Financial Accounting 1

1033516-42265500

2021 Sample Final Examination Information Booklet

Duration: 120 minutes + 60 minutes

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INFORMATION THAT MAY BE HELPFUL IN COMPLETING YOUR FINAL EXAMINATION.

The following pages provide information that you will need to refer to in order to answer specific questions in your final examination paper.

The Bare Necessities Store is owned by Moe Glee provides a variety of goods and services for outdoor adventurers. Below are a selection of transactions that occurred during October.

Oct 11Cash purchase of 24 pairs of Jungle Walker Boots for $39.95 a pair, plus a total GST of $96 from Amus Teriosman (Cheque Number 280). The average cost for these shoes before the purchase was $38 per pair.

Oct 16Purchased 20 pairs of Barely There Lightweight Pants from Baloos Emporium (Invoice Number 7092 and Order Number 99) for $57 a pair plus freight totalling $70 and total GST of $121.

Oct 17Sold 10 pairs of See All Binoculars for $155 a pair plus total GST of $155 to A. Kayla (invoice number 4301 and Order Number 73 on the usual terms). The current average cost for these items is $72 a pair.

Oct 19Paid $2740.10 (Cheque Number 281) to Kaas Khaki Warehouse to pay for invoice Number 4297. As payment was received within the discount period, Kaas allowed a discount amount of $174.90 which included GST of $15.90.

Oct 23Purchased 80 pairs of Gator beach shoes Gator Limited (Invoice Number 3341 and Order Number 165) for $23 a pair plus freight totalling $50 and total GST of $189.

Oct 27Paid $529 (Cheque Number 282) to Bags Here paying for Invoice Numbers 4293 and 4298.

Oct 27Paid $94 to Just in Case Limited (Cheque Number 283) representing insurance on the companys delivery truck for the months of June and July. There is no GST applicable to this transaction.

The Bare Necessities Store recently started selling a new travel shirt specifically designed to deter jungle bugs. Moe Glee has provided you with the following information to help track this new inventory. Each shirt sells for $36. The Bare Necessities Store began October with 40 shirts, with a total value $360.

DatePurchasesSales

October 25

November 40 @ $12.30 each

December 18

January20 @ $10.83 each

February 22

March 14 @ $9.80 each

April 26

At the end of May, a physical stock take reveals 19 shirts on hand.

Moe has asked for your assistance in reviewing his cash controls and has provided you with the following information:

The final balance on the Bank Statement for the month of September was $1444.99 Cr. Additional information that Moe located on the bank statement but had not yet recorded in the business journals included credit entries for a Direct Deposit (from customer Jasmine Rajah) of $750.00 and Interest earned of $18.96. In the debit column of the bank statement were Account keeping fees of $47.00 and a Dishonoured cheque (Iago Bird) for $185.42. Moe also noted that cheque # 842 for $927 had been incorrectly recorded in the Cash Payments Journal as $972.

A review of the Cash Receipts Journal showed a total in the Bank column of $16,565.20. This amount does not include any of the items listed above but did include cash receipts of $1785 for 30 September 2021 that were placed in the company safe overnight, and deposited the following day (1 October 2021).

A review of the Cash Payments Journal showed a total in the Bank column of $20,189.36. This amount does not include any of the items listed above but did include three cheques that did not show up on the bank statement, cheque # 864 for $70.00, cheque # 866 for $87.60, cheque # 870 for $127.59.

Cash at Bank

DATE Details Post Ref DEBIT CREDIT BALANCE

Sep 1 Opening Balance GJ 5987.42 5987.42 Dr

Moe has also been reviewing all the cash in his business and has noticed that his previous years profit is well above his cash inflows for the year, he would like to investigate this further and has provided you with the following accounting reports.

The Bare Necessities

INCOME STATEMENT

FOR THE YEAR ENDED JUNE 30

$ Net Sales 107,500 COGS 19,500 88,000

Other Revenue: Discount Received 2,200

Expenses: Operating Expenses 61,600 Doubtful Debts Expense 4,000 Depreciation Expenses 6,100 Interest Expense 10,500 82,200

Profit / Loss 8,000

The Bare Necessities

COMPARATIVE BALANCE SHEETS

AS AT JUNE 30

Current Previous

Current Assets Cash on Hand 200 400 Cash at Bank - 3,000 Accounts Receivable 7,200 7,300 Less Allowance 2,300 4,900 2,300 5,000

