Ledger Account Title



REVISION QUESTIONS UNIT 4QUESTION 1Wonderful Ltd issues a prospectus on 10 June offering 1,000,000 50 cents ordinary shares to the general public.Applications were receive for all the shares by 20 July and the directors allotted the shares on 24 July.Preliminary expenses were paid on the day the shares were allotted and amounted to $10,000.Required:Prepare the general ledger entries to record the above events.QUESTION 2On 1 July, the directors of Annie Ltd offered for subscription 200,000 $1 ordinary shares payable in full on application. All application moneys were received by 31 July and the directors proceeded to allotment on 3 August.Required:Record the relevant events in the journals of Annie LtdPrepare the Balance Sheet at 3 AugustQUESTION 32 August 2009BSP Limited offered 400,000 shares to the public $1 each, payable in full on application.31 August 2009The share issue closed9 September 2009All shares were allotted30 September 2009The company paid $2,000 in share issue costsRequired:Prepare the journal entries to record the share issue.QUESTION 4July 2021Achieve Limited was incorporated.August 2024On 2 August 2024 the company offered 260,000 ordinary shares to the public. The shares of $2.00 each were payable in full on application.On 19 August 2024 the share offer closed with applications received for all shares offered.On 31 August 2024 the shares were allotted to the new shareholders. Share issue costs were $3,100 cash. The share issue costs were closed to share capital.November 2026On 1 November 2026 the company made an issue of 1 for 5 bonus shares, of $2.00 each, out of a general reserve.1 July 2027The retained earnings of the company were $41,308.February 2028The company paid an 8 cents per share interim dividend.30 June 2028The directors declared a 17 cents per share ordinary dividend (to be voted on at the annual general meeting to be held in November 2028).An amount of $3,000 was transferred to a general reserve.The balance of retained earnings on 30 June 2028 was $19,150 credit.Required1Prepare the general journal entries to record the issue of shares in 2024 including the write off of the share issue costs.2Prepare the general journal entry to record the bonus share issue in 2026.3Prepare the retained earning ledger account for the year ended 30 June 2028.QUESTION 5Howell Ltd. manufacture and sell pesticides for commercial use. The account balances for this business, sorted in alphabetical order, are provided below:Howell Ltd Account balances as at 30 June 2010$Accounts payable18,000Accounts receivable217,000Accrued expenses7,200Accumulated depreciation – equipment75,000Accumulated depreciation – vehicles55,000Allowance for doubtful debts12,000Bank loan (due 27 September 2010)65,000Cash at bank135,000Cost of sales250,000Current tax liability90,000Equipment275,000General reserve120,000Income tax expense90,000Inventory225,000Land (at cost)600,000Ordinary share capital (400,000 shares)800,000Other expenses50,000Other income25,000Retained earnings (1 July 2009)229,800Revaluation reserve70,000Sales575,000Vehicles (at cost)300,000Other information (not currently included in the account balances above):The final dividend of 8 cents per share declared at the 2009 annual general meeting was paid on 1 December 2009. On 1 January 2010, Howell Ltd issued a prospectus offering 80,000 ordinary shares, payable in full on application at an issue price of $2. The shares were fully subscribed and the directors allotted the shares on 15 April. On 30 April 2010 the directors decided to make a transfer of $140,000 to the General reserve. On 1 June 2010, a bonus share issue of 1 for 4 was made to ordinary shareholders. The bonus share issue was funded from the general reserve and the issue price was $2 each.Additional information:On 30 June 2010 Equipment is to be re-valued upwards by $50,000.The directors proposed a final dividend of 10 cents per share to ordinary shareholders.Required:Prepare general journal entries to reflect points 1–4 only. Narrations are not required.Prepare a Statement of Comprehensive Income for year ending 30 June 2010QUESTION 6Marketing Consultants LimitedTrial Balance (extract)as at 30 June 2028Ledger Account TitleDebitCreditUnearned income609,010Interest revenue 3,500Interest on loan 7,800Wages162,000Telephone 33,000Prepaid insurance 25,000Prepaid rent154,000Share capital (103,950 $1.00 ordinary shares)101,000Retained earnings 39,400General reserve 26,000Additional InformationaUnearned