Analyze how various transactions will affect the accounting equation, the balance sheet, and the income statement and communicate this to a range of stakeholders

Questions:

Learning Outcomes:

1.Analyze how various transactions will affect the accounting equation, the balance sheet, and the income statement and communicate this to a range of stakeholders;

2.Apply, analyze, synthesize and evaluate information from multiple sources to make decisions about the financial performance of entities including assets, liabilities, owner’s equity, revenue and expenses;

3.Employ information technologies to analyze transaction data and financial statement to facilitate data-driven decision-making;

4.Assess the impact of taxation and other liabilities, relevant legislation and industry codes of practice on business and define management strategies.

Week 1

Evaluate the statement “Accounting is all about numbers.”. Using the definition of accounting to justify your answer.

Week 2

Financial data for Safety Hire as of 30 June 2019 are:

Required:

Prepare an income statement for the month of June and a balance sheet in account format for Safety Hire as at 30 June 2019.

Week 3

On 1 July 2018 Nicole Andreou opened a beauty parlour. The following transactions occurred during the first month of operations (ignore GST).

Use the following account titles and numbers: Cash at Bank, 100; Accounts Receivable, 101; Supplies, 102; Equipment, 103; Loan Payable, 200; Nicole Andreou, Capital, 300; Nicole Andreou, Drawings, 301; Revenue, 400; Rent Expense, 500; Advertising Expense, 501; Insurance Expense, 502; Telephone Expense, 503.

Required:

a) Prepare the general journal entries to record the above transactions.

b) Post the entries from the general journal to the general ledger accounts (running balance format) and enter the posting references in the general journal.

c) Prepare a trial balance as at 31 July 2018.

Week 4

The financial year for Drip Dry Cleaning Services ends on 30 June. Using the following information, make the necessary adjusting entries at year-end. Ignore GST. Ignore Narration.

  1. On 15 February, Danielle Drip’s business borrowed $16 000 from Northern Bank at 8% interest. The principal and interest are payable on 15 August.
  2. Drip Dry Cleaning Services purchased a 1-year insurance policy on 1 March of the current year for $660. A 3-year policy was purchased on 1 November of the previous year for $2700. Both purchases were recorded by debiting Prepaid Insurance.
  3. The business has two part-time employees who each earn $220 a day. They both worked the last 3 days in June for which they have not yet been paid.
  4. On 1 June, the Highup Hotel paid the business $2100 in advance for doing their dry cleaning for the next 3 months. This was recorded by a credit to Unearned Dry Cleaning Revenue.
  5. The supplies account had a $280 debit balance on 1 July. Supplies of $1560 were purchased during the year and $190 of supplies are on hand as at 30 June.

Required:

Prepare the necessary adjusting entries at 30 June.

Date              Accounts              Ref    Debit     Credit

Week 5

The adjusted trial balance columns in the worksheet of Elliot Painting Services are as follows.

Elliot Painting Services

Worksheet (Partial)

for the year ended 30 June 2019

 

Adjusted trial balance

Income statement Balance sheet
Account

Debit

Credit

Debit Credit Debit Credit
Cash at Bank

1 230

         
Accounts Receivable

75 600

         
Prepaid Rent

1 800

         
Office Supplies

8 320

         
Equipment

160 000

         
Accum. Depr. Equip’t  

25 000

       
Accounts Payable  

54 000

       
Salaries Payable  

8 760

       
Unearned Revenue  

3 430

       
F. Elliot, Capital  

101 500

       
F. Elliot, Drawings

22 000

         
Painting Revenue  

219 650

       
Salaries Expense

106 000

         
Rent Expense

6 050

         
Depreciation Expense

8 040

         
Telephone Expense

4 020

         
Office Supplies Used

10 080

         
Sundry Expenses

9 200

         
 

$412 340

$412 340

       
Profit for the period            

Required:

a) Complete the worksheet.

b) Prepare the closing entries necessary at 30 June 2019, assuming that this date is the end of the entity’s accounting period.

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