QUESTION 3: Accounting ConceptsFor each of the following scenarios, in your own words, using a letter format and references whereappropriate:Ms Daphne Blake is the sole proprietor of 'Sunsetz', a beach shade sale and hire business specialisingin beach tents. Many of the customers who purchase or hire beach shades from Sunsetz' have seenthe Sunsetz' shades set up on the beach in front of the shop. The local lifeguards use these shades torest under between their shifts in the tower.Ms Blake has had a meeting with the Managing Partner of Michell & Co Accounting Specialists Pty Ltdand you were invited to attend.During the meeting Ms Blake explained that she felt there was an omission in "Sunsetz' financialstatements prepared by Michell & Co Accounting Specialists Pty Ltd. Ms Blake considered that thesmall area of beach in front of the shop should be recorded as an asset in 'Sunsetz' Balance Sheet. MsBlake argued that it was due to the beach in front of the business she was able to set up a beach shadedaily advertising the beach shades she hires out and sells.After the meeting, the Managing Partner tells you she is extremely busy with a number of clients atthe moment and asks you to prepare a letter to Ms Blake.REQUIRED:Please write a letter in your own words, addressed to Ms Blake explaining whether or not the beachdirectly in front of "Sunsete' can be recorded as an asset in Sunsetz' financial statements.The explanation must refer to the appropriate *element definition and apply the facts provided above.Generic answers will achieve minimal marks.*element = asset, liability, income, expenseUp to an additional 2 marks will be awarded for adhering to the following the formattingrequirements:• Date your letter the 8th August 2020Address your letter to Ms Blake, Sunsetz', 26 The Esplanade, Stony Point, South Australia5959• Any formal business letter format is acceptable (a template has not been provided - studentsare expected to research business letter formats themselves).• Consider an appropriate way to sign off your letter• Set out your letter with subheadings to separate each part of your letter as you address thecriteria requiredNo specific word count is prescribed. However, given the nature of the questions, it wouldbe expected that the entire letter (including address and sign-off) should require no morethan a single A4 page. QUESTION 2: Financial StatementMs Daphne Blake is the sole proprietor of "Sunsetz', a beach shade sale and hire business specialisingin beach tents. She is also a good friend of Fred Jones and often refers customers who are holidayingin the area to the "Shore Read'. The following Trial Balance for 'Synsetz has been prepared at yearend by Ms Blake who likes to keep a hand in the bookkeeping side of the business.SUNSETZ - TRIAL BALANCE AS AT 30 JUNE 202ODebit ($)Credit ($)Shop Furniture & FittingsSalaries Expense20 00033 280Sales Returns & Allowances6 904Accounts Receivable36 871Office Electricity ExpenseDiscount Received8002 536Insurance Expense1 520Accumulated Depreciation –7216Shop Furniture &FittingsOffice Rent Expense2 920Daphne, DrawingsDoubtful Debts Expense14 800800Cash at 8ank38 789Advertising PayableInterest ExpenseSales7957376336 000Shop Electricity ExpensePurchases454308 968Purchase returns and4 336allowancesDaphne, CapitalDepreciation Expense– Shop35 8482 840Furniture & FittingsInterest received1 848Sales Equipment11 520Freight Inwards2 256Hire Fees100 000Shop Rent ExpenseAdvertising ExpenseAccounts PayableDiscount AllowedInterest PayableInventory (1 July 2019)Loan PayablePrepaid AdvertisingAllowance for Doubtful DebtsFuel ExpenseTotals20 5205 2378 4782 98049616 76826 8801 232800Delivery Van2 560532 395532 395QUESTION 2: Financial Statement (cont.)Additional Information:The loan is payable in equal amounts over 48 monthsA physical stocktake of inventory at 30th June 2020 revealed $46 750 on hand.Insurance was paid to cover the office equipment.The Salaries expense covered Shop Salaries and Office Salaries $22 640 and $10 640 respectively.REQUIRED:Prepare a fully classified Income Statement using the Trial Balance provided for the period inquestion. Please answer directly below.