income on 30 June 2028 was $15,900.bAccrued interest revenue on balance date $291.bWages owing on balance date was $9,361.cPrepaid insurance on 30 June 2028 was $5,400.dRent expense for the year was $147,000.eOther assets information:30 June 202730 June 2028Office Equipment 70,000 72,000Less Accumulated Depreciation (10,000) (13,000)fCompany income tax rate 30%.gA $67,000 interim dividend was paid to the shareholders in November 2027.hIn March 2028 a bonus share issue of 1 ordinary share of $1.30, for every 9 now held, was made out of the general reserve.iLand was revalued by $18,000.Required1Prepare a Statement of Comprehensive Income for the year ended 30 June 2028.2Prepare the retained earnings section of the balance sheet on 30 June 2028.QUESTION 7 1492251257300(B)0(B) 457200-24765000QUESTION 8 QUESTION 9Ready Set Go LimitedBalance Sheet (extract)As at June 30 2008Non Current AssetsProperty Plant and Equipment100,000EquityShare Capital 382,000Other reserves 60,000Retained earnings (10, 000)Total Equity 432,000Share Capital on 30 June 200816,000 10% preference shares of $4.00 each, fully paid, 62,000 less share issue costs of $2,000 644,000 ordinary shares of .50 cents each, fully paid, less320,000share issue costs of $2,000Other reservesGeneral Reserve$60,000Property Plant and EquipmentLand $40,000Buildings $60,000Additional information A For the year ended 30 June 2008, the directors recommended preference shareholders receive their dividend entitlement, and ordinary shareholders receive a divided of 5c per share. These dividends were approved by the shareholders in August 2008 and paid in September 2008B In April 2009 the ordinary shareholders were paid an interim divided of 4 cents per share and the preference shareholders were paid a 7% interim dividendC In May 2009 the ordinary shareholders were given 1 fully paid bonus shares for every 10 now held. The bonus share issue was to be made from the general reserve.D On June 30 2009 the company made a profit after tax of $260,000E The directors of the company proposed the following final dividends for the year ended 30 June 2009.The remainder of the annual dividend entitlement to the preference shareholdersAn 9 cents per share dividend to the ordinary shareholdersThese dividends must be approved by the shareholders at the annual general meeting in September 2009 before they can be paid.F An amount of $10,000 was transferred to the general reserve from retained earnings.G On June 30, 2009 it was decided to revalue the land. The current market value of the land is $80,000.Required:Prepare the retained earning ledger account at 30 June 09Prepare the general journal entries to distribute profit for the year ended 30 June 09Show the Non-Current Assets – Property, Plant and Equipment section of the Balance Sheet and the Equity section of the Balance Sheet as at June 30, 2009.Show the note attached to the balance sheet for the final dividends at June 30, 2009 QUESTION 10Lawson Ltd was incorporated in 2003. By 30 June 2006, 220 000 ordinary shares had been issued at a price of $1.80 fully paid on application.Lawson LtdBalance Sheet (extract)As at June 30 2006EquityShare Capital396 000General Reserve 20 000 Retained earnings (1 July 06) 21 500Total Equity437 500The following transactions and events occurred during the year ended 30 June 20072006 October 1The company offered 50,000 5% preferences shares for sale to the public at $3.50 each payable in full on applicationOctober 31Applications for 48,000 shares were received2 NovemberThe 48,000 shares were allotted and issued to shareholders$2,000 in share issue costs were paid2007 June 30The company recorded a net profit after tax of $72,800 June 30 The directors resolved to:Provide for the final dividend for preference sharesProvide for a final dividend on the ordinary shares of 6 cents per shareBoth of these final dividends will be paid on 28 August 2007A transfer of $10,000 is to be made to the general reserveRequired:Prepare the journal and ledger entries to record the share issue made on October 1 2006b) Prepare general journal entries to record the distribution of profits on June 30, 2007c) Prepare the Retained Earnings ledger account as at June 30 2007Prepare the Equity section of the Balance Sheet as at June 30, 2007Show the notes attached to the Balance Sheet for final proposed dividends at 30 June 2007.QUESTION 11The following information relates to Leighton Ltd for the year ended 30 June 2010.Leighton LtdAfter closing Trial