Student Name______
Student Number______
Prepare Financial Statements for Non-Reporting Entities
FNSACC404A
Assignment 3 MARKING GUIDE
ASSESSMENT EVENT/S
Event 3 of 3
ASSESSMENT CONDITIONS/ INSTRUCTIONS TO STUDENTS
· Questions must be answered in the spaces provided.
PERFORMANCE MEASURMENT
Results will be reported as:-
Satisfactory 70% or more to be deemed satisfactory in this task
Not Yet Satisfactory 69% or less to be deemed not yet satisfactory in this task
Question Number / Marks Allocated / Marks Achieved / CompetencyQ1 / 40 / S /US
Q2 / 15 / S / US
Q3 / 30 / S / US
Total / 85 / S / US
Plagiarism Declaration
I have read the Student Service Guide under Student Responsibilities to “… not engage in plagiarism, collusion or cheating in any assessment event or examination”.
Student Signature…………………………………………
Question 1 Statement of Cash Flows (40 marks)
The financial statements of Hit and Miss Trading appear below:
Statement of Comprehensive Income
for the year ended 30 June 2014
Sales (all credit) 1,600,000
Less: Cost of Goods Sold
Inventory - 1 July 2013 14,600
Purchases (cash) 988,200
1,012,800
Less: Inventory – 30 June 2014 12,800 1,000,000
Gross Profit 600,000
Other Income
Interest Income 15,000
Total Operating Income 615,000
Operating Expenses
Interest 52,000
Wages 28,000
Advertising 64,000
Rent 10,000
Annual Leave 300,000 454,000
Net Profit 161,000
Statement of Financial Position (comparative)
as at 30 June 2014
2013 2014
Assets
Cash at bank 29,200
Call deposits 300,000 360,000
Inventory 14,600 12,800
Accounts Receivable 143,000 158,400
GST Paid 14,000 20,000
Prepaid Wages 12,000 9,000
Loan to Brittania 100,000 60,000
Plant and equipment at cost 660,000 960,000
1,272,800 1,580,200
Liabilities 2013 2014
Bank overdraft 53,000
Interest income in advance 2,000
Provision for annual leave 12,000 8,000
Bank loan 124,000 80,000
Accrued Advertising (incl. GST) 8,800 6,600
GST collected 28,000 34,000
172,800 183,600
Net Assets 1,100,000 1,396,600
Owners Equity
Capital 1,100,000 1,396,600
1,100,000 1,396,600
Additional Information:
· Net GST Paid for the year was $1,600
· There were no sales of plant and equipment during the year
· During the year the owner took drawings totalling $44,400
· The owner made an additional cash contribution of capital during the year
· Accounts receivable balance comprises unpaid invoices issued for sale of inventory
REQUIRED:
Prepare a statement of cash flows for the year ended 30 June 2014 and accompanying reconciliation of cash and cash equivalents (note: several account reconstructions will be required to complete this question).
Accounts Receivable (3 marks)
Date / Particulars / Debit / Date / Particulars / Credit1/7/13 / Bal b/d / 143,000 / 30/6/14 / Bank* / 1,744,600
30/6/14 / Sales + GST / 1,760,000 / 30/6/14 / Bal c/d / 158,400
1,903,000 / 1,903,000
Interest Income (3 marks)
Date / Particulars / Debit / Date / Particulars / Credit30/6/14 / Int. income in adv. / 2,000 / 30/6/14 / Bank* / 17,000
P&L / 15,000
17,000 / 17,000
Advertising (4 marks)
Date / Particulars / Debit / Date / Particulars / Credit30/6/14 / Bank* / 54,000 / 1/7/13 / Accrued adv. (rever) / 8,000
Accrued Advertising / 6,000 / 30/6/14 / P&L / 52,000
60,000 / 60,000
Wages (4 marks)
Date / Particulars / Debit / Date / Particulars / Credit1/7/13 / Prepaid wages (rev) / 12,000 / 30/6/14 / Prepaid wages / 9,000
30/6/14 / Bank* / 297,000 / P&L / 300,000
309,000 / 309,000
Provision for Annual Leave (2 marks)
Date / Particulars / Debit / Date / Particulars / Credit30/6/14 / Bank* / 68,000 / 1/7/13 / Bal b/d / 12,000
Bal c/d / 8,000 / 30/6/14 / Annual leave exp / 64,000
76,000 / 76,000
Capital (4 marks)
Date / Particulars / Debit / Date / Particulars / Credit30/6/14 / Drawings / 44,400 / 1/7/13 / Bal b/d / 1,100,000
Bal c/d / 1,396,600 / 30/6/14 / Bank* / 180,000
P&L (net profit) / 161,000
1,441,000 / 1,441,000
Hit and Miss Trading
Statement of Cash Flows for year ended 30 June 2014 (16 marks)
Cash Flows from Operating ActivitiesReceipts from customers / 1,586,000
Payments to suppliers and employees / (1,445,200)
Interest paid / (10,000)
Net GST paid / (1,600)
