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Unit: ACC102 – Fundamentals of Accounting II

Submission Date: 14 Oct 2014 before 6.00 pm

Weighting: The assignment is worth 20% of the total unit weight.

Instructions:

1. Students are required to cover all stated requirements.

2. Your answer must be both uploaded to Moodle in word file and handed over a printed copy.

3. You need to support your answers with appropriate Harvard style references where necessary.

4. Only include information in your appendixes that has been directly referred to in the body of your document.

5. Include a title/cover page containing the subject title and code and the name, student id numbers.

6. Please save the document as ACC101AT2_first name_Surename_Student Number

Eg: ACC101AT2_John_Smith_20140000

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Question 1: Perpetual Inventor Y System with Returns

During the year ended 30 June 2014, TooBakko Ltd sold each unit of its goods at $9. Purchases and sales of the goods are shown below. Ignore GST.

2013

July

1

Inventory on hand

200 units @ $5.00 each

30

Sales

120 units

Aug.

25

Purchases

300 @ $5.25

30

Sales

250 units

Sept.

3

Purchases

450 units @ $5.30

10

Purchases returns

50 damaged units from 3 September purchase

30

Sales

300 units

Oct.

5

Purchases

300 units @ $5.40

Dec.

8

Purchases

250 units at $5.45

2014

11

Sales

500 units

Feb.

21

Purchases

150 units @ $5.50

March

18

Purchases

100 units at $5.60

April

30

Sales

300 units

May

2

Sales returns

30 units from 30 April sales, goods returned to inventory

4

Purchases

250 units @ $5.70

June

6

Purchases

300 units @ $5.85

30

Sales

460 units

TooBakko Ltd uses a perpetual inventory system.

Required

A. Using dollars and cents in appropriate inventory records, determine the cost of the inventory at 30 June 2014 under the following inventory cost flow assumptions:

? FIFO

? Moving average (round to the nearest cent).

B. Assuming that a physical count at 30 June 2014 determined that only 300 units remained in inventory, prepare the journal entry to record the fact that some units had gone missing.

C. Using the moving average method, prepare the Inventory Control, Cost of Sales and Sales accounts CT account format), assuming that these accounts are balanced yearly on 30 June. Assume as well that the physical count of inventory was as mentioned in requirement B above.

Question 2: Depreciation of Machinery

In early July 2013 Admirable Ltd is considering the acquisition of some machinery for $1200 000 plus GST to be used in the manufacture of a new product. The machinery has a useful life of 10 years, during which management plans to produce 500 000 units of the new product. The residual value of the machinery is $100 000.

The following projections were made in order to select a depreciation method to be used for the machinery:

Year ended 30 June

Units of output

Repairs and maintenance

Profit before depreciation

2014

50 000

$ 70 000

$350 000

2015

45 000

60 000

340 000

2016

55 000

90 000

355 000

2017

58 000

95 000

360 000

2018

60 000

100000

380 000

In calculating the profit before depreciation, all expenses have been deducted, including the repairs and maintenance expense.

Required

A. As the accountant for Admirable Ltd, prepare separate depreciation schedules for the machinery for the 5 year period, using the following depreciation methods: (a) straight line, (b) diminishingbalance, (c) sum of years digits, and (d) units of production. Use the following headings for each schedule: ‘Year ending 30 June’, ‘Annual depreciation

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expense’, ‘Accumulated depreciation’, ‘Carrying amount at end of year’.

B. Prepare a report for management, stating the advantages and disadvantages of each depreciation method. Include in the report your recommendations on the choice of method consistent with the requirements of IAS 16/AASB 116. Support your recommendations with schedules showing the total annual cost of operating the machinery, and the profit after depreciation.

Question 3: Disposal and Revaluation Increases and Decreases

On 1 January 2011, Punchbowl Ltd bought a machine for $33 000 cash; its useful life was 12 years and its residual value was $3000. It was decided to depreciate the machine by the straight line method. On 30 September 2013, the machine was traded in to Leichhardt Ltd for a new model, the total cost being $25 000. Leichhardt Ltd allowed $17 000 for the old machine. It was decided to depreciate the new machine at the rate of 45% p.a. by the diminishing balance method. Residual value of the new machine was $7000.

On 1 July 2014, Punchbowl Ltd decided to adopt the revaluation model and revalue its machine upwards to reflect fair values. This represented a 15% increase in the carrying amount of the machine. The diminishing balance method of depreciation was continued at the same rate. The accounting period ended on 30 June each year. At 30 June 2015, the carrying amount of the machine was approximately equal to fair value.

Required

A. Prepare relevant ledger accounts to record the above transactions up to 30 June 2015. Ignore GST.

B. Show how the asset would appear in the financial statements of Punchbowl Ltd as at 30 June 2012, 30 June 2014 and 30 June 2015.

C. Show the Machinery account and Accumulated Depreciation Machinery account if the revaluation on 1 July 2014 had been downwards instead of upwards.

Attachments:

Assignment Ta….pdf