FNS50215 Diploma of Accounting Assignment Help

FNS50215 Diploma of Accounting Assignment Help

FNS50215 Diploma of Accounting Assignment Help

1. List three (3) differences between a small and a large proprietary company?

A.Small proprietary company is a company whose consolidated revenue is less than $25 million for the financial year where large proprietary company is company where revenue is $25 million or more for the FY of the company.

B. Small proprietary company is a company whose consolidated gross assets are less than $12.5 million at the end of FY where large proprietary company is company where gross assets of such company is $12.5 million or more at the end of FY. (Zielstra & Zipf, 2010).

FNS50215 Diploma of Accounting Assignment HelpC. Small proprietary company is a company which holds less than 50 employees at the end of FY where large proprietary company holds more than 50 employees at the end of FY.

2.Rufflander Ltd. – General Journal Entries                       

Date

Accounts 

Debit

Credit

 

Cash Trust a/c Dr.

To Share Application a/c

300,000

 

 

300,000

 

Receipt of application money

 

 

 

Share Application a/c Dr.

To Share Capital a/c

300,000

 

300,000

 

Issue of 300,000 $1 fully paid ordinary shares

 

 

 

Bank a/c Dr.

To Cash Trust a/c

300,000

 

300,000

 

Transfer of application funds to bank

(Weygandt, et. al., 2015)

 

 

3.

Date

Account

Debit

Credit

 

Cash Trust a/c Dr. (1000*100)

To 8% Debenture application a/c

 

100,000

 

100,000

 

Receipt of application money for debentures

 

 

 

8% Debenture application a/c Dr.

To 8% Debenture a/c

100,000

 

100,000

 

Issue of Debentures

 

 

 

Bank a/c Dr.

To Cash Trust a/c

300,000

 

300,000

 

Transfer of application funds to bank on issue of debentures(Bhattacharyya, 2012)

 

 

4.  Smelliot Ltd. – General Journal

Account

Debit

Credit

Freehold land and building a/c Dr.

Plant and Equipment a/c Dr.

Motor Vehicles a/c Dr.

Inventory a/c Dr.

Accounts Receivable a/c Dr.

Allowance for doubtful debts a/c Dr.

General Reserves a/c Dr. (Balancing figure)

To Accounts Payable

To Business Purchase

(Shah, 2013)

400,000

150,000

74,000

164,000

100,000

15,000

12,000

 

 

 

 

 

 

 

115,000

800,000

Acquisition of  business

 

 

Business Purchase a/c Dr.

To Equity Capital (500,000 equity shares of $1 each)

To Bank

800,000

 

500,000

300,000

Payment of Purchase Consideration(Shah, 2013)

 

 

5 a. Why would a company establish a reserve?

Reserves are specific portions of profits which are set aside by the companies for future contingencies. These reserves are beneficial for the companies from security point of view as to reduce the risk of loss in business in future. These reserves are helpful in providing the security to the businesses in relation to all types of financial risks that are related to business plan. From such reserves companies can look for its expansion plans as well as companies can invest in various portfolios which are profitable for the company. These reserves are beneficial for the companies in avoiding future probable losses (Montoro & Moreno, 2011).

5 b. List three (3) types of reserves which may be established?

Three types of reserves that can be established are as follows.

1. Debenture redemption reserve

2. Investment fluctuation reserve

3. Reserve for doubtful debts (Montoro & Moreno, 2011)

6.Fantuz Ltd. – General Journals

Date

Account

Debit

Credit

1st Qtr

PAYG tax withholding a/c Dr.

 

 

11,000

 

 

 

To PAYG tax instalment payable

 

11,000

 

PAYG Tax Instalment due for  quarter

 

 

1st Qtr

PAYG tax instalment payable

 

 

11,000

 

 

 

To Bank

 

11,000

 

Payment of PAYG tax instalment for quarter

 

 

2ndQtr

PAYG tax withholding a/c Dr.

PAYG tax withholding a/c Dr.

