2004 Session 2.pdf - THE UNIVERSITY OF NEW SOUTH WALES...

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1 THE UNIVERSITY OF NEW SOUTH WALES School of Accounting ACCT 1501: Accounting and Financial Management 1A FINAL EXAMINATION PAPER SESSION 2, 2004 This is a three (3) hour paper. You have ten ( 10 ) minutes reading time. There are six (6) questions. There are eight (8) pages, including this one. You must answer all parts of all questions. The questions are not of equal value. All answers must be written in blue or black ink. Show all relevant working. This paper forms 50% of the assessment in this course. This paper may be retained by the candidate. Do not turn the page until instructed by the examination supervisor.
2 Question 1 Adjusting entries and financial statements (18 marks) The following pre-adjusted trial balance has been prepared for Luxo Ltd as at 30 June 2004 (for the 12 months beginning on 1 July 2003): DR $000’s CR $000’s Cash at Bank 10 Accounts Receivable 200 Provision for Doubtful Debts Inventory 100 Prepaid Rent 10 Property,Plant and Equipment 450 Accumulated Depreciation - PPE 200 Accounts Payable 60 Bank loan 50 Paid-up Capital 310 Retained Profit at 1 July 2003 34 Sales 450 Cost of Goods Sold 265 Interest Expense Wages Expenses 80 Rent Expense 1,115 1,115 The following information is given which may give rise to year end adjustments: Depreciation on Property, Plant and Equipment is provided for on a straight line basis at 10% per annum. The balance in Prepaid Rent relates to the 12 month period from 1 January 2004 to 31 December 2004. 1 5 5
It is estimated that 2% of the Balance of Accounts Receivable (before any provisions) will prove to be uncollectible. On 30 June 2004, the directors decide to declare and provide for a dividend of $5,000, to be paid on 15 September 2004. The bank loan is a 5 year loan and was taken out on 30 June 2003. Interest on the loan is 10% p.a. and is payable on 30 June each year. Required: a. Prepare journal entries for the necessary end of period adjustments. (6 marks) 1 1 5 1 3 1 5 1 1
b. Prepare a Statement of Financial Performance ( Profit and Loss Statement ) for the year ended 30 June 2004: (7 marks) ½ ½ 1 1 1 1 ½ 1
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4 Marks are given for the answer that correctly incorporates the adjusting journal entries as recorded by the student. , so they can have a wrong je, a wrong P&L amount but still get full marks. In the Statement of Financial Position ( Balance Sheet ) as at 30 June 2004: i. What would be the balance of total current assets? (2 marks) Marks Accounts receivable 200 ½ Less provision for doubtful debts 4 196 ½ Inventory 100 ½ Prepaid rent 5 ½ Total 301 ii. What would be the balance of total current liabilities? (1½ marks) Marks Bank overdraft 10 ½ Accounts payable 60 ½ Dividend payable 5 ½ Total 75

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