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Unit 10: Financial Accounting and Reporting DeDDecisions 2Individual assignment Dr. Louann Ho !eins "ummings 10 am April 2#$ 201%

I$ &&&&&&&&&&&&&&&&&&&&&&&&&& !ere'( con irm t!at t!is assignment is m( o)n )or* and not copied or plagiari+ed rom an( source. I !ave re erenced t!e sources rom )!ic! in ormation is o'tained '( me or t!is assignment.

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----------------------------------------------------------------------------------------------------------FOR OFFICIAL USE Assignment Received -(: Date:

Unit Outcomes E i!ence "o# t$e c#ite# i%



Assesso#(s !ecision

Inte#n%) Ve#i"ic%tion

.repare Be %&)e to inancial *#e*%#e statements "in%nci%) or a variet( st%tement o 'usinesses rom a trial "#om 'alance$ com*)ete o# ma*ing incom*)ete appropriate #eco#!s +LO,- ad/ustments


.repare inancial statements rom incomplete records


Be %&)e to *#esent "in%nci%) in"o#m%tion in %cce*te! "o#m%ts "o# *u&)ic%tion +LO/-

.repare inancial statements in a orm suita'le or pu'lication '( a sole trader$ partners!ip and limited compan(


Me#it 0#%!es %1%#!e! Distinction 0#%!es %1%#!e!

M. D.

M, D,

M/ D/

Assi0nment 0 1 2ell3structured4 Re erence is done properl( 5 s!ould 'e done 0i an(1 6verall$ (ou7ve A#e%s "o# im*#o ement2

ASSESSOR SIGNATURE NAME2......................................................................... +O#%) "ee!&%c' 1%s %)so *#o i!e!STUDENT SIGNATURE NAME 2........................................................................ FOR INTERNAL USE ONLY 89RIFI9D :9, ;6 DA<9 ;A=9 : ........................................................... : ...........................................................



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Part 1
Harris Training Institutes unadjusted trial balance and the adjustment data is given below:

Additional information items:

a. The Prepaid Insurance account consists of a payment for a !ctober " of the current year.

year policy that was made

b. A cash payment for space sublet for # months was received on $uly " and was credited to %nearned &ent. c. The interest on the note payable is #'. (o interest e)pense has been paid by year end.


"." +omplete the following table and determine the amounts and effects of these adjustments on the ,ecember -"st income statement and the ,ecember -"st balance sheet. %se up .down/ arrows to indicate an overstatement .understatement/ in the 0ffect columns.


Amount in the entry

Effect on net income

Effect on total assets

Effect on total liabilities

Effect on total equity

a. b. c.

". 1ased on your computations in "." e)plain the overarching purpose of adjusting entries and discuss the impact on the year2end financial statements of Harris Training Institute3 Provide computations to support your answer.

Part II 1eachside &ealty rents condominiums and furnishings. Its adjusted trial balance at ,ecember -"4 5"64 is as follows: +ash Accounts &eceivable Inventory ;ong2term investments ;and 1uildings Accumulated depreciation Accounts payable =ortgage payable +ommon stoc>4 7< &etained earnings4 " ?-"?"6 ,ividends @ales +ost of goods sold @elling e)penses !ffice e)penses 76 4555 #-4855 9:4555 -"4<55 8 4-55 "6 4<55 7- 4<85 <"4#55 " 4<55 554555 849<5 654<65 6"-4555 5-46 5 <#4-55 664 55

Insurance e)pense @upplies e)pense Ta)es22real estate and payroll Interest revenue Interest e)pense

" 4555 <4"55 "<4#55 :<5 94-55 7#6:4<85 7#6:4<85 AAAAAAAA AAAAAAAA

." Prepare 1eachside &ealtys -"?" ?"6 income statement. . . Prepare 1eachside &ealtys -"?" ?"6 statement of retained earnings. .- Prepare 1eachside &ealtys -"?" ?"6 balance sheet. .6 Prepare the closing entries that need to be made at the end of the period. .< 0)plain4 in your own words4 the nature and purpose of ma>ing closing entries at the end of an accounting period. .8 Is 1eachside &eality a sole proprietorship4 partnership4 or corporation3 How do you >now3 .: +ompare and contrast how financial statements differ between a .i/ sole proprietor4 .ii/ a partnership4 and a .iii/ corporation3 0)plain your answer by clarifying e)actly where and why these statements are different and similar. Part III The following information relates to the Bietnamese Teaching Croup on ,ecember -"4 5"6. The company4 which uses the calendar year as its annual reporting period4 initially records prepaid and unearned items in balance sheet accounts .assets and liabilities respectively/. .a/ .b/ .c/ The balance of the companys supplies account was 7""< the beginning of the month. ,uring ,ecember4 the company purchased more supplies for 7#:-. !n " ?-"?"6 an inventory count showed 7"8# of unused supplies. The company has a "5' note payable for 7"#4555 due in "< months. Bietnamese Teaching Croup has not yet recorded the monthly interest e)pense. Bietnamese Teaching Croup is run by the owner and his daughter. The owner pays himself on the "<th of every month for wor> performed the previous month. His monthly salary is 7-4855. His daughter is paid 76<5 for each <2day wor> wee> .=onday 2 Driday/. The last day of the month fell on Tuesday. Pre2paid contracts signed with e)2pats have a balance of 7:4555 .recorded under unearned fees/. According to the manager4 65' of that amount has been earned at the end of ,ecember. There were 7955 of services performed at month end but no billing has been sent to the customers. The company bought a 7-4555 transcription computer on "?"?" . Bietnamese Teaching Croup e)pects to use the computer for four years and it has no residual or salvage value. The company uses reducing balance method .double declining balance/.


