ACFI2011 - Blair Farai Case Study - Accounting & Finance Assignment Help

Assignment Task

PART A
Your friend Blair Farai has $500,000 of savings and would like to invest in Qantas group. She is aware that you are doing a business degree and have done several accounting courses at the University of Newcastle. She is not familiar with financial statements and is unsure where to find relevant financial information to assist her investment decision.
She is asking you to help her with her investment decision. She has asked you to prepare a brief report on the company's economic sustainability based on Qantas' 2020 financial statements.

Required:
Summarised the Qantas business activities. (Hint: you can find it at Qantas's website).
Download the 2020 annual report of Qantas Group Limited (Hint: you can find it at Qantas's website). Review Qantas' financial statements (income statement, balance sheet, statement of changes in equity, cash flow and note to the financial statements). Write a brief report on Qantas' economic sustainability based on 2020 financial statements and provide your investment recommendation to your friend.
(NOTE: Although there are so many factors you may consider before making an invesemtn decision, Your assessment here needs to be solely based on the company's financial statements. No current and future assumptions are necessary.)

PART B (Preparation of Financial Statements)
Sydney Ltd, commenced retail operations on 1 July 2019 by issuing 1,000,000 shares at @ $1.00 per share, payable in full on application. Company sales designer's leather bags to customers. There were no share issue costs. For the year ending 30 June 2021, the company recorded the following balances:
Sales revenue $1,350,000 (Sales price: $1,500 each bag)
Gain from trading securities $20,000
Cost of sales: need to be calculated (Cost: $1,000 each bag)
Wages and salaries (administrative) $80,000
Wages and salaries (selling) $100,000
Office Rent $20,000
Advertising and distribution expense $10,000
Utility bills $4,000
Sales commission expense (sales employee) $28,000
Bad debt expense $8,000
Depreciation expense – Furniture? (need to be calculated)
Depreciation expense – Building? (need to be calculated)
Interest expense $40,000
Bank charge $10,000
Income tax expense $46,000
Summarised account balances for the equity section at the end of the prior financial year (i.e., 2020) are provided below:
Year-end balances, 30 June 2020 $
Share Capital, 30 June 2020 1,000,000
Retained earnings, 30 June 2020 95,000

In the current year-
Additional shares were issued and fully paid on the following dates during the 2021 financial year:
1 Jan 2021: 40 000 ordinary shares issued/fully paid @ $2.50
1 April 2021: 60 000 ordinary shares issued/fully paid @ $3.00
A cash dividend of $22 000 was declared and paid during the 2021 financial year.
Balance of other relevant accounts of the Sydney Ltd For the year ending 30 June 2021 are provided below:
Accounts $
Cash on hand 75,000
Cash on deposit, at call 60,000
Trade debtors 1,620,000
Allowance for doubtful debts 40 ,000
Other debtors 850,000
Inventory 200,000
Trading securities 25,000
Land 125,000
Buildings 500,000
Accumulated depreciation – buildings* ?
Furniture 200,000
Accumulated depreciation – Furniture * ?
Patents 180,000
Amortisation of patent 55,000
Bank loans 553,000
Other loans 300,000
Trade creditors 1,200,000
Provision for employee benefits 50,000
Warranty provision 45,000
Current tax payable 40,000
Deferred tax liability 35,000

Additional information
The following additional information was noted during the preparation of financial statements for the year ended 30 June 2021:
Inventory was measured at the lower of cost and net realisable value as per AASB102.
*Depreciation and accumulated depreciation for buildings and furniture need to be calculated.
Trading securities are equity investments that are held for the purpose of selling and short-term profit taking.
$20 000 of bank loans are repayable within 1 year. The remaining amount is payable in full at the end of 2030. The loans are secured over the land.
$150 000 of other loans are repayable within 1 year. The remaining amount is payable in full at the end of 2024.
The provision for employee benefits includes $20 000 payable within 1 year.
The warranty provision is in respect of a 12-month warranty given on certain goods sold.
Buildings and furniture were measured at cost. The benefits were expected to be received evenly over the useful life of the asset. The residual values are negligible. Building was acquired on 1 July 2019 for $500,000 (cost) and estimated useful life is 20 years. Furniture was acquired on 1 January 2020 for $200,000 (cost) and estimated useful life is 10 years.
Land was revalued upward by $5 000 to $125 000 (assume zero income tax for this transaction). There had been no previously recognised reserve for revaluation surplus. The valuation was conducted by the registered valuer, The Valuable Pty Ltd.
Sydney Ltd transferred $10,000 out of retained earnings into general reserve.

Required:
For the year ending 30 June 2021 (NOTE: comparative financial statements are not required),
Using the pro forma table supplied, prepare a preliminary trial balance for Sydney Ltd;
Prepare a statement of comprehensive income for Sydney Ltd in accordance with the requirements of AASB 101. Sydney 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; 
Prepare a statement of changes in equity for Sydney Ltd in accordance with the requirements of AASB 101;
Prepare a statement of financial position for Sydney Ltd in accordance with AASB 101. Use the current/non-current presentation format;
Prepare appropriate notes to the accounts. (You are not required to prepare a note related to income taxes. Include the following note as note 1. You may optionally add accounting policies to this note)
"1. Summary of significant accounting policies
Basis of accounting
The financial report is a general purpose financial report which has been prepared on the historical cost basis, except where stated otherwise.
Statement of Compliance
The financial statements have been prepared in accordance with the requirements of the Corporations Act, Australian Accounting Standards which include Australian equivalents to International Financial Reporting Standards (AIFRSs) and AASB Interpretations. Compliance with AIFRSs ensures the financial statements and notes comply with International Financial Reporting Standards."
Presentation Requirements (Departures may attract a penalty)
Use the provided pro forma to prepare a trial balance

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