Note: This is the sample exam only. This is not the actual take home exam. Actual take home exam will be available only at the time of exam
Before you start please type your Surname and Student ID below:
Student Name: ……………….
Student ID: ……………………
Instructions Sheet
- Type your answer to each question in the template or box provided.
- Type your answers in either Font 10 or 12 (preferably Ariel or Times New Roman).
- This examination paper comprises six (6) questions, worth 60 marks in total. Answer all 6 questions.
- You have 3.5 hours to complete and submit this examination paper. Late submissions will not be marked. If you encounter problems submitting your paper to Moodle, email it to your unit coordinator by the due time.
- This is an individual assessment, so collaboration with other students or other persons will result in an academic misconduct allegation for all students involved. This may result in a fail result for this assessment. Please note that your paper will be submitted through Turnitin.
- It is preferred that you type your answers in the examination document. If you wish to handwrite your answers, then print the document, write your answers (legibly) in black pen, and then scan it as a pdf.
TOTAL 60 MARKS
Answer ALL six questions.
Question 1 12 Marks
Nifty Neville Enterprises recorded all sales and purchases using the perpetual inventory method during the month of June 2020. Assume all sales, sales returns, purchases and purchase returns amounts include GST at a rate of 10%.
| Date | Business transactions |
| June 3 | Purchased inventory on credit terms 2/10 n 30 for $7,700. |
| 4 | Purchased inventory for cash of $2,530. |
| 6 | Returned $308 of inventory purchased on 3 June as it was damaged. |
| 8 | Sold goods on credit terms of 3/15, n/30 for 22,660 (cost, $4,400 net of GST). |
| 10 | Paid for goods purchased on 3 July less purchase returns and received the appropriate discount. |
| 12 | Customers returned damaged goods from the 8 July sale of $550 (cost, $110 net of GST). |
| 21 | Received payment in full for the sale dated 8 June less any sales return and adjustment for discounts. |
Required
Journalise the above transactions in the books of Nifty Neville Enterprises.
Note 1: Show calculations for GST and discounts.
Note 2: Do not round off calculations (take to the nearest cent).
Note 3: Narrations are not required.
| Date | Details | Debit | Credit |
Question 1 continued next page
Question 1 continued
| Date | Details | Debit | Credit |
Question 2 12 Marks
The unadjusted trial balance of Staple Services as at 30 June 2020 is shown on the following worksheet. The following adjustments are yet to be included in Staple Services worksheet.
Note: Ignore GST.
- Supplies on hand at the end 30 June amount to $300.
- Ten months of rent (i.e., the $20,000) was paid in advance on 1 March 2020.
- Staple Services depreciates equipment at a rate of 5% per year on cost and the yearly depreciation expense is yet to be recorded.
- Employees at Staple Services work Monday to Friday and are paid fortnightly every Friday for the previous 10-day work. Staples Services last paid the usual fortnightly wages of $4,000 on Friday 26 June for the previous 10 days work. The next payment of wages will not occur until the 10 July. Assume the 30 June 2020 is a Tuesday.
- On 1 June 2020, Staple Services received $35,000 in advance from a client for consulting services to be provided evenly from 1 June 2020 to 31 October 2020. Assume the revenue will be earned evenly over the next five months and the earned component has yet to be recorded.