BalanceAs at 30 June 2010Land593,900Buildings186,000Less accumulated depreciation on buildings48,000Plant and Equipment134,000Less accumulated depreciation of Plant and Equipment39,000Cash at Bank70,400Accounts receivable23,900Prepaid advertising5,600Inventory34,600Accrued Income1,600Investments (in other companies)41,000Interim Ordinary dividend14,000Retained earnings 65,600Ordinary share capital 576,000Profit and Loss (before tax)83,600General reserve 48,000Asset revaluation reserve64,000Accounts payable64,000Accrued expenses2,800Unearned income2,000Current tax liability22,00010% debentures (repayable in 2014)90,0001,105,0001,105,000Additional information:Issued capital consists of $1 fully paid sharesDuring the year a bonus share issue was made consisting of 1 bonus share for every five shares already being held – this was paid out of the asset revaluation reserve.The directors decided to transfer $10,000 to the general reserve from retained earnings.For year ended 30 June 2010 the directors recommended a 10c per share dividend paid. This dividend is subject to shareholders approval.Required:Prepare a statement of changes in equity for Leighton Ltd for year ended 30 June 2010Prepare a Balance Sheet for Leighton Ltd as at 30 June 2010.Prepare the notes to the Balance Sheet for Property, Plant and Equipment Calculate the amount of the final dividends recommended on 30 June 2010QUESTION 12The following information relates ASK Ltd for the year ended 30 June 2009ASK LtdTrial Balance As at 30 June 2009Ordinary Capital300,000Asset Revaluation Reserve40,000Retained earnings1,500Cash at Bank46,200Accounts Receivable62,800Inventory17,000Accounts Payable20,50014% Debentures (due November 2011)50,000Profit and Loss131,500Plant and Equipment65,000Accumulated depreciation of Plant and Equipment18,500Land 260,000Buildings230,000Accumulated depreciation of Buildings62,000Interim dividend20,000General Reserve80,000702,500702,500Additional information:The ordinary share capital consists of fully paid 50 cents sharesCurrent tax liability is $42,000A final dividend of 5 cents per share is to be declared$25,000 is to be transferred from the general reserveRequired:Prepare journal entries to distribute profitPrepare a Statement of Changes in Equity for year ended 30 June 2009.Prepare a Balance Sheet at 30 June 2009Prepare notes to the Balance Sheet – for Shareholders’ Equity, Dividends and Property Plant and EquipmentQUESTION 13326390390715500345284-3346701Part B Prepare a Statement of Comprehensive Income (8 marks) Part B Prepare a Statement of Comprehensive Income (8 marks) 120650285496000635-37020500t8540151045857QUESTION 14QUESTION 15QUESTION 16Mineral Water Wholesalers LimitedTrial Balanceas at 30 June 2019Ledger Account TitleDebitCreditCash at Bank 19,614Inventory 2,500Prepaid Insurance (3 months paid in advance) 900Land 105,000Plant and Equipment 40,700Accumulated Depreciation of Plant and Equipment 5,000Debentures (repayable in March 2020) 9,600Debentures (repayable in 2025) 22,400Share Capital($0.50 ordinary shares less share issue costs of $1,600) 101,400General Reserve 3,000Retained Earnings 27,314$168,714$168,714Transactions for the year ended 30 June 2020:a69,100 bottle of mineral water were sold for cash at $3.00 per bottle.bThe 69,100 bottles of mineral water sold included 2,100 bottles of mineral water sold in advance. These 2,100 bottles will be delivered to customers in August 2020.cThe cost price of each bottle of mineral water sold was $1.80.dClosing inventory of mineral water on 30 June 2020 was $4,800.eAll bottles of mineral water were purchased for cash.fWages paid for the year were $51,000, with $1,900 of accrued wages on 30 June 2020. gThe annual insurance premium was renewed on 1 October 2019 for $3,720 cash.hInterest paid during the year was $2,500. There was no accrued interest expense on30 June 2020.iThe plant and equipment accumulated depreciation on 30 June 2020 was $11,000.jThe income tax rate is 30% of the profit. The income tax for 2020 will be paid in 2021.kA 5 cents per share interim dividend was paid in March 2020.l$2,000 was transferred from the general reserve to retained earnings.RequiredPrepare a Statement of Financial Position as at 30 June 2020.QUESTION 17QUESTION 18QUESTION 19QUESTION 20 QUESTION 21The management of Lizard Ltd. require you to prepare a statement of cash flows for their business for the year ended 30 June 2010. Unfortunately they do not have balance sheets for the past two financial years