Do Ngoc Anh Alina_22891176_assignsubmission_file_DOYNY010_Accouting Assginment

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ACCT 1008 Accounting for Business, SP2 2023 Assignment 100 marks - Weighting 30% Due 9:00pm Adelaide time (ACST) on Wednesday 26 April 2023 Student Full Name: Ngoc Anh Do Student ID: 110406718 Please note that this is an individual assessment . There is the temptation for some students to plagiarise/cheat. This may be done by copying other students work, buying an assignment, using an answer from a homework site etc. I am going to reiterate that it is better to submit your own work and receive useful feedback than to submit a piece of work that is not your own. If you submit work that is not entirely your own, a marker cannot possibly know what you understand and what you don't understand and provide quality feedback to assist you. The outcome for an Academic Integrity breach at best zero for the assignment, through to more sever penalties. All assignments will be put through Turnitin and will be checked by the Academic Integrity Office for matches to other students work both from this study period and prior study periods and other sources. All the information required to complete the assignment is provided in the ACCT1008 course materials therefore do not go beyond the course materials . Any matches to external sources will be reviewed carefully and must be referenced. I declare the work contained in this assignment is my own, except where acknowledgement of sources is made. I authorise the University to test any work submitted by me, using text comparison software, for instances of plagiarism. I understand that this will involve the University or its contractor copying my work and storing it on a database to be used in future to test work submitted by others. The attachment of this statement on any electronically submitted assignments will be deemed to have the same authority as a signed statement. Signed: Anh Date: 26/04/2023 Office Use only 1 Assessment/ grade 89.5/100 Assessed by: MJL

Please aim to complete this assignment a few days prior to the due date to allow for any unforeseen circumstances such as illness, holidays, family issues, work commitments etc. You may submit the assignment early if you have other commitments around the due date. The due date and time are stated in the Course Outline document, on the course website and in this assignment document. All times listed are local (South Australia) times. Please ensure you factor in any time difference between Adelaide (South Australia) and your location when submitting your assignment, to avoid incurring any late submission penalties. Please note the following important instructions relating to the assignment format and submission: IMPORTANT - Failure to follow these instructions may result in your assignment not being marked, so please read them carefully. 1. You must complete your assignment using the assignment Word document provided. 2. There is no need to delete any part of this template. 3. Do not convert this document into any other format (.docx or .doc are the only permissible file formats than can be uploaded). 4. You can only submit this one file. 5. If you use Excel for calculations, ensure you only copy and paste as a table. Do not ‘embed’ spreadsheets in the assignment Word document. 6. Do not include any files as pictures within the assignment Word document. 7. You cannot scan handwritten responses and submit. All assignments must be word processed. 8. Remember to complete the details on page 1 of the assignment. 9. All assignments must be lodged via the course website (link located on same page as assignment). 10. Assignments submitted via e-mail (or any other method) will NOT be accepted. 11. Make sure that you upload the correct file. If you discover (after the due date) that you have uploaded a draft version or the wrong file completely, you will not be allowed to submit a second file. Note that this is an individual piece of assessment. Pay particular attention to the “Declaration of Originality” that you must agree to when submitting your assignment electronically. Please also be aware that extensions to assignment due dates will only be approved in exceptional circumstances and for reasons that could not have been foreseen at the commencement of the study period. All applications for extensions must be submitted via the “Extensions” menu provided on the course website and must include an explanation of the circumstances under which the extension is being sought and relevant supporting documentation must be included with the original application. Please note that circumstances such as usual workload (university or employment), taking a holiday, being overseas or any situation within the control of the student do not qualify as grounds for an extension. Please note that extension requests made within 7 days of the due date must also include a draft of the assignment you have completed to that point. All the best with your assignment. 2

