FNS50215 Diploma of Accounting Proof Reading Service

FNS50215 Diploma of Accounting Assignment Help

FNS50215 Diploma of Accounting Proof Reading Service

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 Help C. 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)

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.

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 ($200,00025%) whereas the tax depreciation allowed is $60,000($200,00030%). 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.