Critically Analyze Financial Reporting Practices - Accounting Assignment Help

Assignment Task :

Task Description

The group assignment consists of practical and theoretical questions. Students will be required to:

• Make calculations;
• Record accounting journal entries;
• Apply accounting standards;
• Prepare external financial reports and
• Critically analyze financial reporting practices.

QUESTION ONE 
Fountain Gate Ltd is a manufacturing firm. Given below is the trial balance on 30 June 2019.

Additional Information:
(a) Stock at 30.06.2019: $206,390.
(b) Plant and machinery are apportioned: distributive 60 percent; administrative 40 percent.
(c) Accrued auditors’ remuneration at 30.06.2019: $35,500.
(d) Depreciate plant and machinery: 20 percent on cost.
(e) Of the motor vehicle hire, $27,500 is for distributive purposes.
(f) The corporation tax on profits is estimated to be $119 250, and is payable on 31.12.2019, at the rate of 35 percent.
(g) An amount of $35,000 was transferred into a general reserve.
(h) On the 21st of July 2019, one of the factory sites of Fountain Ltd was damaged by fire and properties worth $450,000 were destroyed.
(i) Plant of $37,500 has been purchased during the year.

(l) Inventory worth $250 were damaged in flooding incident which occurred on the 1st of August 2019.

Required:
(i) Prepare the journal entries to record the adjusting transactions and events for the period ending 30 June 2019 and indicate the action to be taken for any non-adjusting event with an explanation.
(ii) Subject to the limits of the information given you, prepare the statement of comprehensive income, statement of changes in equity and the statement of financial position for the financial year ending 30 June 2019. They should be in published form and accompanied by the necessary notes to the accounts.

QUESTION TWO 
Fiddle Ltd has been in operation for two years dealing in the manufacture of household appliances. It started operation on 01 July 2018. Provided below are the statement of comprehensive income and the statement of financial position for the financial year-end 30 June 2020.

Additional Information
1. Interest income receivable pertains to income earned on investments that had been disposed of as at year-end. The related revenue will be taxed by the ATO when the amounts are received.
2. All administration and salaries expenses incurred have been paid except for $48,200 accrued wages and salaries as at year-end. Wages and salaries expense is deductible for tax purposes when paid.
3. The warranty expenses incurred during the period remained unpaid at year-end. Warranty expenses are allowed for deduction when paid for tax purposes.
4. Out of $45,000 incurred as an expense for long service leave, only $20,000 had been paid as at year-end. This is only allowed for deduction when actually paid.
5. Provision for doubtful debt had an opening balance of $45,000. The amount charged for the year represents the increase in provision for the period. Only bad debts are allowed as deductibles for tax purposes.
6. Rent expense charged for the period represents the portion of the total prepaid amount which had been used during the year. $20, 400 of the prepaid amounts have not been used as at year-end. Rent expenses are deductible when paid.
7. $60,500 of utilities expenses for the year has not been paid as at year-end. Accrued utility expenses are not deductible for tax purposes.
8. The plant and machinery are depreciated over five (5) years for accounting purposes while its useful life is estimated to be four (4) years for tax purposes.
9. The applicable tax rate for Fiddle Ltd is 30%
10. The land had an initial cost price of $90,000 before it was revalued to its fair value at the end year.

Required:
a) Prepare the reconciliation statement to determine taxable income and the journal entry to recognize the current tax payable on 30 June 2020. 
b) Complete the Deferred Tax Worksheet and journal entries to adjust deferred tax accounts

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