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ACC222: The trial balance of KLZR Ltd - Financial Accounting Report Assignment Help

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Financial Accounting Report Assignment Help

Task: Question 1  Topic 2: Presentation of financial statements 

The trial balance of KLZR Ltd for the year ended 30 June 2018 is presented below:

Debit Credit
$ $
Sales revenue 997,000
Dividend revenue 7,000
Interest revenue 3,000
Cost of sales 355,000
Impairment loss – goodwill 5,000
Auditor remuneration 36,000
Depreciation – motor vehicles 45,000
Depreciation – plant and equipment 46,000
Doubtful debts 8,000
Interest expense 32,000
Office expenses 92,000
Rental expenses 15,000
Salaries 104,000
Selling expenses 97,000
Bad debt recovered 26,000
Loss on destruction of building 42,000
Income tax expenses 61,000
Cash on hand 13,000
Inventories 298,000
Receivables 192,000
Provision for doubtful debts 12,000
Bank deposits 40,000
Deferred tax assets 24,000
Franchises (cost) 95,000
Goodwill 100,000
Accumulated impairment losses – goodwill 20,000
Motor vehicles 150,000
Accumulated depreciation – motor vehicles 50,000
Plant and equipment 460,000
Accumulated depreciation – plant and equipment 147,000
Shares in listed companies (cost) 62,000
Accounts payable 102,000
Bank loan 100,000
Bank overdraft 35,000
Current tax liabilities 59,000
Deferred tax liabilities 24,000
Unsecured notes 150,000
Paid up capital (400,000 ordinary shares) 400,000
General reserve 1 July 2017 15,000
Retained earnings 1 July 2017 225,000
2,372,000 2,372,000

Additional information:

  • Auditor remuneration includes $16,000 in fees for management consulting services.

  • The franchises currently valued at cost of $95,000, were revalued to fair value of $115,000. Assume a tax rate of 30%.

  • The directors have declared a dividends of $65,000.

  • The directors have proposed a transfer from retained earnings to a general reserve of $25,000.

  • The depreciation expenses for the relevant assets are used for selling and distribution and administrative purposes, as detailed below:

 

Selling and distribution 

Administrative 

 

$

$

For motor vehicle

25,000

20,000

For plant and equipment

36,000

10,000

Salaries of $104,000 are incurred for: $60,000 for selling and distribution purposes and $44,000 for administrative purposes.

  • The rental expenses are for administrative purposes.

  • KLZR Ltd uses the single statement format for the statement of profit or loss and other comprehensive income and classifies expenses by function within the statement.

Required:

Prepare a statement of profit or loss and other comprehensive income and a statement of changes in equity for KLZR Ltd for the year ended 30 June 2018, according to the requirements of AASB 101. Notes to the accounts are not required but figures in your statements must be supported by explanations and/or workings. Ignore the requirement for prior period comparative figures.

Question 1 Max. marks allocated

SPLOCI

5

SCE

4.5

Workings/explanation 

8

Overall presentation

1.5

Total 

19

 

Question 2 Topic 3: Accounting policies and other disclosures

UTAR Ltd is finalising its financial statements for the reporting period ending 30 June 2018. On 20 August 2018, before the financial statements have been finalised and authorised for issue, the company’s directors become aware of the following situations:    

  1. The company holds shares in a public listed company, Binnie Ltd. The shares were valued at their market value at reporting date of $200,000. A major fall in the share market occurred on 12 August 2018, and the value of UTAR Ltd’s shareholding in Binnie Ltd declined to $150,000.

  2. One of the company’s major debtors, Fancy Ltd, filed for bankcruptcy on 10 August 2018. UTAR Ltd’s financial statements have been prepared reflecting a 50% doubtful debts provision for this account, with the carrying amount of this debtor stated at $400,000 ($800,000 less provision for doubtful debts of $400,000). It appears, at 10 August 2018, that no amount will be recovered from Fancy Ltd’s liquidator in respect of this account.

  3. On 30 June 2018, UTAR Ltd had a United States dollar loan outstanding (non-current liability) amount of US$200,000. Given the exchange rate at reporting date of A$1.00 = US$0.91, the load is stated in UTAR Ltd’s statement of financial position at a value of $219,780. A major fall in the value of the Australian dollar occurred on 13 August 2018, such that the exchange rate fell to A$1.00 = US$0.87. The Australian dollar equivalent of the United State dollar loan therefore rose to A$229,885.

  4. On 18 July 2018, it is discovered that a divisional manager has been under-depreciating plant and equipment. The motivation of the manager was to maximise the division’s profit figure in order to maximise his bonuses. The carrying amount of the relevant plant and equipment in UTAR Ltd’s financial statement is $1,500,000. An investigation by the company’s internal audit division, presented to UTAR Ltd’s directors on 15 August 2018, suggests that the plant and equipment has a recoverable amount of $1,150,000.

Required:

Assuming that each of the independent events described above are material events, you are required to:

  1. Classify the events as either an adjusting or non-adjusting event after the end of the reporting period. Justify your classification and make reference to relevant authority when appropriate.

  2. Base on your answer to 1 above, prepare the necessary journal entries or note disclosures to comply with the requirements of AASB110. 

Question 2 Max. marks allocated

Event (1)

4

Event (2)

4

Event (3)

4

Event (4)

4

Total 

16

  Question 3  Topic 4: Accounting for equity

Tara Ltd was incorporated on 1 July 2017.  The following transactions and events occurred during the year ended 30 June 2018:

1 Aug 2017

Tara Ltd makes an offer to the public for investors to subscribe for 5,000,000 shares, at an issue price of $6.00 per share, with $3.00 payable on application, $2.00 payable within one month of allotment, and $1.00 payable on a call to be made at a later date.

 

30 Sep 2017

Applications close, with applications received for 5,200,000 shares.

 

10 Oct 2017

Shares are allotted on a first-come first-served basis, and application money is refunded to unsuccessful applicants.

 

10 Nov 2017

All allotment money is received.

 

1 Feb 2018

The call is made, with money due by 28 February 2018.

 

28 Feb 2018

All call money is received except for holders of 100,000 shares who fail to meet the call.  

 

14 Mar 2018

The shares on which call money was not received are forfeited and sold as fully paid.  An amount of $5.30 is received for each share sold.  The balance in the forfeited shares account after reissue is returned to former shareholders.

Required:

 

Prepare the journal entries necessary to account for the above transactions and events. Show all relevant dates and brief narrations.

Question 3

Max. marks allocated

Journal entries

11

Dates 

2

Narration 

2

Total  

15

Question 4 Topic 5: Revaluation of assets

 

Companion Ltd acquires an item of machinery on 1 July 2016 for $190,000. The useful life and residual value of this machinery is estimated to be six years and $10,000 respectively. The directors elect to depreciate machinery on a straight-line basis.

On 30 June 2017, Companion Ltd adopts the revaluation model for machinery. On this date, the directors determine that the fair value of this machinery is $150,000. As at 30 June 2017, this machinery is expected to have a remaining useful life of five years, and the estimated residual value is revised from $10,000 to $6,000.

On 30 June 2018, the directors determine that the fair value of this machinery is $140,000. As at 30 June 2018, this machinery is expected to have a remaining useful life of four years, and the estimated residual value remains unchanged at $6,000

Ignore any tax effect.

Required:

Prepare the necessary journal entries to account for the item of machinery (including entries for acquisition, depreciation and all revaluation entries) for the period 1 July 2016 to 30 June 2018.  Show all relevant workings.

  • Uploaded By : amy
  • Posted on : September 04th, 2017
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