QUESTION 1: Balance Day Adjustments (18 marks) Below is the Unadjusted Trial Balance as at 30 June 2022 for “Here If You Need”, a retail business specialising in netball uniforms and equipment. It is owned and operated by Gail Shooter. Gail is the sole proprietor and does a lot of the business bookkeeping during the year, however she sends information through to Prider & Copeland Accounting Services at the end of the financial year for any necessary balance day adjustments to be completed. Here If You Need Unadjusted Trial Balance For the year ended 30 June 2022 Debit ($) Credit ($) Cash at Bank 68,176 Accounts Receivable 85,000 Inventory 374,400 Prepaid Insurance 13,104 Office Supplies on hand 8,736 Furniture & Fittings 146,080 Accumulated Depreciation – Furniture & Fittings 31,824 Delivery Van 84,800 Accumulated Depreciation – Delivery Van 49,920 Computer/Printer package 3,200 Accounts Payable 72,072 Loan Payable 312,000 G. Shooter – Capital (1 July 2021) 176,592 G. Shooter – Drawings 74,880 Sales Revenue 1,842,744 Sales Returns and Allowances 26,464 Cost of Sales 1,099,488 Discount received 34,552 Freight inwards 24,960 Sales Salary Expense 182,208 Delivery Expense 48,672 Advertising Expense 71,760 Rent Expense 76,128 Office Salaries Expense 90,000 Telephone/Internet Expense 23,552 Discount Allowed 18,096 Totals 2,519,704 2,519,704 On the following page is additional information that Gail has provided to you in relation to the year ended 30 June 2022. 3

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You are a Graduate Accountant at Prider & Copeland Accounting Services. It is now the end of the financial year Gail has provided you with the following additional information: REQUIRED: Based on the information provided below, record the necessary adjusting journal entries required.  Journals must be correctly formatted and include a narration (explanation) for each entry.  Use the General Journal templates provided on the following pages.  There is more than enough space in the templates provided, so please leave a gap between each journal entry. 1. On 30 June 2022, Gail reviewed her outstanding Accounts Receivable balance. Based on her previous experience, she has estimated that 2% of this balance is unlikely to be collected. 2. On 1 February 2022, Gail took out a 2-year insurance policy for her inventory, contents and vehicles and cost $16,320. This policy was paid for from the business bank account on the same day and was recorded as Prepaid Insurance. 3. Gail conducted a count of her stationery cupboard on 30 June 2022. This count revealed that office supplies still on hand at that time were $3,700. 4. Both the Furniture & Fittings and the Delivery Van are expected to be used evenly over their useful lives. The expected total useful lives and residual values of both assets is as follows: Estimated Useful life Estimated Residual Furniture & Fittings 10 years $10,000 Delivery Van 8 years $20,000 5. During the year, Gail purchased a new computer and printer package for the office. The package cost $3,200 and was purchased on 1 November 2021. Gail has estimated that the package will have a useful life of 4 years, after which she expects to be able to sell it for $800. 6. Office Salaries which are payable but have not yet been recorded at 30 June 2022 are $3,140. 7. A custom-made set of netball uniforms costing $2,150 were ordered and paid for by a customer on 25 June 2022. At the time of the sale, Gail recorded this amount as Sales Revenue. Gail has confirmed with the manufacturer that the uniforms will not be delivered and available for the customer until at least 5 August 2022. 8. Gail’s last telephone bill for the business was for the month ending 31 May 2022, and this account was paid in early June. She has not yet received the June account but has estimated that the cost of her telephone and internet usage up until 30 June 2022 was $970. 4

General Journal Date Details Debit ($) Credit ($) 30 June Doubtful Debts Expenses 1,700 Allowance for Doubtful Debts 1,700 Debts never be received Insurance Expense 3,400 Prepaid Insurance 3,400 Insurance paid for 2 years Office Supplies expenses 5,036 Office Supplies 5,036 Office Supplies used Depreciation Expense- FF 13,608 Accumulate Depreciation-FF 13,608 Depreciation of Furniture&Fittings for year Depreciation Expense- Van 8,100 Accumulate Depreciation- Van 8,100 Depreciation of Delivery Van for year Depreciation Expense- Computer Package 600 Accumulate Depreciation- Computer Package 600 Depreciation of Delivery Computer for year Office Salaries Expense 3,140 Office Salaries Payable 3,140 Office Salaries Expense for June Sale Revenue 2,150 Unearned Revenue 2,150 Revenue received but not earned yet Telephone expense 970 Telephone payable 970 Telephone expense for June 5