 

 

11,000

 

 

To PAYG tax instalment payable

 

11,000

PAYG Tax Instalment due for  quarter

 

 

PAYG tax instalment payable

 

 

11,000

 

 

To Bank

 

11,000

Payment of PAYG tax instalment for quarter

 

 

 

 

 

11,000

 

 

 

To PAYG tax instalment payable

 

11,000

 

PAYG Tax Instalment due for  quarter

 

 

2nd Qtr

PAYG tax instalment payable

 

 

11,000

 

 

 

To Bank

 

11,000

 

Payment of PAYG tax instalment for quarter

 

 

3rd Qtr

PAYG tax withholding a/c Dr.

 

 

11,000

 

 

 

To PAYG tax instalment payable

 

11,000

 

PAYG Tax Instalment due for  quarter

 

 

3rd Qtr           

PAYG tax instalment payable

 

 

11,000

 

 

 

To Bank

 

11,000

 

Payment of PAYG tax instalment for quarter

 

 

4th Qtr

PAYG tax withholding a/c Dr.

 

 

11,000

 

 

 

To PAYG tax instalment payable

 

11,000

 

PAYG Tax Instalment due for  quarter

 

 

4th Qtr

PAYG tax instalment payable

 

 

11,000

 

 

 

To Bank(Atwood, et. al., 2010)

 

11,000

 

Payment of PAYG tax instalment for quarter

 

 

4th Qtr

Additional tax payable a/c Dr.

 

 

6,400

 

 

To Bank

 

6,400

 

(168,000*30% - 44,000)

 

 

 

Additional tax payable for year

 

 

4th Qtr

PAYG Tax withholding a/c Dr.

To

6,400

 

 

To Additional tax payable

 

6,400

 

 

 

 

 

Balance transferred (Atwood, et. al., 2010)

 

 

7. (a) Under tax payable accounting the appropriation f tax expenses in the books of accounts is made when the tax expenses are required to be paid whereas under tax effect accounting the appropriation of tax expenses in the books of accounts is made as and when they incur rather than when they are need to be paid (Taylor & Richardson, 2012).

(b)

 

Item

Accounting treatment

Tax treatment

1.

Depreciation

Charged on the basis of accounting rate

Charged On the basis of rate which is allowed under income tax laws

2.

Revenue in advance

Not recorded as revenues in profit and loss statement but recognised as asset in balance sheet.(Taylor & Richardson, 2012)

Included in the taxable revenues of the period

(c) Reporting entities shall adopt tax effect accounting method since they need to comply with the provisions of International Accounting Standard 12 ‘Income Taxes’ which requires for recognition of tax effect in the form of DTA and DTL (Taylor & Richardson, 2012).

8. (a)

Account

Debit

Credit

DTA a/c Dr.

$900

 

To Profit & Loss Account

 

$900

Explanation:

 

Out of the doubtful debt expense of the company amounting to $9,000 only $6,000 have been written off against the opening balance of allowance of bad and doubtful debts and thus the remaining expense of $3,000 will be written off in the future years for which the tax deduction can be claimed and thus DTA will arise. The amount of DTA will be ($9,000 - $6,000)*30% = $900 (Finger, 2010).

 

(b)  

 

Account

Debit

Credit

Profit & Loss a/c Dr

$6,000

 

To DTL

 

$6,000

Explanation:

The revenue of $20,000 has not been recognised in the CY and thus will be recognised in next four years. In future years the tax will be payable on the revenues  and thus the DTL will arise in the current year. The amount of DTL will be $20,000*30% = $6,000 (Finger, 2010).

 

(c)   

Account

Debit

Credit

Profit & Loss a/c Dr

$3,000

 

To DTL

 

$3,000

Explanation:

The accounting depreciation charged on plant and machinery is $50,000 ($200,000*25%) whereas the tax depreciation allowed is $60,000($200,000*30%). The accounting difference is $10,000. The accounting difference will be disallowed in future years for tax purposes and thus DTL will arise which amounts to $10,000*30% = $3,000 (Finger, 2010).