Inventory 12,000 5,200 Prepaid Expenses 1,750 18,850 900 14,500,

Non Current Assets Equipment 35,000 35,000 less Acc. Depreciation 6,600 28,400 5,500 29,500

Van 40,000 40,000 less Acc. Depreciation 35,000 5,000 30,000 10,000

Land 400,000 400,000

Total Assets 452,250 454,000,

Current Liabilities Bank Overdraft 4,200 - Accounts Payable 1,850 1,500 Accrued Expenses 800 6,850 900 2,400

Non Current Liabilities Loan 316,000 326,000

Total Liabilities 322,850 328,400

Net Assets 129,400 125,600

Shareholders' Equity Capital 120,000 120,000 Retained Profits 9,400 129,400, 5,600 125,600

Moe is also keen for you to review the methods The Bare Necessities Store uses when dealing with Accounts Receivable. You have spoken with the business Debtors Manager, Payne Oworelss and they have provided you with the following information.

On June 30, 2019, the Account Receivable balance for The Bare Necessities Store was $20,493 Dr. The company uses an Allowance for Doubtful Debts account, which had a balance of $3,500 Cr. For the year ended 30 June 2019, credit sales totalled $58,900 (net of GST) and sales returns equalled $1,160 (net of GST). Cash received from Debtors totalled of $44,128.70 and the discount expense for the period equalled $113.30 (including GST). Cash sales for the period were $2,277 (including GST).

Payne also informed you that despite his best efforts, Bad Debts totalling $3,190 (including GST) were written off during the year. He also provided you with the following ageing of the Account Receivables as at June 30, 2019.

Amount doubtful %

Accounts not yet due $12 100 0.5

Accounts overdue: 1-30 days 9 680 3.0

31-60 days 6 930 10.0

61-150 days 5 170 30.0

151 days and over 3 179 80.0

$37 059

Moe Glees business acquired a group of assets two years ago to help with expansion plans , but Moe would now like to review the use of some of those assets. Moes close friend Ana Maui Harrys has been helping out and started to record some details about the assets purchased but never quite completed the job.

Purchase Date Asset Name Depreciation Details Original Cost Expected Disposal Value

1/7/19 Inventory 15,000 1,500

Land 120,000 Off Road Truck 40% per annum 38,000 7,500

Parachute Training Simulator Maximum usage - 50,000 jumps 142,000 42,000

Notes:

Assets that are depreciated using the straight-line method are deemed to have a useful life of 10 years and residual value equal to 10% of their cost.

The Parachute Training Simulator performed 15,000 jumps in its first year of use.

All relevant depreciation has been recorded in the companys books up until June 30, 2020.

During the year ended 30/6/21, the following transactions took place:

On August 1 2020, Deep in the Jungle sold their Parachute Training Simulator. A local flying school agreed to purchase the machine for $150,000 cash. An additional 1,000 jumps had been done between July 2020 and the date of sale.

On January 1 2021, Deep in the Jungle traded in their Off Road Truck for an APC, a vehicle that will allow them to take a group of adventurers deeps into the jungle. Moe received a trade-in of $20,000 for the Truck and paid an additional $60,000 cash to purchase the APC. Ana has worked out the accumulated depreciation on the truck was $19,760 at the date of the trade-in.

On March 30 2021, Deep in the Jungle exchanged the land they had purchased for a Warehouse that could store their vehicles and equipment. The Warehouse was being advertised for $140,000. The land had a fair value of $117,000 at the time of the exchange.

Moe and Ana have decided to set up a partnership on the weekends that will allow them to indulge their other passion, teaching people to sing songs from movies, and have invited Alistair to join them.

The singing classes have proved to be quite a lucrative side business and fortunately the three were sensible enough to have drawn up a partnership agreement outlining how any profits will be distributed.

The agreement states that Ana will receive a $30,000 salary as she spends most of the time organising the lessons. Moe will receive a $20,000 salary but Alistair is often away so will only receive $5,000. In addition to this, to encourage one another to minimise their drawings from the business, interest of 10% will be paid on the capital balance of each partner at the end of the period. Any remaining profits will be split equally in thirds between the partners.

In the past 12 months, the store made a profit of $62,000 and the ending capital balances were:

Moe $50,000, Alistair, $28,000 and Ana $22,000.

END OF EXAMINATION INFORMATION

1033516-42265500

Financial Accounting 1

2021 Sample Final Examination Answer Booklet