ACCT10002 Introduction to Financial Accounting Topic 3 Tutorial Questions
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ACCT10002 Introduction to Financial Accounting
Topic 3 Tutorial Questions
3.1
The following adjustments were identified for ABC Enterprises (“ABC”) Pty Ltd for December
2022.
a) ABC received an amount of $7,700 in December, recorded as consulting revenue, for work to be completed in January 2023. An invoice was completed.
b) The Prepaid Insurance account included $600 for December
c) Wages payable at the end of December was $4,200
d) The December 2022 electricity account for $1,320 was not received until January 2023
e) The Supplies on Hand showed a balance of $900, however, a stocktake indicated that the value of supplies was $540
f) The December loan payment of $3,100 (inc. Interest of $530) was debited to the Loan Liability account
Note: GST is only recorded on receipt of a tax invoice or cash.
Required:
Record the above adjustments in the journal provided.
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Account |
Debit |
Credit |
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3.2
How do adjusting entries explain the qualitative principle of timeliness and the Accounting Period concept?
3.3
Harris Pty Ltd began operations on 1 August 2022. Quarterly financial statements are prepared. The trial balance and adjusted trial balance on 31 October are shown below.
HARRIS PTY LTD
Trial balance
as at 31 October 2022
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Unadjusted |
Adjusted |
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Account Name |
DR |
CR |
DR |
CR |
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Cash |
114,450 |
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114,450 |
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Accounts receivable |
5,400 |
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12,900 |
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Prepaid rent |
22,500 |
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15,000 |
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Supplies |
9,000 |
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4,500 |
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Equipment |
120,000 |
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120,000 |
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Accounts payable |
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19,200 |
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19,200 |
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Salaries payable |
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10,800 |
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Interest payable |
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900 |
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Commission revenue received in advance |
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12,000 |
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5,400 |
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Bank loan |
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90,000 |
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90,000 |
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Share capital |
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105,000 |
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105,000 |
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Retained earnings |
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0 |
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0 |
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Dividends |
3,000 |
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3,000 |
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Sales revenue |
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77,700 |
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85,200 |
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Commission revenue |
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45,000 |
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51,600 |
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Salaries expense |
54,300 |
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65,100 |
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Rent expense |
15,000 |
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22,500 |
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Supplies expense |
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4,500 |
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Electricity expense |
5,250 |
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5,250 |
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Interest expense |
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900 |
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$348,900 |
$348,900 |
$374,100 |
$374,100 |
Required:
a) Journalise the adjusting entries that were made.
3.4
ABC Enterprises Pty Ltd had recorded a profit of $62,000 for December 2022 before the adjustments in 3.1 above.
Required:
a) Calculate the Profit for December 2022 after the adjustments; and
b) Discuss any issues that may occur if a manager received a bonus of $5,000 if the profit was above $60,000 for December 2022
2023-02-04