.e/ .f/

-." Prepare any necessary adjusting journal entries on ,ecember -"4 5"6. -. Prepare T2accounts for the accounts affected by adjusting entries and post the adjusting entries. ,etermine the adjusted balances for all T2accounts. Part IV Elepsers Elun>ers .EE/ has had a rough year. $ust when the economy started to pic> up the business suffered from several unfortunate events. +onsider the following events independently as you determine and assess the implications of these circumstances on EEs statement of financial position and income statement. 6." (ear the end of the first *uarter an e)cessively rainy spring resulted in localiFed flooding in EEs city. The flood damage resulted in a great deal of damage to its office and inventory. Amongst the records that were recovered the following information was given to you by your supervisor to estimate the cost of the damaged ending inventory. ,etermine .a/the estimated ending inventory amount to file an insurance claim and .b/ e)plain why4 despite the fact that the following records were saved from the flood4 the estimate computed in .a/ could be inaccurate. Cive an e)ample to support your answer. @ales revenue Appro)imate gross profit percentage 1eginning inventory Purchases 7-554555 <' 7 94555 ""4555

6. EEs accountant4 Ha4 had great computer s>ills but he was4 at times4 rather remiss in recording transactions in a timely manner. He is currently away at an accounting convention and your manager is as>ing for information regarding the current *uarters cash payments. The following balances and amounts are available for the current *uarter end -5 =arch 5"6: 1alance =arch -5 7 94<55 "554555 6 4<55 -4555 1alance $anuary " 7 4555 "-<4555 : 4555 "4555

Accrued e)penses .operating e)penses/ Accounts payable .merchandise creditors/ =erchandise inventory Prepaid e)penses

The cost of goods sold was 7:554555 this first *uarter and the operating e)penses .not including depreciation/ were 7"854555. ,etermine the amount of .a/ cash payments for merchandise and .b/ cash payments for operating e)penses. 6.- As delightful as the +ontrollers Administrative Assistant is4 she is clumsy. $ust after the receivables transactions for =arch were entered into the computer she spilled an entire cup of Highlands coffee on the >eyboard. AlasG All electronic postings were lost. Than>fully she was able to read the paper source documents once they dried off. The following transactions occurred during =arch 5"6.

1ased on this information determine .a/ the ending balance in each subsidiary account4 .b/ the accounts receivable control balance4 .c/ discuss the significance of the sum of the individual balances in each subsidiary accountH i.e.4 what does it e*ual and why does it matter4 .d/ e)plain the impact of writing off an account receivable4 and .e/ describe why it is important for companies to ma>e period end adjustments to reflect accounts that wont be collected. =arch < =arch "5 =arch "5 =arch "=arch " =arch " =arch 6 =arch 8 =arch 8 @old 784 55 of merchandise to ,innerware4 Inc. The terms were ?"54 n?-5. @old 7<4555 worth of merchandise to Drutiables4 terms n? <. ,innerware4 Inc. returned 7 55 of its purchase due to the fact that this amount arrived defective. @old 7 48:< worth of merchandise and services to The !rganic +ompany for cash. Performed 7"4555 worth of services for Druitables4 terms n? <. ,innerware paid the amount due from its < =arch purchase. @old 7:#6 worth of merchandise to ,innerware4 Inc. The terms were ?"54n?-5. ,iscovered that The !rganic +ompany filed for ban>ruptcy and wrote off <5' of its balance due. +ollected the amount due from Druitables.

GRADING 4%ss Me#it is ac!ieved '( meeting all t!e reBuirements de ined in t!e assessment criteria. 0Re er to page 2 o t!e assignment 'rie 1 Identi ( and appl( strategies to ind appropriate solutions 0=11

"haracteristics / Possible Evidence C A satis actor( and generall( accurate presentation o inancial statements or a variet( o 'usinesses prepared rom a trial 'alance and5or incomplete records )it! less t!an 20D plagiarism evidenced. ,elect and appl( appropriate tec!niBues. 0=21

Characteristics / Possible Evidence "omputations accuratel( computed and anal(+ed$ appropriate demonstration o a'ove average discernment regarding t!e need or ad/usting and closing entries to prepare inancial statements and less t!an 10D plagiarism evidenced. .resent and communicate appropriate indings 0=>1

"!aracteristics / Possible Evidence C <!e )or* is presented in a pro essionall(3)ritten report )it! appropriate structure and approac!. Anal(+es and evaluates logicall(4 e ective use o evidence4 treats di erent points o vie) airl(4 generall( convincing4 considers audience4 properl( documented researc!. Less t!an ?D plagiarism is evidenced. Distinction Use critical re lection to evaluate o)n )or* and /usti ( valid conclusions 0D11 Characteristics / Possible Evidence C,(nt!esi+es$ anal(+es$ and evaluates logicall(4 ample evidence4 eEtends and eEplores conteEt and5or implications4

persuasive4 demonstrates clear consideration o audience. Independentl( connects eEamples$ acts$ or t!eories rom more t!an one ield o stud( or perspective. ;o plagiarism is evidenced. <a*e responsi'ilit( or managing and organi+ing activities 0D21 Characteristics/Possible essionall( )ritten report t!at eE!i'its completion o tas* )it!in t!e speci ied time rame$ adeBuatel( recogni+es t!e eEtent and nature o in ormation needs$ utili+es onl( legitimate sources$ locates$ evaluates$ and e ectivel( uses t!e needed in ormation$ cites source0s1 )it! proper A.A documentation$ independentl( connects eEamples$ acts$ or t!eories rom more t!an one ield o stud( or perspective.