Manual Assignment

This assessment consists of 2 parts:

Part 1.

The business has the following opening balances: Additional Information:

  • Cash At Bank $16,611 Bank loan interest rates (% per year) 8
  • Account Receivable $16,248 Motor vehicle useful life (years) 3
  • Motor Vehicle $30,316 Motor vehicle scrap value ($) 3,380
  • Account Payable $8,787 Insurance paid for (months) 2
  • Bank Loan (due 2022) $24,973 Rent paid for (months) 3
  • Furniture $22,514 Furniture useful life (years) 2
  • Promotional Material Supplies $579 Furniture scrap value ($) 0
  • Capital ? Closing stock of promotional materials 30/6 ($)
  • Staff work a 14 day fortnight and are paid on the 15th day. 961

Transactions:

Date Description Amount Date Description Amount

  • 1-Jun Paid General Insurance $2,622 2-Jun Advertising placement fees – Cash $808
  • 3-Jun Rent of Business Premises $4,193 3-Jun Sundry Expenses $421
  • 4-Jun Purchase promotional materials $917 5-Jun Payment to Account Payable $1,184
  • 5-Jun Auction commission – Account $798 5-Jun Auction commission – Account $1,034
  • 7-Jun Advertising Expense – Cash $688 8-Jun Rental commission – Cash $1,845
  • 10-Jun Receive Payment from Account Customers $1,788 10-Jun Cash Withdrawals by Owner $1,060
  • 11-Jun Rental commission – Account $1,431 12-Jun Payment to Account Payable $596
  • 14-Jun Rental commission – Cash $1,990 15-Jun Staff Wages $2,030
  • 16-Jun Advertising placement fees – Cash $888 17-Jun Rental commission – Account $1,452
  • 18-Jun Auction commission – Cash $1,722 19-Jun Advertising placement fees – Account $851
  • 20-Jun Auction commission – Cash $1,787 20-Jun Motor Vehicle Expenses $308
  • 24-Jun Advertising placement fees – Account $1,155 25-Jun Additional cash contributed by owner $3,643
  • 28-Jun Advertising Expense – Account $1,335 28-Jun Receive Payment from Account Customers $1,346
  • 29-Jun Staff Wages $2,030

Assume that this assignment involves an existing business that was purchased by the new owner on 1 June 2019.

Note the list of transactions is in date order, left to right, line by line.

Use three separate ledger accounts for revenue, namely rental commission, auction commission and advertisement placement fees. All revenues relate to the month of June.

Transactions involve cash unless specified as ‘Account’.

Record payments for rent and insurance in prepaid accounts initially.

Information relevant to complete adjusting entries can be found in the top right section of this page.

The periods to which the rent and insurance apply commence on 1 June.

Round your calculations to the nearest dollar.

Using the unique series of business transactions (data) students are required to:

Manually record the transactions through the general journal and general ledger, prepare balance day adjustments, closing entries, financial statements, and a worksheet.

Part 2. Qualitative component (5%) – approximately 250-300 words

Based on your work in Part 1 (Excel component), explain how the accrual accounting concept provides guidance to accountants in preparing the income statement and calculating profits. In your answer, include a discussion of the role of adjusting entries in accrual accounting. To this end, you need to explain your answer using TWO examples based on your work in Part 1 (Excel component).

The qualitative component will be marked based on both i) the quality of the content and ii) the quality of written expression (e.g., spelling, grammar, and appropriate tone).

Note: In order to perform well in this task, you need to ensure that your discussion is specifically related to your work in Part 1 (rather than merely providing a general discussion).