Net cash provided from Operating Activities / 129,200
Cash Flows from Investing Activities
Interest received / 17,000
Payment for purchase of plant and equipment / (300,000)
Receipt of loan repayment from Brittania / 40,000
Net cash used in Investing Activities / (243,000)
Cash Flows from Financing Activities
Capital contributions from owner / 180,000
Drawings paid to owner / (44,400)
Repayment of bank loan / (22,000)
Net cash provided from Financing Activities / 91,600
Net decrease in cash held / (22,200)
Cash at 1 July 2013 / 329,200
Cash at 30 June 2014 / 307,000
Note: Reconciliation of cash and cash equivalents / (4 marks)
Cash at Bank / 29,200 / 0
Bank Overdraft / 0 / (53,000)
Deposits at call / 300,000 / 360,000
329,200 / 307,000
-1 mark per error (missing or incorrect items) to max. available (20 marks for reconstructed ledgers, 20 marks for statement of cash flows)
Question 2 Partnership Formation (15 marks)
On July 1st, 2014 Abbott and Costello who operated their own businesses (within the same industry) decided to amalgamate their businesses and enter into a partnership.
The following are the respective (simplified) statements of financial position as at 30 June 2014 for both Abbott and Costello prior to the formation of the partnership:
Abbott
Statement of Financial Position as at 30 June 2014
Assets
Accounts Receivable 26,000
Less: Allowance for Doubtful Debts 1,000 25,000
Premises – at cost 101,000
Furniture and Equipment - at cost 60,000
Less: Accumulated depreciation 20,000 40,000 166,000
Liabilities
Accrued Expenses 8,000
Bank Overdraft 6,000
Mortgage on Premises 90,000
104,000
Net Assets 62,000
Owner’s Equity
Capital 62,000
62,000
Costello
Statement of Financial Position as at 30 June 2014
Assets
Cash at Bank 10,000
Accounts Receivable 24,000
Less: Allowance for Doubtful Debts 2,000 22,000
Motor Vehicles – at cost 36,000
Less: Accumulated depreciation 16,000 20,000
Furniture and Equipment - at cost 40,000
Less: Accumulated depreciation 16,000 24,000 76,000
Liabilities
Accrued Expenses 6,000
6,000
Net Assets 70,000
Owner’s Equity
Capital 70,000
70,000
Additional Information:
· Abbott’s assets are to be introduced at book values, except for (the allowance for doubtful debts is to be increased to $2,000) and Premises (which are to be valued at $130,000)
· Abbott’s bank overdraft is to be repaid using Costello’s cash balance (the partnership will have only one bank account)
· The partnership will assume the liability for Abbott’s mortgage on premises
· The partnership will assume the liability for both partners’ accrued expenses
· Costello’s assets are to be introduced at book values, except for motor vehicle, which is to be valued at $24,000
· As the goodwill of each practice is considered to have a similar value, it has been decided not to bring goodwill into the partnership
· Both partners agreed that their Capital would be fixed at $80,000, with any excess treated as a loan from the partner and any shortfall to be corrected by an additional cash contribution.
· Both businesses have satisfied all of the conditions to be treated as the supply of a going concern. Therefore the cost of assets contributed do not include GST.
Required:
Prepare a classified statement of financial position for the newly formed partnership
Abbott & CostelloStatement of Financial Position as at 1 July 2014
Current Assets
Cash at Bank 10,000
Accounts Receivable 50,000
Less: Allowance for Doubtful Debts (4,000) 46,000 56,000
Non-Current Assets
Premises – at cost 130,000
Furniture and equipment – at cost 64,000
Motor Vehicles – at cost 24,000 218,000
Total Assets 274,000
Current Liabilities
Accrued Expenses 14,000 14,000
Non-Current Liabilities
Mortgage on Premises 90,000
Loan from Abbott 10,000 100,000
Total Liabilities 114,000
Net Assets 160,000
Owner’s Equity
Capital – Abbott 80,000
Capital – Costello 80,000
160,000
-1 per error in merged partnership balance sheet, except Bank figure (-3 marks) and Loan from Abbott figure (-2 marks) to a max. 15 marks
Q3. Appropriation of Profits (30 Marks)
Crockett and Tubbs have been operating as a partnership for several years, with profits and losses being shared equally.
