ACG 11 (Accounting for Business) SP4 2020

Assignment Part B
70 marks - Weighting 18%
Due 8pm Adelaide time (ACST/ACDT)
On 7th February, 2020
Please aim to complete this assignment a few days prior to the due date to allow for any unforeseen circumstances
such as illness, holidays, family issues, work commitments etc. You may submit the assignment early if you have
other commitments around the due date.

The due date and time is stated in the subject outline, on the subject website and above. All times listed are local
(South Australia) times. Please ensure you factor in any time difference between Adelaide (South Australia) and your
location when submitting your assignment, to avoid incurring any late submission penalties.

Please note the following important instructions relating to the assignment format and submission:

IMPORTANT - Failure to follow these instructions may result in your

assignment not being marked, so please read them carefully.
1. You must complete your assignment using the assignment Word document provided.
2. There is no need to delete any part of this template.
3. Do not convert this document into any other format (.docx or .doc are the only permissible file formats than
can be uploaded).
4. You can only submit this one file.
5. If you use Excel for calculations, ensure you only copy and paste as a table. Do not ‘embed’ spreadsheets in
the assignment Word document.
6. Do not include any files as pictures within the assignment Word document.
7. You cannot scan hand written responses and submit.  All assignments must be word processed. 
8. Remember to fill out the assignment coversheet which is the third page of assignment Word document.
9. All assignments must be lodged via Learnonline page (link located on same page as assignment). 
10. Assignments submitted via e-mail (or any other method) will NOT be accepted.
11. Make sure that you upload the correct file. If you discover (after the due date) that you have uploaded a
draft version or the wrong file completely, you will not be allowed to submit a second file.

Note that this is an individual piece of assessment. Pay particular attention to the student declaration which forms
part of the coversheet. You must type your name and the date in the appropriate field in this declaration.

Please also be aware that extensions to assignment due dates will only be approved in exceptional circumstances
and for reasons that could not have been foreseen at the commencement of the study period. All applications for
extensions must be submitted via the “Extensions” link provided on the subject website and must include an
explanation of the circumstances under which the extension is being sought and relevant supporting documentation
must be included with the original application. Please note that circumstances such as usual workload (university or
employment), taking a holiday, being overseas or any situation within the control of the student do not qualify as
grounds for an extension.

Please note that extension requests made within 7 days of the due date must also include a draft of the work you
have completed to that point.

Best of luck with your assignment.

 Assignment Cover Sheet
for OUA Students

An Assignment Cover Sheet needs to be included at the front of each assignment submitted.

Address details
Full name:

Address:

Postcode:

Personal details
UniSA Student ID:

UniSA Email: @mymail.unisa.edu.au

Assignment details
Subject code: ACG11 Subject name: Accounting for Business

Assignment no. Part B

Extension due date (if applicable):

Assignment topic (as stated in the Subject Outline):

Student Declaration

I declare the work contained in this assignment is my own, except where acknowledgement of sources is made.
I authorise the University to test any work submitted by me, using text comparison software, for instances of
plagiarism. I understand that this will involve the University or its contractor copying my work and storing it on a
database to be used in future to test work submitted by others.

Note: The attachment of this statement on any electronically submitted assignments will be deemed to have the same
authority as a signed statement.

Student Signature: Date:

LODGING YOUR ASSIGNMENT

Please note: All text based assessment tasks should be submitted electronically using learnonline Gradebook.

OFFICE USE ONLY

Date received: Received by:

Academic staff member: Assessment/grade:

Date recorded and dispatched to student: Recorded and dispatched by:

QUESTION 1: Balance Day Adjustments (20 marks)

Joy Spark is the sole owner of ‘Keep Me Tidy’ a business specialising in home storage. Joy’s business
was recently show-cased on a tv home show and as a result the demand for her unique home storage
system has increased dramatically.

Joy is so busy with the growth of the business that she is unable to attend to the bookkeeping, so she
has recently hired Michell & Jones Co Accounting Specialists Pty Ltd to take over the accounting
function. You are the graduate accountant working at Michell & Jones Co Accounting Specialists Pty Ltd
and are now responsible for preparing the year end Balance Day Adjustment journals for ‘Keep Me
Tidy’.

Keep Me Tidy
Trial Balance
As at 30 June 2020
$ $
Cash 13 260
Accounts Receivable 79 560
Inventory (1 July 2019) 95 030
Prepaid Rent 3 978
Delivery Van 35 360
Accumulated Dep’n Delivery Van 7 072
Office & Shop Equipment 8 840
Accumulated Dep’n Office and Shop Equipment 4 420
Accounts Payable 71 272
J Spark, Capital (1 July 2019) 128 180
J Spark, Drawings 27 625
Sales 459 238
Sales Returns & Allowances 4 972
Discount Allowed 884
Purchases 309 842
Interest Revenue 1 989
Electricity Expense 4 751
Water Expense 2 652
Sales Staff Wages 53 040
Local Government Rates Expense 1 768
Insurance Expense 7 735
Advertising Expense 8 287
Rent Expense 14 587
672 171 672 171

(Continued next page)

QUESTION 1: Balance Day Adjustments (continued)

Joy has emailed you the following list of account information related to the year ended 30 June
2020:

REQUIRED:

It is now the end of the financial year and Joy requires you to undertake the following:

Prepare the Balance Day Adjustment Journals for ‘Keep Me Tidy’ where required, in the proforma
provided on the next page. Include a narration (explanation) for each journal entry. (20 marks)

(i) Sales staff wages owing but not paid as at balance day equals $3,970.