QUESTION 2: Financial Statement (40 marks) In your role as a Graduate Accountant at Prider & Copeland Accounting Services you have been supplied with the following Adjusted Trial Balance for “Nailed It Hardware”, prepared at the end of the financial year by the business owner, Stanley Noife. REQUIRED: Using the Trial Balance provided below, prepare the following for the period in question: a) Fully classified Income Statement [20 marks] b) Statement of Changes in Equity [4 marks] c) Fully classified Balance Sheet (Narrative format) [16 marks] Nailed It Hardware Adjusted Trial Balance For the year ended 30 June 2022 Debit ($) Credit ($) Cash at Bank 36,800 Accounts Receivable 39,200 Inventory (30 June 2022) 16,768 Allowance for Doubtful Debts 800 Prepaid Advertising 1,232 Shop Furniture & Fittings 20,000 Accumulated Depreciation – Shop Furniture & Fittings 7,216 Sales Equipment 11,520 Accumulated Depreciation – Sales Equipment 3,968 Advertising Payable 3,600 Accounts Payable 12,800 Interest Payable 480 Loan Payable 26,880 S. Noife - Capital (1 July 2021) 31,880 S. Noife - Drawings 14,800 Sales 440,152 Sales Returns & Allowances 6,904 Discount Received 2,480 Electricity Expense 1,280 COS 308,968 Depreciation Expense – Shop Furniture & Fittings 2,840 Depreciation Expense – Sales Equipment 2,304 Freight Inwards 2,256 Rent Expense 23,440 Discount Allowed 2,960 Salaries Expense -Store 26,720 Advertising Expense 448 Interest Expense 376 Doubtful Debts Expense 800 Salaries Expense - Admin 10,640 Totals 530,256 530,256 Stanley has provided the following additional information to assist you with the statement preparation:  $3,200 of the Rent expense specifically relates to the administration office. The remainder of this expense relates rent on the store.  15% of the Electricity expense specifically relates to the administration office. The remainder relates to electricity used in running the store.  $8,960 of the Loan Payable needs to be repaid in the next 12 months. Answer on the following pages 6

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Nailed It Hardware Income Statement For the year ended 30 June 2022 INCOME Sale revenues 440,152 Less: Sales returns & allowances 6,904 Discount allowed 2,960 Net Sale Avenue 430,288 Less: COS Cost of Sales 308,968 Add: Freight Inwards 2,256 311,224 Less: Discount received 2,480 Cost of Sales 308,744 Gross Profit 121,544 LESS EXPENSES Selling and distribution expense Advertising expense 448 Dep Ex- FF 2,840 Dep Ex - Equipment 2,304 5592 Administrative Expense Electricity Expenses - Admin 192 Electricity Expense - Store 1,088 Salaries Expense – Admin 10,640 Salaries Expense -Store 26,720 Rent Expense - Admin 3,200 Rent Expense - Store 20,240 62,080 Finance Expense Doubtful Debts Expense 800 Interest Expense 376 1176 Total 68,848 PROFIT 52,696 7 Nailed It Hardware Statement of Change in Equity For the year ended 30 June 2022 Capital- 1 July 2021 31,880 Add: Profit 52,696 84,576 Less: Drawings 14,800 Capital – 30 June 2022 69,776

Nailed It Hardware Balance Sheet As at 30 June 2022 ASSETS Current Asset Cash at Bank 27,840 Account Receiveable 39,200 Less: Allowance for Doubtful Debts 800 38,400 Inventory (30 June 2022) 16,768 Prepaid Advertising 1,232 84,240 Non- Current Asset Shop Furniture & Fittings 20,000 Accumulated Depreciation – Shop Furniture & Fittings 7,216 12,784 Sales Equipment 11,520 Accumulated Depreciation – Sales Equipment 3,968 7552 20,336 Total Asset 104,576 LIABILITIES Current Liabilities Account Payable 12,800 Advertising Payable 3,600 Interest Payable 480 Loan Payable 8960 Non- Current Liabilities 25,840 Loan Payable 17,920 Total Liabilities 34,800 EQUITY 69,776 8