During the year ended 30th June 2014 the partnership earned a net profit of $ 305,600 (prior to any adjustments for entitlements or charges)
Relevant account balances (before any entries for entitlements or charges) at 30th June 2014 were;
Capital - Crockett $400,000
Capital - Tubbs $200,000
Current – Crockett $100,000 DR
Current – Tubbs $ 58,000 DR
(Note: Current account balances are prior to entries for entitlements and charges but after recording of drawings and salary payments)
Loan from Crockett to Partnership $ 40,000
Drawings – Crockett $ 24,000 (already debited to Current account)
Drawings – Tubbs $ 8,000 (already debited to Current account)
Additional Information:
· Partners are entitled to interest on capital at 15% p.a. (based on Capital account balance at start of year)
· Partners are to be charged interest on Current accounts overdrawn at start of year at 15% p.a.
· Crockett is entitled to interest on his loan to the Partnership at 7% p.a.
· Partners are entitled to an annual salary of $70,000 each and can draw on their salaries during the year
· Salary payments (already debited to the partners’ Current accounts during the year) were $64,000 for Crockett and $60,000 for Tubbs
· Neither partner contributed additional capital during the year
· The balance of Crockett’s loan account has not changed throughout the year
Required:
Prepare:
· General Ledger accounts for the Profit and Loss account, Profit and Loss Appropriation account and each Partner’s Current account for the year ended 30 June 2014 (25 marks)
· Owner’s equity section of the Statement of Financial Position as at 30 June 2014 (5 marks)
Profit and Loss
Date / Particulars / Debit / Credit / Balance30/6/14 / Bal b/d / 305,600 Cr
Current – Crockett (Loan int.) / 2,800 / 302,800 Cr
P&L Approp. / 302,800 / Nil
Profit and Loss Appropriation
Date / Particulars / Debit / Credit / Balance30/6/14 / P&L / 302,800 / 302,800 Cr
Current – Crockett (Int. on cap.) / 60,000 / 242,800 Cr
Current – Tubbs (Int. on cap.) / 30,000 / 212,800 Cr
Current – Crockett (Int. O/D cur) / 1,800 / 214,600 Cr
Current – Crockett (salary) / 70,000 / 144,600 Cr
Current – Tubbs (salary) / 70,000 / 74,600 Cr
Current – Crockett (profit share) / 37,300 / 37,300 Cr
Current – Tubbs (profit share) / 37,300 / Nil
Current – Crockett
Date / Particulars / Debit / Credit / Balance1/7/13 / Bal b/d / 12,000 Dr
Various / Drawings / 24,000 / 36,000 Dr
Various / Salary / 64,000 / 100,000 Dr
30/6/14 / P&L (Interest on Loan) / 2,800 / 97,200 Dr
P&L Approp. (Int on O/D curr) / 1,800 / 99,000 Dr
P&L Approp. (Int. on Capital) / 60,000 / 39,000 Dr
P&L Approp. (Salary) / 70,000 / 31,000 Cr
P&L Approp. (Profit share) / 37,300 / 68,300 Cr
Current – Tubbs
Date / Particulars / Debit / Credit / Balance1/7/13 / Bal b/d / 10,000 Cr
Various / Drawings / 8,000 / 2,000 Cr
Various / Salary / 60,000 / 58,000 Dr
P&L Approp. (Int. on Capital) / 30,000 / 28,000 Dr
P&L Approp. (Salary) / 70,000 / 42,000 Cr
P&L Approp. (Profit share) / 37,300 / 79,300 Cr
Extract of Owner’s Equity section of Statement of Financial Position as at 30 June 2014 (5 marks)
Owner’s EquityCapital – Crockett 400,000
Current – Crockett 68,300 468,300
Capital – Tubbs 200,000
Current – Tubbs 79,300 279,300
Total Owner’s Equity 747,600
-1 per error, missing or incorrect items in ledgers and Owner’s Equity extract to max. value shown.
FNSACC404A Ass 3 S1 2014 3/03/14 Page 7 of 8