Required
- Complete the adjustments columns in the worksheet and total. Key each adjusting entry by the letter corresponding to the data given. Thus, the supplies adjustment would be keyed with the letter (a). (5 marks)
- Complete the Adjusted trial balance columns and total. (3 marks)
- Complete the Income statement columns, total and include the profit or loss in the appropriate area. (2 marks)
- Complete the Balance Sheet columns, total and include the profit or loss in the appropriate area. (2 marks)
Note: Complete the worksheet using “Arial Font 9”
Question 2 continued next page
Question 2 continued
| Trial Balance | Adjustments | Adj Trial Balance | Income Statement | Balance Sheet | ||||||
| Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | |
| Bank | 26,400 | Use font 9 | ||||||||
| Accounts Receivable | 15,300 | |||||||||
| Supplies | 1,500 | |||||||||
| Prepaid Rent | 20,000 | |||||||||
| Equipment | 30,000 | |||||||||
| Acc Dep Equipment | 4,500 | |||||||||
| Accounts Payable | 4,300 | |||||||||
| Wages Payable | ||||||||||
| Unearned Revenue | 35,000 | |||||||||
| Capital | 22,400 | |||||||||
| Drawings | 2,000 | |||||||||
| Service Revenue | 125,000 | |||||||||
| Supplies Expense | ||||||||||
| Rent Expense | ||||||||||
| Depreciation Equipment | ||||||||||
| Wages Expense | 96,000 | |||||||||
| 191,200 | 191,200 | |||||||||
| Profit | ||||||||||
Question 3 10 Marks
Regent’s general ledger bank balance as at 30 June 2020 shows a debit balance of $7,205 while the Bank Statement from Westpac shows a credit balance of $6,730.
A review of the Westpac Bank Statement and Regent’s General Ledger Bank Account as at 30 June shows the following:
- A deposit from a customer recorded in Regent’s cash receipts journal for $960 does not yet appear on the bank statement.
- The bank erroneously charged a $200 cheque to Regent’s bank statement. The cheque should have been charged to another customer’s account.
- Three cheques written by Regent’s accountant and recorded in Regent’s cash payment journal have not yet been presented to the Westpac bank. The three outstanding cheques are shown below:
| Date | Cheque No. | Amount |
| June 18 | 546 | $250 |
| June 24 | 558 | $125 |
| June 28 | 587 | $330 |
- The Westpac Bank Statement shows interest revenue (earned on a Term Deposit) for $75 was directly deposited into Regent’s account. Regent was not aware of this deposit prior to the preparation of the reconciliation.
- Westpac’s service charge for the month was $15. Regent was not aware of this service charge prior to the preparation of the reconciliation.
- The bank shows a dishonoured cheque for $80 that was originally received by Regent. Regent was not aware of this dishonoured cheque prior to the preparation of the reconciliation.
Required
- Prepare the book side records of Regent as at 30 June 2020. (5 marks)
| Book side | ||
Question 3 continued next page
Question 3 continued
- Prepare the bank reconciliation (bank side) for Regent as at 30 June 2020.
(5 marks)
| Bank side | ||
The financial year for Peter Jones runs from 1 July to 30 June each year. The following transactions occurred during the 2019 and 2020 financial year.
Jones uses the allowance method to measure bad debts.
Note 1: Ignore GST.
Note 2: Narrations are not required
| Dates | Transactions |
| Financial year ending 30 June 2019 | |
| June 30 | Jones expects the bad debts expense to be 3% of the credit sales figure of $150,000. (ENTRY REQUIRED) |
| June 30 | The bad debts expense account was closed off to Income Summary account at 30 June. ( NO ENTRY REQUIRED) |
| Financial year ending 30 June 2020 | |
| July 3 | Most of the credit sales noted above were collected. (NO ENTRY REQUIRED) |
| July 5 | After repeated attempts Jones finally decides that the business cannot collect the outstanding balance of $2,000 from one of its accounts receivable customer’s (Nelson). Jones therefore decides to write-off the receivable by $2,000. (ENTRY REQUIRED) |
| July 23 | Received $2,000 from Nelson, along with a letter stating his apology for paying late. Jones reinstated Nelson’s account in full and recorded the cash collection. (ENTRY REQUIRED) |
| July 31 | Jones now decides to increase the bad debts expense by a further 1%. The further 1% is based on the previous financial years credit sales figure of $150,000. (ENTRY REQUIRED) |
Required:
- Where it states, “entry required”, record the transaction in the general journal of Peter Jones. (6 marks)
| Date | Account | Debit | Credit |
Question 4 continued over next page
Question 4 continued
| Date | Account | Debit | Credit |
| Date | Account | Debit | Credit |
| Date | Account | Debit | Credit |
(b) Post the relevant transactions to the Allowance for Doubtful Debts “T” Ledger account and balance the account. (2 marks)
| Allowance for Doubtful Debts Account | |||||
| Date | Reference | Amount | Date | Reference | Amount |
.
