MAA717: Introductory Accounting - Abcde Pty Ltd - Accounting and Finance Assessment Answer

Code: MAA717

Introductory Accounting Assessment Answer

Assignment Task: MAA717 Company Name: Abcde Pty Ltd The company began operations as a retailer on 1 July in the current financial year. It buys and sells one inventory item, derrings, from a leased warehouse in the outer suburbs of Melbourne. The company is registered for GST which it pays quarterly. Assume GST was last paid on 30 June. It uses the Weighted Average cost allocation method and the perpetual inventory recording method. The company uses the straight line depreciation method for office furniture and computers and the reducing balance method for motor vehicles. MAA717 The company employs two people who are rostered over a seven day working week. The employees are paid fortnightly up to and including the day of payment. There are no penalty wages. The company has one debtor (Debtor1) and one creditor (Creditor1). Terms for all credit sales and purchases are 30 days. Relevant information 1. The company has the following opening balances at the 1 July in the current financial year: MAA717 Cash at Bank: $20,665.00 Accounts receivable: $4,785.00 Allowance for doubtful debt: $366.00 Inventory: $11,020.00 Motor vehicle: $24,797.00 Accumulated depreciation motor vehicle: $2,196.00 Accounts payable: $4,075.00 Bank loan owing (due in 20 months): $13,367.00 Office furniture: $13,129.00 Accumulated depreciation office furniture: $1,929.00 Office supplies: $434.00 Share capital: $35,611.00 Retained earnings: balance amount $17,286.00 2. Transactions for the month (all dollar amounts include GST where applicable). MAA717 02 July Sales on credit 59 units 05 July Sales on credit 59 units 11 July Sales on credit 68 units 18 July Sales on credit 70 units 22 July Sales on credit 76 units 29 July Sales on credit 75 units 09 July Paid Wages (ignore PAYG tax) $2,081.00 23 July Paid Wages (ignore PAYG tax) $2,481.00 24 July Paid rent for the current month $2,728.00 01 July Paid insurance $1,329.00 14 July Received advertising invoice (due in 30 days) $509.00 27 July Purchased computer on credit $2,482.00 07 July Purchased inventory on credit 21 units at the cost per unit of $27.00 14 July Purchased inventory on credit 29 units at the cost per unit of $27.00 20 July Purchased inventory on credit 22 units at the cost per unit of $24.00 24 July Purchased inventory on credit 22 units at the cost per unit of $28.00 30 July Purchased inventory on credit 21 units at the cost per unit of $25.00 20 July Received payment from accounts receivable $514.00 06 July Received payment from accounts receivable $660.00 25 July Received payment from accounts receivable $668.00 04 July Purchased office supplies on credit $687.00 03 July Paid motor vehicle expenses $170.00 08 July Paid accounts payable $824.00 02 July Paid accounts payable $939.00 13 July Paid accounts payable $1,406.00 3. Additional information: MAA717 Selling Price per unit (GST inclusive) $55.00 Insurance paid from the first of the current month and for: 7 months in total. Insurance commences from the first of the month in which it is paid. All asset purchases and expenses except wages include GST Cost of opening inventory items per unit $20.00 Depreciation rate motor vehicle 20% Residual value motor vehicle: $2,670.00 Depreciation rate office furniture 20% Residual value office furniture: $515.00 Regardless of purchase date, company policy is to depreciate new assets for 15 days in the month of purchase. Depreciation rate computer 35% No residual value is expected for computers. The company counted inventory at the end of the month. They discovered that 3 units were missing and these must be removed from inventory. Office supplies on hand at end of the month were $218.00 At the end of the month the company records potential bad debts expense using the percentage of sales method. The business uses 1% of sales to determine estimated bad debts. Interest owing on the bank loan at the end of the month is $60.00

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