available but they have been able to provide you with the following account balances (sorted in alphabetical order).20102009$$Accounts payable104,00082,000Borrowings300,000180,000Cash holdings21,00045,000Income tax payable192,000136,000Inventories173,000188,000Investments650,000750,000Property, plant and equipment2,003,0001 550,000Receivables120,000119,000General reserve300,000250,000Retained earnings111,000169,000Share capital2,000,0001 900,000Short-term deposits40,00065,000Notes:Property, plant and equipment20102009Land, at cost900,000900,000Plant and equipment, at cost1,290,000795,000Accumulated depreciation of plant and equipment187,000145,0001,103,000650,000Property, plant and equipment, book value2,003,0001,550,000An item of plant originally purchased for $65,000 and with a book value of $12,000 was sold during the year for cash.Lizard LtdIncome statement for the year ended 30 June 2010$Sales2,850,000Less cost of sales1,340,000Gross profit1,510,000Add interest revenue2,400 Gain on sale of plant and equipment8,000 Dividends received24,0001,544,400Less interest expense18,750 Other expenses670,300Profit before taxLess income tax expenseProfit for the year855,350192,000663,350Other information:Income tax provided on 30 June 2009 was paid during the year.The change in borrowings during the year was due to an issue of debentures. It is company policy that the purchase and sale of all non-current assets be for cash.Prepare a Statement of cash flows for Lizard Ltd. for the year ended 30 June 2010.(35 marks)QUESTION 22(30 marks)Financial reports are an essential component of all business activity as they provide a wide variety of information for both internal and external users. Over recent years corporate failures have called into question the reliability of financial information.(a)Explain the roles of the FRC, AASB, ASX, ASIC, IASB (full titles should be included in your answer) and external auditors. (18 marks)(b)Describe the effectiveness of these organisations in ensuring the reliability of financial statements. (12 marks)QUESTION 23There is acceptance within the broader community that government, business and individuals must all do their part to reduce their impact on the natural environment. In relation to business, it is generally the large mining, petroleum, oil and gas and chemical manufacturing organisations which attract most regulatory and public attention. However, businesses of all sizes must implement policies and procedures to reduce their environmental impact. (a)Outline four incentives for businesses to act in an environmentally responsible manner.(8 marks)(b)Describe the potential benefits to a business of engaging in environmentally responsible practices.(12 marks)(c)Describe the potential costs to a business of engaging in environmentally responsible practices.(4 marks)(d)Explain briefly corporate social responsibility. Using two examples (other than environmental), explain how these demonstrate corporate social responsibility.(6 marks)QUESTION 24Mia has $10,000 to invest and is considering the acquisition of ordinary shares in Goldpost, a mining firm with several gold mining sites in regional Western Australia. A summary of the firm’s performance over the last three financial years is outlined in the table below:Ratio30/6/200730/6/200830/6/2009Industry averageDebt to equity40%55%70%45%Quick asset1.151.381.701.05Price/earnings1512814Profit 7%9%10%14%(a)For each of the ratios contained in the table above, briefly:define what each is measuringdiscuss the trend suggest one reason for the trend.-11430032512000QUESTION 25228600-2159000 9779012065000QUESTION 26Kurraloo Limited has provided the following information. KURRALOO LIMITEDBalance Sheets as at 30 June20082007Current assets$$Cash holdings9 00038 000Short-term deposits20 00050 000Receivables150 000112 000Inventories266 000167 000Total current assets445 000367 000Non-current assetsProperty, plant and equipment1 913 0001 485 000Investments400 000500 000Total non-current assets2 313 0001 985 000Total assets2 758 0002 352 000Current liabilitiesAccounts payable83 00067 000Income tax payable180 000128 000Total current liabilities263 000195 000Non-current liabilitiesBorrowings200 000100 000Total non-current liabilities200 000100 000Total liabilities463 000295 000NET ASSETS$2 295 000$2 057 000EquityShare capital2 100 0001 800 000Reserves150 000100 000Retained earnings45 000157 000TOTAL EQUITY$2 295 000$2 057 000NOTESProperty, plant and equipment20072008 Land, at cost1 