HFAC130 - Financial Accounting Assignment - Boston City Campus

Assignment Task

Questions

1. BSG Solutions buys and sells computer accessories and also offers computer training to business clients. The firm’s financial year–end is 31 December.

Additional Information

All the appropriate reversal entries were processed correctly on 1 January 2023.

1. The bookkeeper has not recorded the following items relating to the financial year ending 31 December 2023.

• Stationary on hand on 31 December 2023 amounted to R 10 478 at cost.
• A telephone bill for R 5 664 relating to the month of December 2023 was received on 4 January 2024, and no entries had been made for it.
• A sales invoice for R 28 320 relating to computer accessories costing R 14 160 sold to Karoo Traders on 31 December 2023 had not been recorded.
• The prepaid insurance of R163 123 (see the pre-adjustment trial balance) includes an amount of R101 952 paid on 31 August 2023, covering the year from 1 September 2023 to 31 August 2024.
• The fixed deposit investment was made on 1 May 2023 and earns interest at 10% per annum. The interest on this investment is received quarterly in arrears (on 1 August, 1 November, 1 February and 1 May)
• The fee income of R 337 008 (refer to trial balance) includes an amount of R32 568 (received in December 2023), which relates to computer training provided in January 2024.

2. The physical count concluded on 31 December 2023 revealed that inventory on hand had a cost of R 501 440 and a net realizable value (NRV) of R494 360.

Required

a) Prepare the journal entries required to record each transaction on additional information point 1. No narrations are required.

b) Prepare the statement of comprehensive income for BSG Solutions for the year ended 31 December 2023.

c) Prepare the statement of financial position for BSG Solutions as at 31 December 2023.

2. Gabex is a retailer buying and selling leather handbags. The following information relates to the month ended 29 February 2024.

Additional Information:

The only sale during the month of Feb 2024 was a sale of 62 units on 15 Feb 2024.

Required

a) Determine the cost of closing inventory on the FIFO cost allocation method.

b) Prepare the cost of sales and inventory accounts in the General Ledger for the month ended 29 Feb 2024, using the FIFO cost allocation method, assuming the periodic recording system was used. (Adjusting and closing entries should be included)

c) Prepare the cost of sales and inventory accounts in the General Ledger for the month ended 30 Feb 2024, using the FIFO cost allocation method, assuming the perpetual recording system was used.

d) Prepare the cost of sales and inventory accounts in the General Ledger for the month ended 29 Feb 2024, using the weighted average cost allocation method, assuming the perpetual recording system was used.

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