Income Statement: A financial statement which shows profitability of company over a period of time…

For each of the following scenarios, in your own words, using a letter form appropriate: Ms Daphne Blake is the sole proprietor of 'Synsetz, a beach shade sale and in beach tents. Many of the customers who purchase or hire beach shades the "Sunsetz' shades set up on the beach in front of the shop. The local lifege rest under between their shifts in the tower. Ms Blake has had a meeting with the Managing Partner of Michell & Co Ac and you were invited to attend. During the meeting Ms Blake explained that she felt there was an omis statements prepared by Michell & Co Accounting Specialists Pty Ltd. Ms E small area of beach in front of the shop should be recorded as an asset in "Sy Blake argued that it was due to the beach in front of the business she was abl daily advertising the beach shades she hires out and sells. After the meeting, the Managing Partner tells you she is extremely busy wi the moment and asks you to prepare a letter to Ms Blake. REQUIRED: Please write a letter in your own words, addressed to Ms Blake explaining w directiv in front of Sunsetz' can be recorded as an asset in "Sunsetz' financia

For each of the following scenarios, in your own words, using a letter form appropriate: Ms Daphne Blake is the sole proprietor of 'Synsetz, a beach shade sale and in beach tents. Many of the customers who purchase or hire beach shades the "Sunsetz' shades set up on the beach in front of the shop. The local lifege rest under between their shifts in the tower. Ms Blake has had a meeting with the Managing Partner of Michell & Co Ac and you were invited to attend. During the meeting Ms Blake explained that she felt there was an omis statements prepared by Michell & Co Accounting Specialists Pty Ltd. Ms E small area of beach in front of the shop should be recorded as an asset in "Sy Blake argued that it was due to the beach in front of the business she was abl daily advertising the beach shades she hires out and sells. After the meeting, the Managing Partner tells you she is extremely busy wi the moment and asks you to prepare a letter to Ms Blake. REQUIRED: Please write a letter in your own words, addressed to Ms Blake explaining w directiv in front of Sunsetz' can be recorded as an asset in "Sunsetz' financia