 

    

9. (a)

( a )      Statement of Cash Flows for Financial Year Ended 30 June 2016

( i )      Cash flows from Operating Activities

Receipts from Customers

$ 260,000

 

Dividends Received

$ 18,000

 

Interest Income

$ 20,000

 

Payments to Suppliers

$ (160,000)

 

Payments to Employees

$ (125,000)

 

Taxation Paid

$ (22,000)

 

Other Operating Expenses

$ (188,000)

 

Net cash used in Operating Activities

(197,000)

$

( ii )     Cash flows from Investing Activities

Proceeds from disposal of Machinery

$ 41,000

 

Purchase of Property, Plant & Equipment

$ (270,000)

 

Net cash used in Investing Activities

(229,000)

$

( iii )    Cash flows from Financing Activities

Proceeds of Share Issue

$ 2,00,000

 

Proceeds of Debenture Issue

$ 50,000

 

Dividends Paid

$ (40,000)

 

Net Cash from Financing Activities

 

$ 2,10,000

Net decrease in cash and cash equivalents

$ (216,000)

Cash and cash equivalents at beginning

 

$ 324,000

Cash and cash equivalents at end of year

 

$ 108,000

Reconciliation of cash and cash equivalents

 

Cash at bank

$ 105,000

 

Petty cash on hand

$ 3,000

 

Cash and cash equivalents at end of year

$ 108,000 (Disatnik, et. al., 2013)

9(b)

Reconciliation to determine cash flows from operating activities

 

Operating profit after tax

 

$58,000

+ / -

Non Cash Items

 

 

 

Depreciation of non-current assets

$ 21,000

 

 

Loss on sale of plant

$ 4,000

 

 

Doubtful debts

$ 4,000

$ 29,000

 

 

 

 

 

Changes in Current Assets and Liabilities

 

 

 

Increase in Accounts Receivable

$ (1,000)

 

 

Increase in Bills Receivable

$(1,000)

 

 

Decrease in Inventory

$2,000

 

 

Increase in Accounts Payable

$7,000

 

 

Decrease in Taxation Payable

$(4,000)

$3,000

 

Net cash from Operating Activities (Disatnik, et. al., 2013)

 

$32,000

The following questions are based on the material in Chapter 8:

10.

Statement of Financial Position of Lozza Limited at 30 June 2016

ASSETS

 

 

CURRENT ASSETS

 

Note:

$

 

Cash and cash equivalents

 

1

$ 134,500

 

Trade and other receivables

 

2

$ 316,000

 

Inventories

 

3

$ 370,100

 

Other Current Assets

 

4

$ 31,900

$ 852,600

 

 

 

NON CURRENT ASSETS

 

 

Available for sale investments

5

$ 420,000

 

Other financial assets

6

$ 145,000

 

Property plant and equipment

7

$ 2,609,000

 

Goodwill

 

8

$ 198,000

 

Other intangibles

 

9

$ 51,000

 

Other non-current assets

 

10

$ 30,000

$ 3,453,000

TOTAL ASSETS

 

 

 

$ 43,056,000

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

Other Current liabilities

 

 

$ 654,000

 

NON CURRENT LIABILITIES

 

 

 

 

Deferred tax liabilities

11

$ 155,300

 

TOTAL LIABILITIES

 

 

 

$ 809,300

NET ASSETS

 

 

 

$ 3,496,300

 

 

 

 

 

EQUITY

 

 

 

 

Share capital

 

 

$ 1,000,000

 

Reserves

 

12

$ 448,700

 

Retained Earnings

 

 

$ 2,047,600

 

TOTAL EQUITY

 

 

 

$ 3,496,300 (Chen, et. al., 2011)

 

 

 

 

 

(b) Notes to Statement of Financial Position

1. Cash and cash equivalents

 

Cash at bank

 

 

$ 81,000

 

Cash on hand

 

 

$ 3,500

 

At call deposit

 