QUESTION 3: Accounting Concepts (12 marks) As part of your continuing professional development as a graduate accountant at Prider & Copeland Accounting Services, the Managing Partner (Scott Prider) has asked you to assist a new client, Bonnie Jovi, who owns and operates “Vinyl Countdown”, a record store specialising in albums and CDs from the 1980’s. Bonnie was referred to Prider & Copeland Accounting Services by her good friend Stanley Noife Scott Prider has already spoken with Bonnie, and he has told you that she is quite skeptical about coming to see an accountant. She doesn’t understand the concept of accrual accounting and believes that adjusting her accounts will just delay the preparation of her statements. She also believes that as the adjustments are so small, they will make no difference and are a waste of time. She also doesn’t understand why money she withdraws for her own expenses from the business are not treated as an expense. Bonnie has provided the following Income Statement (prepared using cash accounting) and additional information related to the transactions she has recorded. Vinyl Countdown Income Statement For the year ended 30 June 2022 Income: Record sales $240,000 Less : Expenses $198,000 Profit $42,000 1. Record sales earned made in the year ended 30 June 2021 for $5,000 were collected in the current year and have been included in the revenue above. 2. Record sales earned in the year ended 30 June 2022 of $8,000 are expected to be collected in the following year. These have not been included in the revenue above. 3. Salaries owing to staff at 30 June 2021 were $2,000. These were paid in July 2021 and have been included in the expenses above. 4. Salaries owing to staff at 30 June 2022 were $2,700. These were paid in July 2022 and have not been included in the expenses above. 5. Depreciation expense of $6,300 has not been included in the expenses above. 6. During the year, Bonnie withdrew $1,900 per month for her own personal expenses, and these have been included in the expenses above. REQUIRED: The Managing Partner (Scott Prider) has requested that you do the following: a) Using the above information, prepare an Income Statement using accrual accounting, showing all relevant calculations. (5 marks) Vinyl Countdown Income Statement For the year ended 30 June 2022 Income: Record sales $240,000 - Sale for 2021, collected in 2022 + Sale for 2022, collected in 2023 Less : Expenses + Depreciation Expense + Salaries Expense - Salaries expense for 2021, collected from 2022 -Drawing 5000 8000 243,000 $198,000 6,300 2,700 2,000 1,900 203,100 Profit $39,900 9

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b) Explain why the revised statement is considered to be a better measure of profit. (2 marks) Since the updated statement takes into account all expenses incurred over a certain time period, even those not directly related to the production of products or services, it is seen as a more accurate estimate of profit. A more thorough view of a company's financial status is offered by the comprehensive income statement, a method of computing profit. c) Explain why it is the correct accounting procedure to exclude drawings from expenses. (2 marks) Drawings are the amounts of cash or other assets withdrawn by the owner for a person's use, therefore, they cannot be considered as business-related expenses. Moreover, these withdrawals cannot also be accounted for in the operations of the business and do not constitute any expense incurred for the purpose of generating revenue. Thus, it is reasonable and accurate to remove them from the expenses. Scott has asked that you prepare your responses in a formal business letter addressed to him (not the client). He will then review your work, and he will use it as the basis of a response to Bonnie. The remaining 3 marks will be awarded for following the formatting requirements below:  Date your letter 15 August 2022  Address your letter to Scott Prider (Managing Partner), Prider & Copeland Accounting Services, 516 Glynburn Rd, Burnside SA 5066  Any formal business letter format is acceptable. Please note that a template has not been provided. Students are expected to research business letter formats themselves.  Set out your letter with subheadings to separate each of the required responses.  Use an appropriate professional way to begin and end your letter. You must consider the context of the letter – who are you writing it to, and how would you communicate with them?  The use of appropriate language, accounting terminology and reference in your letter to the specific information presented in the question.  No specific word count is prescribed. However, given the nature of the questions, it would be expected that the entire letter (including address and signoff) should require no more than one A4 page. (Letter to commence here) 13 April 2023 Mr. Scott Prider Prider & Copeland Accounting Services 516 Glynburn Rd Burnside SA 5066 Dear Mr. Prider, Regarding the given task of Vinyl Countdown’s income statement, I have conducted an extensive analysis of the firm’s financial position based on the provided information by using the accrual accounting method. Generally, Countdownn’s total revenue for the year ended 30 June 2022 was $243,000. According to my calculations, this income was separately included in two revenue streams. First, the record sale was $240,000 including $5000 from 2021 collected in 2022 and $8000 from 2022 collected in 2023. However, since the revenue from the previous year cannot be accounted for in the current year, therefore, $5000 was removed from the total revenue. The business has a variety of income streams, and sales in the future are anticipated to follow the existing trend. On the other hand, the total expenses for the business for the years was amounted to $203,100, invloving of $6,300 for depreciation expenses, $2,700 for salaries. Howeve, $2,000 for the salaries expense for 2021 collected from 2022 was initially excluded from the overall expenses. Importantly, the owner’s drawing which contributed to $1,900 was also excluded from the total expense. The outcome indicates the net profit for Vinyl Countdown remains at $39,000, representing the difference between the revenue and the expenses. This can be considered beneficial as it reflects the business is performing well financially. In a nutshell, I would like to thank you once again for the absolute chance to work on this income statement. Please do not hesitate to contact me if you require any further information or clarification. I look forward to hearing from you. Sincerely, 10

