COMM1140 Additional Practice Content for Final Exam
Hello, dear friend, you can consult us at any time if you have any questions, add WeChat: daixieit
COMM1140 Additional Practice Content for Final Exam
QUESTION: Prepare financial statements
The following is the closing account balances as prepared for Sydney Company as at 30 June 2020 (for the 12 months beginning on 1 July 2019):
|
DR $ |
CR $ |
Bank Overdraft Accounts Receivable Inventory Prepaid Rent Property, Plant and Equipment Accumulated Depreciation Accounts Payable Bank loan Share Capital Retained Profit at 1 July 2019 Sales revenue Cost of Goods Sold Interest Expense Wages Expenses Rent Expense |
200,000 100,000 10,000 450,000
265,000 5,000 80,000 5,000 |
11,000
200,000 60,000 50,000 310,000 34,000 450,000 |
|
1,115,000 |
1,115,000 |
The following information is given which may give rise to year-end adjustments. The effect of these transactions is not reflected in the account balances above.
i. Depreciation on Property, Plant and Equipment is $45,000 per annum.
ii. The balance in Prepaid Rent relates to the 12-month period from 1 January 2020 to
31 December 2020.
iii. Insurance worth $18,000 was prepaid on 1 June 2020 for the period 1 June 2020 –
30 November 2020. No journal entry had been recorded for this purchase.
iv. On 30 June 2020, the directors declared a dividend of $5,000, which the shareholders authorised. The dividend is to be paid on 15 September 2020.
v. It is discovered that $10,000 cash received during the year and credited to sales are actually related to services to be delivered in July 2020.
vi. $5,000 of wages relating to June 2020 have not been paid and need to be accrued.
Part A
Prepare journal entries for the necessary end of period adjustments
Account name |
Debit $ |
Credit $ |
|
|
|
Part B
Prepare an Income Statement for the year ended 30 June 2020
Part C
In the Balance Sheet as at 30 June 2020, what would be the closing balance of retained profits? Show all workings
QUESTION Financial Statement Analysis
You are required to indicate the effect of the transactions listed below on the ratio listed opposite it. For each transaction, state whether the ratio would increase, decrease, or have no effect. You are also required to provide a brief explanation for your answer.
|
Transaction |
Ratio |
1 |
Acquired a bank loan of $750,000 |
Debt-to-assets ratio |
2 Inventory worth $30,000 was sold for $45,000 cash Return on equity
3 |
Declared a dividend of $500,000 |
Profit margin |
4 |
Received a deposit from a customer of $10,000 for a project that will commence in the next financial period |
Leverage Ratio |
5 |
Collected $30,000 from a customer |
Asset Turnover |
Note:
Treat each transaction independently.
The current ratio for the period was 2.4.
The debt-to-asset ratio was 0.67.
The return on equity ratio was 4%.
All other ratios were positive.
|
Effect |
Explanation |
1 |
|
|
2 |
|
|
3 |
|
|
4 |
|
|
5 |
|
|
QUESTION Financial Statement Analysis
Drake Ltd manufactures and sells commercial kitchen equipment. The company is constantly profitable. Drake Ltd’s financial statement ratios are as follows:
Profit Margin |
15% |
Total Asset Turnover |
1.8 times |
Current Ratio |
2.2 times |
Debt to Equity Ratio |
0.8 times |
Return on Equity |
17% |
For each of the following transactions or events, indicate the directional effect (increase, decrease, no change) on the Profit Margin, Current Ratio and Debt to Equity in the table below. Note that you must write either ‘increase’, ‘decrease’ or ‘no change’ . A blank response will be marked as incorrect. Consider each transaction independently of all the other transactions.
a. Drake Ltd borrowed an additional $200,000 as short-term, 6-month loan from the bank. (3 marks)
b. Inventory costing $120,000, which was damaged in the company warehouse, was sold $30,000. (3 marks)
Record your answer in the table below.
Transaction |
Profit Margin |
Current Ratio |
Debt to Equity Ratio |
a. |
|
|
|
. |
|
|
|
2022-08-18