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Techniques in Financial AccountingWeek 1
Eric Lu began a small business on 1 July 2018 by depositing $225,000 into a business bank account. On 30 June for the next 3 years, the assets and liabilities of the business were as follows:30 JuneTotal assetsTotal liabilities2019$522,000$315,0002020585,000333,0002021666,000378,000By analysing the changes in equity each year, calculate the profit (loss) made by the businessfor each year ending 30 June, assuming the following events also occurred.1.On 1 January 2019, Eric withdrew $18,000 in cash from the business for personal use.2.On 28 August 2019, Eric invested additional cash of $27,000 into the business.3.On 31 July 2020, Eric invested additional cash of $22,500 into the business.4.On 28 January 2021, Eric withdrew $27,000 in cash for personal use.
Week 2 During the year ended 30 June 2019, the directors of Cooma Ltd paid a final dividend out of
retained earnings of $72,000, which had been recommended at the end of the previous financial year. They also declared and paid an interim dividend of $180,000 on 1 February 2020. The balance of the retained earnings account at 1 July 2019 was $240,000.At 30 June 2020, the ledger accounts showed that the company had made a total profit of $1,200,000 for the year. However, the directors determined that the following adjustments were still necessary to finalise the accounts.1.Provide for an income tax liability of $360,000.2.Recommend the payment of a final dividend of $120,000 out of retained earnings.3.Transfer $210,000 to a general reserve and $120,000 to a plant replacement reserve.
HINT: 2019 Before June (last fin. yr) - (Note: This dividend would have been deducted from retained earnings in the year ended 30 June 2019.)
Warren Ltd was organised on 2 January 2019, and proceeded to issue 90,000 9% cumulative preference shares and 180,000 ordinary shares. The preference shares were issued privately at a value of $2 each and the ordinary shares were issued to the public at $5 each, payable in two instalments of $2.50 per share. The first instalment was payable on application and the remaining instalment was payable by 30 June 2020.Prepare the equity section of the balance sheet as at 30 June 2020.
Week 3On 1 July 2018 Nicole Andreou opened a beauty parlour. The following transactions
occurred during the first month of operations (ignore GST):July 2Andreou invested $144,000 in the business by depositing cash into a business cheque account with the Eastpac Bank.2Paid $2,160 for the first month's rent.3Purchased equipment by an online bank transfer for $38,400 and signing a commercial loan agreement for $45,600.4Purchased supplies for $10,080.6Paid advertising expense of $1,070.16Recorded beauty services revenue for the first half of the month of $3,900 in cash and $740 on credit.20Paid insurance expense for July of $580 using an online bank transfer.23Received a $170 payment from customers who paid on credit in the first half of the month.28Andreou withdrew $670 cash for personal living expenses.31Recorded revenue for the second half of the month of $4,420 in cash and $700 on