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PRE SP1 2019 Major Assignr X + v X O file:/Users/valan/Desktop/SP1%202019%20Major%20Assignment. 2 ( # 5 57 ) + So QUESTION 1 - Accrual Accounting...

there are two questions about Accounting, please show me the processes, thank you soooo much.Microsoft Edge 2019_5_22 22_57_14.pngMicrosoft Edge 2019_5_22 22_57_02.pngMicrosoft Edge 2019_5_22 22_56_46.pngMicrosoft Edge 2019_5_22 22_56_29.png

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PRE SP1 2019 Major Assignr X
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file:///C:/Users/valan/Desktop/SP1%202019%20Major%20Assignment.pdf
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So
QUESTION 1 - Accrual Accounting
News for Views is a business owned and operated by Anne Ohner. The following trial balance has been
prepared at year's end.
NEWS FOR VIEWS - TRIAL BALANCE AS AT 30 JUNE 2019
Debit ($)
Credit ($)
Cash
16 000
Accounts Receivable
38 200
Inventory (1 July 2018)
43 500
Prepaid Rent
4 000
Supplies
210
Warehouse
16 000
Accumulated Depreciation - Warehouse.
5 880
Motor Vehicle
30 000
Equipment
14 000
Acc'd Depreciation - Equipment
4 200
Accounts Payable
32 210
Capital (1 July 20
38 500
Drawings
12 500
Sales
218 670
Sales Returns & Allowances
2 270
Discount Allowed
400
Purchases
130 200
Discount Received
900
Supplies Expense
120
Freight Inwards
2 150
Freight Outwards
1 200
Sales Staff Wages Expense
24 00
Local Government Rates Expense
800
Insurance Expense
50
Advertising Expense
$ 75
Rent Expense
6 600
$350 360
$350 360
(continued.....)

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PRE SP1 2019 Major Assignr X
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The following additional information is also provided at the 30th of June 2019:
(1)
A customer paid $1,000 in advance on the 15 of June for inventory to be delivered to the customer at
a later date. By the 30" of June 2019, $300 of the inventory had been delivered to the customer. The
rest of the inventory will be delivered to the customer in July 2019.
(2)
Upon receipt of the business's bank statement, the owner realised that the business had earned $150
interest for the year ending 30 June 2019. This amount was placed directly into the bank account by
the bank so the cash received has not yet been recorded by the business and it has not yet been recorded
by the business.
(3)
All of the non-current assets are expected to be used evenly over their useful lives. The expected total
useful lives and residual values of the non-current assets are as follows:
Estimated Useful life
Estimated Residual
Equipment
6 years
$2,000
Warehouse
20 years
1,70
Motor Vehicle
$4,000
(4)
The business paid $1,500 cash for insurance on the 15t of April 2019 for 5 months.
(5)
A check of the records showed that wages were still not paid or recorded at 30th June 2019 worth $580.
A bill for the electricity for $720 was received on the 27th of June 2019 and has not been recorded or
paid yet. A bill for the water used by the business was also received on the 25th of June 2019 for $300.
The bill was paid using cash on the 26th of June 2019 but nothing has been recorded yet.
'6)
Rent was paid on 28 January 2019 and was shop rent for ten months starting the 1st of March 2019.
(7 )
A physical stock take of inventory at 30 June 2019 revealed $42 320 on hand.
(8)
It is estimated that 3% of the 30 June 2019 balance of Accounts Receivable will be never be collected
from the customers.
(9)
A check of supplies on hand at the end of June 2019 showed that a total of $270 of supplies had been
used for the period. (So the total amount of supplies that have been used for the whole period is $270).
(10) Hannah paid $800 cash on the 19th of June for advertising on the radio. The advertising will occur
twice, once on the 24" of July and again on the 24" of August 2018.
REQUIRED:
Prepare the journal entries to account for all of the items above.
(20 marks)
TOTAL FOR QUESTION 1: 20 Marks

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PRE SP1 2019 Major Assignr X
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QUESTION 2 - Statement of Cash Flows
You are provided with the following financial information for Red Mist:
RED MIST
COMPARATIVE BALANCE SHEETS
AS AT DECEMBER 31
2019
2018
Current Assets
Cash
$4 500
$15 600
Accounts Receivable (net)
13 800
11 200
Interest Receivable
1 800
2 300
Inventory
60 00
54 000
Prepaid Expenses
4 950
$85 050
2 400
$85 500
Non Current Assets
Equipmen
222 000
192 000
less Acc. Depreciation
(69 000)
153 000
(52 800)
139 200
Total Assets
238 050
224 700
Current Liabilities
Bank Overdraft
16 980
Accounts Payable
11 180
10 960
Interest Payable
80
500
Expenses Payable
2 360
2 310
Tax Payable
2 160
33 480
3 600
17 370
Non Current Liabilities
Bank Loan
60 000
50 000
Total Liabilities
93 480
77 370
Net Assets
$144 570
$147 330
Equity
Capital
144 570
147 330
(continued .........)

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PRE SP1 2019 Major Assignr X
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file:///C:/Users/valan/Desktop/SP1%202019%20Major%20Assignment.pdf
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So
RED MIST
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31 2019
Net Sales Income
$275 000
Cost of Sales
161 400
Gross Profit:
113 600
Other Income:
Interest Income
4 180
1 17 780
Expenses:
Selling & Admin Expense
56 400
Doubtful Debts Expense
350
Discount Allowed
250
Depreciation Expense
16 20
Interest Expense
7 800
81 000
Profit before tax
36 780
Income tax expense
10 134
Profit
$26 646
Additional Information:
The owner contributed $15 000 cash during the period.
REQUIRED:
a.
Prepare a Statement of Cash Flows in the format required by applicable accounting standard. Use the
pro forma in the exam answer booklet and show all calculations.
[15 marks]
b .
The owners of Red Swans cannot understand why there is such a difference between the profit for the
period and the total cash flows showing in the cash flow statement. Using the information from the
financial reports, briefly explain some of the specific reasons causing this difference.
[5 marks]
TOTAL FOR QUESTION 2: 20 Marks

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