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ACC222: The trial balance of KLZR Ltd - Financial Accounting Report Assignment Help
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Internal Code: 1IICE
Additional information:
Salaries of $104,000 are incurred for: $60,000 for selling and distribution purposes and $44,000 for administrative purposes.
Question 2
Topic 3: Accounting policies and other disclosures
UTAR Ltd is finalising its financial statements for the reporting period ending 30 June 2018. On 20 August 2018, before the financial statements have been finalised and authorised for issue, the company’s directors become aware of the following situations:
Question 3
Topic 4: Accounting for equity
Tara Ltd was incorporated on 1 July 2017. The following transactions and events occurred during the year ended 30 June 2018:
Required:
Prepare the journal entries necessary to account for the above transactions and events. Show all relevant dates and brief narrations.
Question 4
Topic 5: Revaluation of assets
Companion Ltd acquires an item of machinery on 1 July 2016 for $190,000. The useful life and residual value of this machinery is estimated to be six years and $10,000 respectively. The directors elect to depreciate machinery on a straight-line basis.
On 30 June 2017, Companion Ltd adopts the revaluation model for machinery. On this date, the directors determine that the fair value of this machinery is $150,000. As at 30 June 2017, this machinery is expected to have a remaining useful life of five years, and the estimated residual value is revised from $10,000 to $6,000.
On 30 June 2018, the directors determine that the fair value of this machinery is $140,000. As at 30 June 2018, this machinery is expected to have a remaining useful life of four years, and the estimated residual value remains unchanged at $6,000
Ignore any tax effect.
Required:
Prepare the necessary journal entries to account for the item of machinery (including entries for acquisition, depreciation and all revaluation entries) for the period 1 July 2016 to 30 June 2018. Show all relevant workings.
Financial Accounting Report Assignment Help
Task: Question 1 Topic 2: Presentation of financial statements The trial balance of KLZR Ltd for the year ended 30 June 2018 is presented below:| Debit | Credit | |
| $ | $ | |
| Sales revenue | 997,000 | |
| Dividend revenue | 7,000 | |
| Interest revenue | 3,000 | |
| Cost of sales | 355,000 | |
| Impairment loss – goodwill | 5,000 | |
| Auditor remuneration | 36,000 | |
| Depreciation – motor vehicles | 45,000 | |
| Depreciation – plant and equipment | 46,000 | |
| Doubtful debts | 8,000 | |
| Interest expense | 32,000 | |
| Office expenses | 92,000 | |
| Rental expenses | 15,000 | |
| Salaries | 104,000 | |
| Selling expenses | 97,000 | |
| Bad debt recovered | 26,000 | |
| Loss on destruction of building | 42,000 | |
| Income tax expenses | 61,000 | |
| Cash on hand | 13,000 | |
| Inventories | 298,000 | |
| Receivables | 192,000 | |
| Provision for doubtful debts | 12,000 | |
| Bank deposits | 40,000 | |
| Deferred tax assets | 24,000 | |
| Franchises (cost) | 95,000 | |
| Goodwill | 100,000 | |
| Accumulated impairment losses – goodwill | 20,000 | |
| Motor vehicles | 150,000 | |
| Accumulated depreciation – motor vehicles | 50,000 | |
| Plant and equipment | 460,000 | |
| Accumulated depreciation – plant and equipment | 147,000 | |
| Shares in listed companies (cost) | 62,000 | |
| Accounts payable | 102,000 | |
| Bank loan | 100,000 | |
| Bank overdraft | 35,000 | |
| Current tax liabilities | 59,000 | |
| Deferred tax liabilities | 24,000 | |
| Unsecured notes | 150,000 | |
| Paid up capital (400,000 ordinary shares) | 400,000 | |
| General reserve 1 July 2017 | 15,000 | |
| Retained earnings 1 July 2017 | 225,000 | |
| 2,372,000 | 2,372,000 |
- Auditor remuneration includes $16,000 in fees for management consulting services.