 

$ 50,000

$ 134,500

 

 

 

2.  Trade and other receivables

 

Trade Receivables                                                                         

 

$ 269,300

 

 

Allowance for Doubtful Debts

$ 5,200

$ 264,100

 

Bills Receivable ( due 12/16)

 

$ 2,000

$ 316,100

 

 

 

 

3.  Inventories

 

Raw Materials at cost

 

$ 47,600

 

Work in Progress at cost

$ 36,000

 

Finished Goods at cost

 

$ 286,500

$ 370,100

 

 

 

 

4.  Other current assets

 

Spare parts

 

$ 7,400

 

Accrued Income

 

$ 8,900

 

Prepayments

 

$ 15,600

$ 31,900 (Chen, et. al., 2011)

(b) Continued…..Notes to Statement of Financial Position

 

 

 

5.  Available for sale investments

 

 

Shares in Listed Companies

 

 

 

- at market value(Cost $370,000)

 

 

$ 420,000

 

 

 

 

6. Other Financial Assets

 

 

 

Shares in Private Companies

 

 

 

- at Directors’ value(Cost $110,000)

 

 

$ 145,000

 

 

 

 

7. Property, plant & equipment

 

 

Land & Buildings

 

 

 

( revalue 30/06/16 )  independent valuer

 

$ 2,400,000

 

Plant & Machinery (at cost)

$ 267,000

 

 

Less Accumulated Depreciation

$ (58,000)

$ 209,000

$ 2,609,000

 

 

 

 

8. Goodwill

 

 

 

Goodwill (at cost)

$ 220,000

 

 

Less Accumulated Impairment

$ (22,000)

 

$ 198,000

 

 

 

 

9. Other Intangible Assets

 

 

 

Licenses (at cost)

$ 85,000

 

 

Less Accumulated Amortisation

$ (34,000)

 

$ 51,000

                                                                       

 

 

 

10. Other Non-Current Assets

 

 

 

Bills Receivable ( due 15/03/18 )

 

 

$ 30,000

 

 

 

 

11. Deferred Tax Liabilities

 

 

 

Deferred Tax Labilities                                    

$ 21,000

 

 

Revaluation Land, Buildings   

$ 166,800

 

 

Revaluation Shares    

$ 25,500

 

 

Deferred Tax Assets

$ (58,000)

 

$ 155,300

 

 

 

 

12. Reserves

 

 

 

Asset Revaluation Reserve

 

 

 

- buildings                  

$ 556,000

 

 

- shares in listed companies

$ 50,000

 

 

- shares in listed companies

$ 35,000

 

 

- tax effect of revaluations

$(192,300)

 

 

 

 

 

$ 448,700 (Chen, et. al., 2011)

11.( a ) Workings:

                                               

Fair value $

Carrying Value $

Building

105,000

105,000

Land

70,000

75,000

Equipment

60,000

60,000

Inventory

30,000

30,000

 Total

270,000

270,000

 

$

Notes:

Carrying Value

75,000

As at 30 June 2016

Less Recoverable amount

70,000

Note: fair value less costs to sell

Impairment Loss

5,000

 

 (Lang, et. al., 2012)

Journal:

 

DR

CR

Impairment loss a/c Dr

5,000

 

To Land

 

5,000

Narration: Journal entries to account for impairment loss under AASB136

( b )                            

 

Fair value $

Carrying Value $

Building

105,000

105,000

Land

62,500

75,000

Equipment

60,000

60,000

Inventory

30,000

30,000

Total

270,000

270,000

(Lang, et. al., 2012)

 

$

Notes:

Carrying Value

75,000

As at 30 June 2016

Less Recoverable amount

62,500

Note: value in use

Impairment Loss

12,500

 

Journal:

 

DR

CR

Impairment loss a/c Dr

12,500

 

To Land

 

12,500

Narration: Journal entries to account for impairment loss under AASB136

(Lang, et. al., 2012)

12.Lilli Ltd.

