George Bucket - The Great Escape Limited - Accounting & Finance Assignment Help

Assignment Task

 

Part One: Multiple Choice Questions

1) A company has the following four ledger accounts:

1 Leased vehicle

2 Revenue received in advance

3 Accrued electricity expense

4 Share capital Which of the followings represent the correct classifications for the four accounts?

A. 1 Asset 2 Liability 3 Revenue 4 Owners’ equity

B. 1 Liability 2 Revenue 3 Expense 4 Equity

C. 1 Asset 2 Liability 3 Expense 4 Liability

D. 1 Asset 2 Liability 3 Expense 4 Owners’ equity

2) Mike Mulching’s (MM) had the following assets and liabilities:

$ Cash in hand 5 000 Accounts payable 4 000 Inventory 2 700 Accounts receivable 8 100 Office furniture 4 500 Loan from MM 15 000 Motor vehicles 12 000 Shareholders’ equity would be:

A. $2 300 B. $31 000 C. $13 300 D. None of the above

3) GST paid should be listed on the balance sheet in which category? A. Assets B. Liabilities C. Shareholders’ equity D. Expense

4) A company had the following transactions in 2020:

Cash sales of $100 000 in 2020

Credit sales of $600 000 in 2020 of which $450 000 was received in 2020.

Received $50 000 from customers in 2020, related to sales in 2019.

Given the above transactions, what is the company’s total revenue for 2020?

A. $550 000 B. $700 000 C. $750 000 D. None of the above

5) The following transactions, among others, occurred during August. Which transaction represented an expense during August?

A. Purchased of a computer for $3 000 cash

B. Paid $3 300 in settle of a loan obtained in May

C. Paid $500 to a garage mechanic for automobile repair work performance in June

D. Purchased $30 of petrol on account for the delivery truck. Account will be paid during September

6) On 30 June 2009, M Ltd estimates that it will incur warranty costs of $150 000 in the next financial year on products sold during the year just ended. On 27 September 2009, the manufacturer pays $20 000 under the warranty. What is the journal entry made by M Ltd on 30 June 2009?

A. Dr Warranty Liability Cr Cash

B. Dr Warranty Liability Cr Warranty Expense

C. Dr Warranty Expense Cr Warranty Liability

D. None of the above

7) In preparing a bank reconciliation statement, what is the appropriate treatment for a deposit of $6 500 that does not appear on the bank statement but is recorded as deposited in the company’s accounts? Note that the company has a substantial cash balance.

A. Deduct from the balance as per the bank statement

B. Add to the balance as per the bank statement

C. Add to the balance as per the company’s records

D. Deduct from the balance as per the company’s records

8) On 30 June 2017, the petty cash fund of Josie’s Kitchen was replenished. The petty cash on hand totaled $60 and vouchers showed that $40 had been spent on postage. The journal entry to record the replenishment was: A. Dr Postage expense $40 Cr Cash $40 B. Dr Petty cash $40 Cr Cash $40 C. Dr Postage expense $40 Cr Petty cash $40 D. Dr Petty cash $60 Cr Cash $60

9) The periodic inventory method of accounting for Inventory movements has which of the following advantages?

A. It is inexpensive to maintain

B. A continuous record is available of inventory on hand

C. Losses from shoplifting are easily detected

D. Timely information is available for management decision-making

10) The perpetual inventory method has advantage over the periodic system in that:

A. A physical count is not required

B. Inventory shortages are eliminated

C. There are lower operational costs

D. Details relating to the number of items on hand are readily available

Part Two: Practical Questions

Question 1

George Bucket established a cleaning business on 1 August 2018. The following transactions occurred during the month: a. George started the business by contributing $10 000 in cash b. Purchased cleaning supplies for $500 on credit c. Purchased cleaning equipment for $2 200 cash d. Leased a van, paying one month’s lease for August, $350 e. Received cash for cleaning offices, $520 f. Paid half of the amount owning in b g. Billed customers for cleaning of offices, $780 h. Paid wages to a part-time helper, $130 i. Paid for an advertisement in the local newspaper, $80 j. Received $390 from customers billed in g Required: i. Prepare journal entries. (5 marks) ii. Post to the ledger accounts (T-account form).

iii. Prepare trial balance.

iv. Prepare closing journal entries.

v. Prepare income statement and balance sheet.

Question 2

The Great Escape Limited reported an accounts receivable ledger balance of $179 000 and an allowance for doubtful debts of $8 700 at 1 June. The following transactions and adjustments to account balances were recorded during the year: a. Cash sales were $235 000 and credit sales were $820 000 for the year. b. Bad debts expense was recorded as 4% of credit sales. c. Payment of $762 000 on accounts receivable were received. d. A total of $29 600 of accounts receivable was written off as uncollectable during the year. e. Management reviewed the accounts receivable balances at the end of the year and decided the balance in the allowance for doubtful debts should be $14 200.

Required:

i. Prepare the journal entries recorded by The Great Escape Limited for each of the above entries.

ii. Prepare the ledger accounts for accounts receivable and allowance for doubtful debts (in T-account form) and show the Balance Sheet extract relating to net accounts receivable at 30 June.

Question 3

Itcheze Ltd is a company producing pet care products. Their internal control structure includes the following:

a. Receipts are issued for all money received, although they are not prenumbered or filed in any way. Banking is done daily, with all cheques and cash listed by the person who opens the mail and also enters the receipts into the computer system.

b. All payments are made by cheque from a general account which can be accessed by any one of the three directors.

c. At the end of the month, a bank reconciliation statement is prepared and balanced by one of the directors. The director who performs the reconciliation instructs the accountant as to the adjustments to journalise.

Required: Comment on any control strengths and weaknesses in Itcheze’s system of internal controls.

 

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