000 0001 000 000Plant and equipment, at cost620 0001 075 000Accumulated depreciation of plant and equipment135 000162 000485 000913 000Property, plant and equipment, book value1 485 0001 913 000An item of plant originally purchased for $50 000 and with a book value of $8 000 was sold during the year for cash.KURRALOO LIMITEDIncome Statement (summarised) for year ended 30 June 2008 $Sales2 450 000Less Cost of sales1 280 000Gross Profit1 170 000Add Interest revenue1 200 Sale of plant and equipment5 000 Dividends received18 0001 194 200Less Interest expense(13 500) Other expenses(580 700)Profit before tax$600 000Other information The short-term deposits are used as part of the company’s cash management function.Income tax provided on 30 June 2007 was paid during the year.$100 000 cash was raised during the year by an issue of debentures and $300 000 by an issue of ordinary shares.Dividends totalling $472 000 were paid during the year.All purchases and sales of inventory are made on credit. During the year ended 30 June 2008 the total inventory purchased was $1 384 000.It is company policy that the purchase and sale of all non-current assets be for cash.‘Other expenses’ included depreciation and loss on sale of plant and equipment.RequiredPrepare a cash flow statement for Kurraloo Limited for the year ended 30 June 2008 showing the cash from operating activities and investing activities ONLY.(28 marks)Explain the meaning of ‘cash and cash equivalents’. Refer to the Cash Flow Statement of Kurraloo Limited in Part A of this question to provide examples for your answer.(4 marks)Use the Cash Flow Statement you have prepared to explain the changes in the cash holdings of Kurraloo Limited over the past financial year.(4 marks)QUESTION 27City Traders LimitedBalance Sheetsas atItem30 June 201630 June 2017AssetsCash at Bank 11 40Cash on Hand 8 6Accounts Receivable 33 47Less Allowance for Doubtful Debts (7) (9)Prepaid Rent 13 21Inventory 10 11Motor Vehicles 60 72Accumulated Depreciation (14) (17)Total Assets$114$171Liabilities and EquityAccrued Wages 19 20Income Tax Payable 2 1Debentures 20 25Share Capital 61 110General Reserve 8 9Retained Earnings 4 6Total Liabilities and Equity$114$171City Traders LimitedIncome Statementfor the year ended 30 June 2017Sales165Less Sales Returns 3162Less Cost of Sales 37Gross Profit125Add Other IncomeGain on Sale of Motor Vehicle 8Interest 2 10135Less Other ExpensesRent 65Discount Allowed 2Interest 1Doubtful Debts 6Wages 30Other Expenses 25129Profit before Tax 6Less Income Tax Expense 1Profit $5Additional InformationaA motor vehicle had been purchased during the last year for $34 cash.bThe accumulated depreciated of the motor vehicle sold was $13 to the date of sale.cThe “other expenses” include the depreciation of motor vehicles.RequiredPrepare a cash flow statement for the year ended 30 June 2017.QUESTION 28Perth Traders Limited Balance Sheet as at 30 June 2025AssetsCash at Bank 40Office Supplies 5Accounts Receivable 34Motor Vehicles 190Prepaid Rent 11Inventory 110Total Assets 390LiabilitiesAccounts Payable 92Accrued Expenses 8Income Tax Liability 30Debentures (repayable in 2029) 40Total Liabilities 170Net Assets$220EquityShare Capital 125Reserves 40Retained Earnings 55Total Equity$220Perth Traders Limited - Income Statementfor the year ended 30 June 2025Sales (all credit)352Less Sales Returns 10342Less Cost of Sales204Gross Profit138Less Interest 15Less Other Expenses 33Profit before Tax 90Less Income Tax Expense 27Profit$63Additional informationaThe total assets of Perth Traders Limited on 1 July 2024 was $270.bPerth Traders Limited issued:290 $0.25 ordinary shares for335 days in the year480 $0.25 ordinary shares for30 days in the year.cA $16 preference dividend was paid in March 2025.dOn 30 June 2025 the market price of an ordinary share of Perth Traders Limited was $3.00.eA $0.31 per ordinary share dividend was paid in March 2025.fThe accounts receivable of Perth Traders Limited on 1 July 2024 was $14.gThe inventory on 1 July 2024 of Perth Traders Limited was $46.Required1Calculate the following ratios for Perth Traders Limited:?current or working capital ratio?quick asset or liquidity ratio?debt to equity ratio?times interest earned?rate of return on assets?earnings per ordinary share?price earnings ratio?dividend yield?debtors’ collection period?inventory turnover ratio.2Comment on the performance and health of Perth Traders Limited. ................
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