Suggested solutions Mock Final exam paper ACCT3102 2009v 3

Suggested solutions Mock Final exam paper ACCT3102 2009v 3...

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SUGGESTED SOLUTIONS: ACCT3102 MOCK FINAL EXAM PAPER SEMESTER 1, 2007 Question 1 Knocking of the almonds __________________________________________________________ Inventory of almonds Dr $600 000 Gain on harvest Cr $460 000 Cash at bank Cr 140 000 __________________________________________________________ ( Sale of the almonds __________________________________________________________ Cash at bank Dr $520 000 Sales revenues Cr $520 000 __________________________________________________________ Cost of almonds sold Dr $600 000 Inventory of almonds Cr $600 000 __________________________________________________________ Almond grove Dr $100 000 Increment in value of almonds (gain) Cr $100 000 (b) Revenues in almond inventory $460 000 Revenues from sale of almonds 520 000 Cost of almonds sold (600 000) Revaluation increment (5 000 000 – 5 100 000) 100 000 Profit from operations $480 000 Question 2 Note: In this question employees are eligible for a pro-rata payment of their LSL entitlement after 10 years. This means that they are unconditionally entitled to the pro-rata cash payment for their LSL from 10 years onward. Thus, there is no need to discount any pro-rata payment entitlements such as the $14,000 payments calculated below – that amount is already in present value terms. This is also the reason why the LSL entitlement of $4,125 was discounted over 5 years (10-5yrs) rather than over 10 years (15-5 yrs). A cash payment can be received after 10 years. Provision for LSL balance = $32 331 $66 245 x 5/15yrs x 13/52wks = $5 520 x 0.7473* = $4 125 $70 000 x 12/15yrs x 13/52 wks = $14 000
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