- The franchises currently valued at cost of $95,000, were revalued to fair value of $115,000. Assume a tax rate of 30%.
- The directors have declared a dividends of $65,000.
- The directors have proposed a transfer from retained earnings to a general reserve of $25,000.
- The depreciation expenses for the relevant assets are used for selling and distribution and administrative purposes, as detailed below:
| Selling and distribution | Administrative | |
| $ | $ | |
| For motor vehicle | 25,000 | 20,000 |
| For plant and equipment | 36,000 | 10,000 |
- The rental expenses are for administrative purposes.
- KLZR Ltd uses the single statement format for the statement of profit or loss and other comprehensive income and classifies expenses by function within the statement.
| Question 1 | Max. marks allocated |
| SPLOCI | 5 |
| SCE | 4.5 |
| Workings/explanation | 8 |
| Overall presentation | 1.5 |
| Total | 19 |
- The company holds shares in a public listed company, Binnie Ltd. The shares were valued at their market value at reporting date of $200,000. A major fall in the share market occurred on 12 August 2018, and the value of UTAR Ltd’s shareholding in Binnie Ltd declined to $150,000.
- One of the company’s major debtors, Fancy Ltd, filed for bankcruptcy on 10 August 2018. UTAR Ltd’s financial statements have been prepared reflecting a 50% doubtful debts provision for this account, with the carrying amount of this debtor stated at $400,000 ($800,000 less provision for doubtful debts of $400,000). It appears, at 10 August 2018, that no amount will be recovered from Fancy Ltd’s liquidator in respect of this account.
- On 30 June 2018, UTAR Ltd had a United States dollar loan outstanding (non-current liability) amount of US$200,000. Given the exchange rate at reporting date of A$1.00 = US$0.91, the load is stated in UTAR Ltd’s statement of financial position at a value of $219,780. A major fall in the value of the Australian dollar occurred on 13 August 2018, such that the exchange rate fell to A$1.00 = US$0.87. The Australian dollar equivalent of the United State dollar loan therefore rose to A$229,885.
- On 18 July 2018, it is discovered that a divisional manager has been under-depreciating plant and equipment. The motivation of the manager was to maximise the division’s profit figure in order to maximise his bonuses. The carrying amount of the relevant plant and equipment in UTAR Ltd’s financial statement is $1,500,000. An investigation by the company’s internal audit division, presented to UTAR Ltd’s directors on 15 August 2018, suggests that the plant and equipment has a recoverable amount of $1,150,000.
- Classify the events as either an adjusting or non-adjusting event after the end of the reporting period. Justify your classification and make reference to relevant authority when appropriate.
- Base on your answer to 1 above, prepare the necessary journal entries or note disclosures to comply with the requirements of AASB110.
| Question 2 | Max. marks allocated |
| Event (1) | 4 |
| Event (2) | 4 |
| Event (3) | 4 |
| Event (4) | 4 |
| Total | 16 |
| 1 Aug 2017 | Tara Ltd makes an offer to the public for investors to subscribe for 5,000,000 shares, at an issue price of $6.00 per share, with $3.00 payable on application, $2.00 payable within one month of allotment, and $1.00 payable on a call to be made at a later date. |
| 30 Sep 2017 | Applications close, with applications received for 5,200,000 shares. |
| 10 Oct 2017 | Shares are allotted on a first-come first-served basis, and application money is refunded to unsuccessful applicants. |
| 10 Nov 2017 | All allotment money is received. |
| 1 Feb 2018 | The call is made, with money due by 28 February 2018. |
| 28 Feb 2018 | All call money is received except for holders of 100,000 shares who fail to meet the call. |
| 14 Mar 2018 | The shares on which call money was not received are forfeited and sold as fully paid. An amount of $5.30 is received for each share sold. The balance in the forfeited shares account after reissue is returned to former shareholders. |
| Question 3 | Max. marks allocated |
| Journal entries | 11 |
| Dates | 2 |
| Narration | 2 |
| Total | 15 |