Question 5 8 Marks
Part A:
Mike Webster worked all the year at Cisco Enterprises on an annual salary of $84,000 plus an annual bonus equal to 10% of his annual salary.
Annual income tax withheld from Mike’s salary was $21,000 and $2,100 for the bonus.
Additional information:
- Mike authorised his employer to deduct $30 per month for life insurance.
- Cisco Enterprises provides Mike with health insurance at a monthly amount of $80.
- Cisco Enterprises provides Mike with superannuation at a monthly amount of $770.
- Cisco Enterprises incurs payroll tax which is calculated at 4% of total payroll.
Required:
- Calculate Mike’s annual gross pay and net (take-home) pay. (4 marks)
| Details | Amount | Amount |
| $ | $ | |
- Calculate Cisco Enterprise’s total annual payroll costs. (4 marks)
| Details | Amount | Amount |
| $ | $ | |
Question 6 10 Marks
The following financial statements relate to Conday Ltd, which owns several furniture retail outlet stores.
| Conday Ltd Statement of Financial Position as at 30 June | ||
| 2019 | 2020 | |
| Current assets | ||
| Bank | 20 | – |
| Accounts Receivables | 320 | 375 |
| Inventories | 335 | 445 |
| Total current assets | 675 | 820 |
| Non-current assets | ||
| Property, plant and equipment | 240 | 290 |
| Land and Buildings | 480 | 520 |
| Total non-current assets | 720 | 810 |
| Total assets | 1,395 | 1,630 |
| Current liabilities | ||
| Bank Overdraft | – | 86 |
| Accounts Payable | 290 | 358 |
| Current income tax payable | 40 | 7 |
| Total current liabilities | 330 | 451 |
| Non-current liabilities | ||
| Long-term borrowings | 250 | 350 |
| Total non-current liabilities | 250 | 350 |
| Total liabilities | 580 | 801 |
| Equity | ||
| Share capital | 550 | 550 |
| Retained earnings | 265 | 279 |
| Total equity | 815 | 829 |
| Total liabilities and equity | 1,395 | 1,630 |
Question 6 continued over next page
Question 6 continued
| Conday Ltd Statement of Financial Performance | ||
| 2019 | 2020 | |
| Revenue (Net Sales) | 1,440 | 2,050 |
| Cost of sales | (1,050) | (1,700) |
| Gross profit | 390 | 350 |
| Operating expenses | (202) | (302) |
| Interest expense | (16) | (30) |
| Profit before income tax | 172 | 18 |
| Income tax expense | (60) | (4) |
| Profit for the year | 112 | 14 |
- In the space provided calculate the following ratios for 2020. Show all workings. (7 marks)
- Current ratio
- Inventory turnover
- Accounts receivable turnover
Question 6 continued over next page
Question 6 continued
- Debt ratio
- Times interest earned ratio
- Gross profit margin
- Rate of Return on Sales
- In 100 words or less, describe the three most significant conclusions that can be derived from your ratio calculations. (3 marks)
Appendix
Formulas
Current ratio
| Current assets |
| Current liabilities |
Inventory turnover
| Cost of Sales | ||
| Average inventory |
Accounts receivable turnover
| Revenue (Credit sales) | ||
| Average accounts receivable |
Debt ratio
| Total liabilities |
| Total assets |
Times interest earned ratio
| Profit before income tax + Interest expense |
| Interest expense |
Gross profit margin
| Gross profit | ||
| Revenue |
Rate of Return on Sales
| Operating profit | ||
| Revenue (Sales) |
END OF PAPER
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