Date

Account

Debit

Credit

30 June 2014

Impairment allowance a/c Dr

$5,000

 

 

To Goodwill

 

$5,000

 

Impairment allowance for the year

 

 

 

Impairment loss a/c Dr.

$5,000

 

 

To Impairment allowance

 

$5,000

 

Balance transferred

 

 

30 June 2015    Hint:Carefully consider whether you think a journal is required at 30/6/15.

At 30 June 2015 the fair value of goodwill is increased which is appreciation and thus no impairment is required to be provided for. No journal is needed (Carlin & Finch, 2010).

                                   Provide your explanation if no journal is required:

 

 

                  

Date

Account

Debit

Credit

30 June 2016

Impairment allowance a/c Dr

$10,000

 

 

To Goodwill

 

$10,000

 

Impairment allowance for the year

 

 

 

Impairment loss a/c Dr.

$10,000

 

 

To Impairment allowance

 

$10,000

 

Balance transferred

 

 

13. (a)

 

 

Date

Account

Debit

Credit

30 June 2016

Share Capital a/c Dr.

$60,000

 

 

Reserves a/c Dr.

$15,000

 

 

Retained Earnings a/c Dr.

$5,000

 

 

To Investment in Yellow Ltd

 

$80,000

 

Journal entry to eliminate the investment in Yellow Ltd by Red Ltd.

 

 

(b)

Worksheet extract

as at 30 June 2016

Red Ltd

Yellow Ltd

Eliminations

Consolidation
Balance

   

Dr

Cr

 

Operating Profit after tax 

48,000

33,000

  

81,000

Retained Earnings 01/07/15

20,000

5,000

5,000

 

20,000

 

68,000

38,000

5,000

 

101,000

Appropriations 

28,000

14,000

  

42,000

Retained Earnings 30/06/16

40,000

24,000

  

64,000

Share Capital 

200,000

60,000

60,000

 

200,000

Reserves 

72,000

15,000

15,000

 

72,000

Shares in Yellow Ltd

80,000

  

80,000

-

(Mohd, et. al., 2012)

References

Zielstra, D., & Zipf, A. (2010). A comparative study of proprietary geodata and volunteered geographic information for Germany. In 13th AGILE international conference on geographic information science (Vol. 2010).
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2015). Financial & Managerial Accounting. John Wiley & Sons.
Bhattacharyya, A. K. (2012). Financial Accounting for business managers. PHI Learning Pvt. Ltd.
Shah, P. (2013). Financial Accounting. OUP Catalogue.
Montoro, C., & Moreno, R. (2011). The use of reserve requirements as a policy instrument in Latin America.
Atwood, T. J., Drake, M. S., & Myers, L. A. (2010). Book-tax conformity, earnings persistence and the association between earnings and future cash flows. Journal of Accounting and Economics, 50(1), 111-125.
Taylor, G., & Richardson, G. (2012). International corporate tax avoidance practices: evidence from Australian firms. The International Journal of Accounting, 47(4), 469-496.
Finger, C. A. (2010). Using judgment to measure the allowance for doubtful accounts. Global Perspectives on Accounting Education, 7, 9.
Disatnik, D., Duchin, R., & Schmidt, B. (2013). Cash flow hedging and liquidity choices. Review of Finance, rft006.
Chen, F., Hope, O. K., Li, Q., & Wang, X. (2011). Financial reporting quality and investment efficiency of private firms in emerging markets. The accounting review, 86(4), 1255-1288.
Lang, M., Lins, K. V., & Maffett, M. (2012). Transparency, liquidity, and valuation: International evidence on when transparency matters most. Journal of Accounting Research, 50(3), 729-774.
Carlin, T. M., & Finch, N. (2010). Evidence on IFRS goodwill impairment testing by Australian and New Zealand firms. Managerial Finance, 36(9), 785-798.
Mohd Nasir, N., Othman, R., Said, J., & Ghani, E. K. (2012). Financial reporting practices of charity organisations: A Malaysian evidence.