Principles of Accounting and Business Finance
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MANAGEMENT FOUNDATION STUDIES
INDIVIDUAL ASSIGNMENT (2)
Principles of Accounting and Business Finance
Question 1 (35 marks)
Luke operates an outlet offering consultation to clients who would like to start a fast- food business. The following are transactions for the month of June 2021.
(a) Luke started his business with $30,000 in the business bank account.
(b) He bought some office equipment at $16,000 from Bee Ltd. on credit.
(c) Furniture of $27,000 was bought from MS Ltd., paying with his personal cheque.
(d) A damaged equipment costing $2,100 was returned to Bee Ltd.
(e) Invoiced Jeff $5,700 for consultation services rendered to him a week ago.
(f) Brian paid Luke a cheque of $2,200 for consultation services at the office.
(g) A cheque ofthe amount of $9,500 was issued to pay for advertising.
(h) An amount of $300 was withdrawn from the bank as cash in hand.
(i) Jeff paid Luke for the amount owing with a cheque.
(j) Luke issued a personal cheque of $4,800 to pay for his son’s school fees.
(k) Luke took a loan of $20,000 from his dad to make a full payment Bee Ltd.
(l) Issued a cheque to pay his employees salaries of $12,000.
(m) Luke rented out part of his office space to Desmond, receiving a cheque of $3,100 as office rental.
Required:
(i) For each of the above transactions, write the accounts and amounts to be debited and credited.
(ii) Compute the amount of closing bank as at 30 June 2021 of Luke’s business.
Question 2 (18 marks)
The following is a summary of Benny Trading’s Cash Book for the month of August 2021.
Additional information:
It was discovered that cheque 124 was entered wrongly in the cash book but correctly in the bank statement.
Required:
(a) Bring the cash book up to date. Calculate the updated balance on 31 August
2021 and state whether it is a debit or credit balance.
(b) Prepare a statement to reconcile the difference between your amended cash book
balance and the balance in the bank statement on 31 August 2021.
(c) State the amount of the bank balance which would appear in Benny Trading’s Statement of Financial Position as at 31 August 2021.
Question 3 (35 marks)
Twixie Co. is a manufacturing company with two production departments Cutting and Assembling. Budgeted overhead costs for the third quarter of2021 are listed below:
Required:
(i) Calculate the overhead absorption rate in each department by completing the table. You are required to use the most appropriate basis to apportion the relevant overhead costs.
(Please show detailed workings and round up your answers to two decimal
places.)
(ii) One of the products of Twixie Co. is Teenie. Cost information to produce one unit
of Teenie is as follows:
Direct materials 3 kg at $2.50 per kg
Direct labour 2 hours at $6.50 per hour
Time spent in:
Cutting Department 3.0 machine hours
Assembling Department 2.5 labour hours
Find the cost per unit of Teenie.
(Please show detailed workings and round up your answers to two decimal places.)
Solutions:
(i)
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Assembling |
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Allocated |
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Apportionment |
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Total |
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Activity Base |
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Overhead Absorption Rate |
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Question 4 (10 marks)
Define the term production overheads.
Give FIVE examples for a company that manufactures leather bags.
2022-01-11