Alina QUESTION 4: Closing Entries (15 marks) Des Infectant is the sole proprietor of “GSI: Grime Scene Investigators”. Des is friends with Gail Shooter, Stanley Noife and Bonnie Jovi. GSI: Grime Scene Investigators is contracted by Here If You Need, Nailed It Hardware and Vinyl Countdown to clean the premises of each business. One evening when they all were all out to dinner, Des was explaining that he had no idea how to close off the accounts. His friends suggested he contact Prider & Copeland Accounting Services again and ask for you as they have all been very happy with the work you have done for them. During his appointment with you, Des presents you with the following Trial Balance. Des has tried to be helpful and has sorted the Trial Balance into alphabetical order! GSI: Grime Scene Investigators Trial Balance For the year ended 30 June 2022 Debit ($) Credit ($) Accounts Payable 9,000 Accounts Receivable 37,800 Accumulated Depreciation - Cleaning Equipment 27,000 Cash at Bank 18,600 Cleaning Equipment 54,000 Cleaning Supplies 9,000 Cleaning Supplies Expense 3,060 D. Infectant - Capital 27,000 D. Infectant - Drawings 21,600 Depreciation Expense 6,300 Insurance Expense 1,620 Interest Expense 900 Interest Payable 680 Mortgage Payable 15,700 Prepaid Insurance 4,500 Rent Expense 7,200 Salaries Expense 21,060 Salaries Payable 3,060 Sales 93,120 Unearned Revenue 10,080 Total 185,640 185,640 REQUIRED The Managing Partner has requested that you assist Des by preparing the following: a) Closing entries based on the Trial Balance provided above. b) A Post-closing Trial Balance for the year ended 30 June 2022. The Post-closing Trial balance must be in the appropriate order (i.e., not alphabetical) 11

a) General Journal – closing entries Date Details Debit ($) Credit ($) 30 June Sales 93,120 Profit& Loss Summary 93,120 Close income account to profit & loss summary 30 June Profit & Loss Summary 40,140 Depreciation Expense 6,300 Insurance Expense 1,620 Interest Expense 900 Rent Expense 7,200 Cleaning Supplies Expense 3,060 Salaries Expense 21,060 Close expense account to Profit 30 June Profit & Loss Summary 52,980 D. Infectant - Capital 52,980 Close Profit & Loss Summary to Capital account D. Infectant - Capital 21,600 D. Infectant - Drawings 21,600 Close Drawings to Capital Account b) Post-closing Trial Balance 12

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GSI: Grime Scene Investigators Post-closing Trial Balance For the year ended 30 June 2022 Debit ($) Credit ($) Cash at Bank 18,600 Account Receivable 37,800 Accumulated Depreciation- Cleaning Equipment 27,000 Cleaning Equipment 54,000 Cleaning Supplies 9,000 Unearned Revenue 10,080 Prepaid Insurance 4,500 Account Payable 9,000 Interest Payable 680 Mortage Payable 15,700 Salaries Payable 3,060 D. Infectant - Capital 58,380 123,900 123,900 Total 13

WRITTEN COMMUNICATION SKILLS 15 marks in total will be awarded for the following aspects of students’ written communication skills development: PARAPHRASING  Presenting ideas and information that student read in their own words,  Not simply taking what someone else has written and changing a few words . It is about translating another person’s ideas into the student’s own words . Mark (maximum 5) = BEING RELEVANT Does what is written contribute to answering the question(s)  Setting out to specifically answer the question(s) by using relevant information,  Staying ‘on track’ with answers,  Avoiding straying from the question and going off on irrelevant tangents. Mark (maximum 5) = WRITING FOR A PROFESSIONAL BUSINESS AUDIENCE (including good presentation)  The written work is clear and understandable,  Where applicable, the written work is based on the facts and available evidence,  Exaggeration and bold statements which are not supported by the facts and evidence are avoided. Good presentation  The written work contains no spelling and grammatical errors. Obvious evidence of editing displayed. (Where the work contains any spelling and grammatical errors, it cannot be awarded full marks),  Any headings and sub-headings display properly, and are used consistently throughout the document,  Page numbering is used. It is usual for page numbering to commence on page 2 of a business document as “2” (template provided- N/A)  Font size and font style are used consistently throughout the document,  If applicable, requested templates are used. Mark (maximum 5) = TOTAL WRITTEN COMMUNICATION SKILLS MARK (maximum 15) 14