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

1. Consider the following scenario: [2.5] Imagine that you are in charge of a cycle hire business in a holiday resort. You have 50 cycles available for hire. Some customers hire cycles for one day; others take them for up to one week. Write down any three decisions that you might make as a manager, where accounting information would be helpful in making the decision.
Sand and Sea Resorts owns and operates two resorts in a coastal town. Both resorts are located on a barrier island that is connected to the mainland by a high bridge. One resort is located on the beach and is called the Crystal Coast Resort. The other resort is located on the inland waterway which passes between the town and the mainland; it is called the Harborview Resort. Some key information about the two resorts for the current year is shown below. Harborview Crystal Coast Total Revenue (000s) $3,500 $6,500 $10,000 Square feet 75,000 225,000 300,000 Rooms 60 140 200 Assets (000s) $136,000 $544,000 $680,000 The nontraceable operating costs of the resort amount to $4,000,000. By careful study, the management accountant at Sand and Sea has determined that, while the costs are not directly traceable, the total of $4 million could be fairly allocated to the four cost drivers as follows. Cost Driver Amount Allocated…
Carry Yoki’s Lounge consists of the following: Carry, the owner, believedthat people would come to hear a band play on Friday, Saturday, andSunday evenings. During the remainder of the week, she believed hercustomers would watch sporting events on several television sets locatedthroughout the lounge. Carry employed two bartenders, three servers, twoassistant servers, two cooks, one dishwasher, and a cleanup person. She hada bar, 15 bar stools, 4 tables, 40 chairs, 4 television sets, and a satellite dish.She had an oven, stove, grill, refrigerator, sinks, dishes, and glassware. Carrystarted this business with $50,000 of her own money, and she borrowed$150,000 from the bank. From this description, list each of the scarceresources that are used in Carry Yoki’s Lounge.
You are the staff accountant working at a local tutoring center. The monthly financial statements (Income Statement, Statement of Retained Earnings, and Balance Sheet) were just finalized and released to the employees of the tutoring center. You hear some of the other employees talking about the financial statements. In most cases, the employees do not understand the purpose of the statements. You have been asked by your supervisor to create a MEMO to be sent to the employees of the tutoring center that includes the following: Explain how accounting became a “norm” (what made a system of accounting necessary) and reflect on why YOU think it is beneficial for society as a whole to have a standard method of accounting.
Complete your calculations by filling in the highlighted cells. Note: the PV Annuity table is provided for you. Discuss if you think the cookie business should accept or reject the purchase of the new equipment and why.Additional information has come to your attention regarding the equipment purchase. One of the partner's brother owns the company that sells the equipment and insists the equipment is needed. Discuss any ethical concerns you see with this type of transaction. Cookie Business As the owner of the Cookie Business, you are considering the following investment: Purchase of new equipment $ 250,000.00 Expected annual increase in sales $ 48,017.50 Time frame 7 years Acceptable rate needed 9% Calculate the Internal Rate of Return: PV of annuity factor Internal rate of return Accept or reject
I.M. Aruban has a sandwich shop in a downtown business district. Several ofhis customers have said that they would purchase from his shop more oftenif he offered a delivery service. I.M. is considering establishing a deliveryservice to meet the needs of his market. He believes that he will have to purchasea fax machine, install a new phone line for the fax machine, purchasea delivery van, and hire at least one delivery person. I.M. asks your advice indetermining whether he should take on the delivery service venture.a. What steps would you recommend that I.M. use in reaching a profitabledecision?b. Explain to I.M. what each step involves.
Sand and Sea Resorts owns and operates two resorts in a coastal town. Both resorts are located on a barrier island that is connected to the malnland by a high bridge. One resort is located on the beach and Is called the Crystal Coast Resort. The other resort is located on the Inland waterway which passes between the town and the malnland; It is called the Harborvlew Resort. Some key Information about the two resorts for the current year Is shown below. Harborview Crystal Coast $ 6,175 250,000 Total Revenue (000s) $ 3,825 $ 10,000 Square feet 80, 000 330,000 Rooms 66 150 216 Assets (000s) $ 110,000 $ 440,000 $ 550,000 The nontraceable operating costs of the resort amount to $4000,000. By careful study, the management accountant at Sand and Sea has determined that, while the costs are not directly traceable, the total of $4 million could be falrly allocated to the four cost drivers as follows. Amount Cost Driver Allocated Revenue $ 185,000 Square feet 115,000 Rooms 580,000 Assets (000s)…
Our client performs bookkeeping work for her clients. She performs most of her client work at the client's office. She has about ten clients and spends about 4 hours per client each week at the client's office. She also has a dedicated office at her home where she does all of her administrative work for her business. The administrative work she performs is at her home office to include billing, record keeping, and training. Area of her home used for business - 500 square feet 5,000 square feet Total area of home Annual indirect costs o Gross income from business $100,000 o Deductible mortgage interest $25,000 o Real estate taxes $1,500 o Utilities $2,500 Ignore depreciation for this assignment. Questions: 6. Does the IRS provide a publication on this topic? If so, please cite. Do not attach the publication as support for this memorandum.
Bob Night opened The General’s Favorite Fishing Hole. The fishing camp is open from April through September and attracts many famous college basketball coaches during the off-season. Guests typically register for one week, arriving on Sunday afternoon and returning home the following Saturday afternoon. The registration fee includes room and board, the use of fishing boats, and professional instruction in fishing techniques. The chart of accounts for the camping operations is provided below. Enter the transactions in a general journal. Enter transactions from April 1–5 on page 1, April 7–18 on page 2, April 21–29 and the first two entries for April 30 on page 3, and the remaining entries for April 30 on page 4. Post the entries to the general ledger. Prepare a trial balance on a work sheet. Complete the work sheet. Journalize the adjusting entries. Post the adjusting entries to the general ledger. The following transactions took place during April 20--. Apr. 1 Night invested…
You work as an accountant for a small land development company that desperately needs additionalfinancing to continue in business. The president of your company is meeting with the manager of alocal bank at the end of the month to try to obtain this financing. The president has approached youwith two ideas to improve the company’s reported financial position. First, he claims that because abig part of the company’s value comes from its knowledgeable and dedicated employees, you shouldreport their “Intellectual Abilities” as an asset on the balance sheet. Second, he claims that by reporting the company’s land on the balance sheet at its cost, rather than the much higher amount that realestate appraisers say it’s really worth, the company is understating the true value of its assets.Required:1. Thinking back to Chapter 1, why do you think the president is so concerned with the amountof assets reported on the balance sheet?2. What accounting concept introduced in Chapter 2 relates to the…
Needing continuing education hours to renew your CPA license, you, a sensible person, decide to combine business and pleasure. So you find a tax conference in Miami and buy a round-trip ticket for $400. The conference is Tuesday-Friday. Bright and early on Saturday morning you hop into your rental car and drive down the “Overseas Highway” to Key West, where you party and stay over. On Sunday afternoon you reluctantly return to Miami and fly home. How much, if any, of your airfare is deductible, and why?
Ronald Roth started his new job as controller with Aerosystems today. Carole, the employee benefits clerk, gave Ronald a packet that contains information on the company's health insurance options. Aerosystems offers its employees the choice between a private insurance company plan (Blue Cross/Blue Shield), an HMO, and a PPO. Ronald needs to review the packet and make a decision on which health care program fits his needs. The following is an overview of that information. a) The monthly premium cost to Ronald for the Blue Cross/Blue Shield plan will be $59.79. For all doctor office visits, prescriptions, and major medical charges, Ronald will be responsible for 20 percent, and the insurance company will cover 80 percent of covered charges. The annual deductible is $840. b) The HMO is provided to employees free of charge. The copayment for doctors' office visits and major medical charges is $25. Prescription copayments are $20. The HMO pays 100 percent after Ronald's copayment. There is…