory note payable for the remainder.
- Paid $3,000 rent for the month.
- Recorded $12,500 of services provided on account.
- Paid wages of $7,500.
- Received $7,000 in cash for services provided.
- Collected $2,000 from customers on account
Question 6 (7 marks)
Because master budgets for service organisations are more straightforward than those for manufacturing entities, it is not as important to budget for service organisations.
Required
In your own words, discuss the above statement.
(Number of words limit 100-150)
Submission instructions:
- Save submission with your STUDENT ID NUMBER and UNIT CODE e.g. EMV54897 HC1010
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