Accounting
Task 1: (5 marks) (Word limit: 500 words) On 31 March, Padbury Publishers received a subscription of $480 for the supply of twelve monthly magazines, beginning in April. At the end of the reporting period, 30 June, the accountant suggested that the owner make an adjusting entry to defer the revenue on nine issues until the New Year. The owner of the business was reluctant to do so, claiming that he had already received the subscriptions in cash and could see no reason for the delay in recognising the revenue. Do you agree with the owner or the accountant? Respond to the owner, explaining the accountant’s position. Ignore GST. Task 2: (5 marks) (Word limit: 500 words) Recently, a new student of accounting was overheard making the following remarks: ‘Why are we learning how to use the double-entry system of recording in the accounting cycle? Surely there are good computer packages available these days which can handle all of these details.’ Provide a suitable reply. ACC 2000 Business Accounting 2 Trimester 2015 - ASSIGNMENT Page 3 of 5 Task 3: (30 marks) The unadjusted trial balance of Helena’s Hire Cars is shown below: HELENA'S HIRE CARS Unadjusted Trial Balance as at 30 June 2016 Debit Credit Cash at bank $7,330 Accounts receivable $11,580 GST receivable $1,350 Office supplies $580 Land $22,500 Hire cars $84,240 Accumulated depreciation – hire cars $35,460 Office equipment $5,580 Accumulated depreciation – office equipment $3,150 Accounts payable $9,720 Wages payable $6,950 Mortgage on Land $17,000 Unearned hire fees $2,040 GST payable $2,920 H. Savva, Capital $59,940 H. Savva, Drawings $18,540 Hire fees revenue $88,860 Bank charges $300 Interest expense $710 Utilities expense $440 Insurance expense $7,370 Wages expense $45,560 Advertising expense $3,500 Maintenance expense $6,840 Fuel and oil expense $9,620 $226,040 $226,040 ACC 2000 Business Accounting 2 Trimester 2015 - ASSIGNMENT Page 4 of 5 Additional information 1. Petrol purchased on credit for $780 plus GST of 10% and used during the last week in June has not been paid for or recorded. 2. A physical count showed office supplies totalling $240 were still on hand at 30 June. 3. Depreciation for 1 year on the hire cars is $12 400. Depreciation on the office equipment is $980. 4. The balance in the Advertising Expense account includes $600 prepayment (net of GST) for an advertising campaign beginning in July. 5. The balance in the Unearned Hire Fees account includes $1800 received in May for hire services completed in June. 6. The June insurance premium of $900 plus GST is overdue and has not been recorded. A tax invoice has not been received. 7. Wages earned but not paid amounted to $2150. Required A. Prepare the necessary adjusting entries. B. Prepare a 10-column worksheet for the year ended 30 June 2016. C. Prepare the income statement for the business for the year ended 30 June 2016. D. Prepare a statement of changes in equity for the year ended 30 June 2016. E. Prepare a balance sheet as at 30 June 2016. (7 + 6 + 6 + 5 + 6 = 30 marks)
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