(ii) It is estimated that 2.5% of the 30th June 2020 balance of Accounts Receivable is
unlikely to be received.

(iii) Upon receipt of the business’s bank statement, Joy realised that the business bank
account had been charged $15.00 interest on 30th June 2020 which had been directly
deducted by the bank on that day. The accounting records need to be updated for this
transaction.

(iv) Both the Van and Office & Shop Equipment are expected to be used evenly over their
useful lives. The expected total useful lives and residual values of both assets are as
follows:

Useful life Residual Value

Delivery Van 8 years $5 000

Office & Shop Equipment 2 years -

(v) Joy has realised that during the year she made an error with one of the journals she
prepared. On the 14th May she sold a car organisation system for $2,300 on cash but she
debited Accounts Receivable instead of Cash at Bank. You are required to prepare a
journal to correct the error.

(vi) A physical stocktake of inventory at 30th June 2020 revealed $94 030 on hand.

(vii) The prepaid rent was paid on 1st April 2020 and was Shop/Office rent for three months
ending 30th June 2020.

(viii) $23,400 of the recorded sales represents sales of storage system to the local library
which will not be delivered until 15th July 2020.
QUESTION 1: Balance Day Adjustments (continued)

‘Keep Me Tidy’

General Journal
Date Details Debit ($) Credit ($)
QUESTION 2: Financial Statement (11 marks)
Ms Leilani owns ‘A Stretch A Day’, a yoga business specialising in yoga apparel and yoga classes. She
is also a good friend of Joy Spark. They often refer clients to one another. The following Trial
Balance for ‘A Stretch A Day’ yoga apparel shop has been prepared at year end by Ms Leilani who
likes to keep a hand in the bookkeeping side of the business.
A STRETCH A DAY
TRIAL BALANCE
AS AT 30 JUNE 2020
Debit ($) Credit ($)
Accounts Receivable 4,837  
Office Operating Expense 68,800
Inventory (1 July 2019) 41,920  
Discount Received   1,600
Insurance Expense 960
Depreciation Exp – Motor vehicle 1,600
Cash at Bank 154,510  
Prepaid Insurance 1,860  
Shop Shelving 70,700  
Accumulated Depreciation Shop Shelving 23,200
Office Furniture and Fittings 25,600  
Accumulated Depreciation Office F & F   7,600
Allowance for Doubtful Debts 520
Motor Vehicle 32,000  
Accumulated Depreciation Motor vehicle   1,600
Sales Returns & Allowances 760
Interest Expense 4,080
Rent Expense 44,200
Depreciation Exp – Shop Shelving 4,000
Accounts Payable   14,480
Accrued Rent 1,600
Discount Allowed 920
Advertising Expense 12,760
Freight Inwards Expense 3,010
Wages 210,400
Delivery Expense 1,440
Loan (repayable 1 Oct 2023)   36,800
Depreciation Exp – Off. Furn. & Fittings 2,560
Leilani, Capital (1 July 2019)   175,640
Leilani, Drawings 28,800  
Sales 606,797
Doubtful Debts Expense 520
Purchases 153,600  
Total  869,837 869,837

(Continued next page)

QUESTION 2: Financial Statement (continued)

Additional Information:

The stocktake performed at 30 June 2020 recorded an ending inventory balance of $38,000.

Ms Leilana has worked out that wages for the year were – sales staff $115,720, bookkeeper $84,160
and the casual (Credit Controller) she employed to follow up outstanding customers with overdue
accounts was paid $10,520.

Ms Leilana has a rent agreement that the shop (which is very small) is rent free but she pays rent for
the office space at the back of the shop. This agreement was struck because the owner of the
property lives above the shop and wanted a quiet, peaceful and clean business to operate below his
home.

On enquiry Ms Leilana has instructed that she treats the insurance expense as an administrative
expense.

REQUIRED:

Prepare a fully classified Income Statement for the year ending 30 June 2020.

Answer question 2 on the following page.

QUESTION 2: Financial Statement (continued)
QUESTION 3: Accounting Concepts (15 marks)

You are a graduate accountant working for Michell & Jones Accounting Specialists Pty Ltd. One of
their new clients is Ms Joy Spark, who owns and operates ‘Keep Me Tidy’. ‘Keep Me Tidy’ specialises
in storage products and providing a decluttering service to both domestic and commercial clients.

Ms Spark has had a meeting with the Managing Partner of Michell & Jones today, and you were
invited to attend the meeting.

After the meeting, the Managing Partner tells you she is extremely busy with a number of clients at
the moment and asks you to prepare a letter to Joy Spark which answers a query raised by Joy
during the meeting. The question and information provided by Joy is provided below.

REQUIRED:

Please write a letter in your own words addressed to Ms Joy Spark explaining the following:

Ms Spark has recently considered buying another business that would complement and
expand her current business ‘Keep Me Tidy’. Ms Spark is currently considering two
businesses and has provided you with a summary of the cashflow statements for each
business in the table below.

Ms Spark requires you to provide a comparative analysis of the two cashflow statements.

As you are not sure how to do this you made a time to see one of the partners of the
accounting firm you work for who has explained what you must do.

For each of the three sections of the cash flow statements provided, you need to:
 Explain what the section of the cashflow statement provides information on.
 Analyse the cash flow for that section for each of the two businesses.
 Compare your analysis above and prepare a sub-conclusion as to which business is in
the better position for that section

You must repeat this for each section of the cashflow statement and then provide an overall
conclusion regarding which business appears to have a stronger performance from an
overall cashflow perspective.

During your conversation with the partner she went to great lengths to reinforce that this
report must be in your own words as it will affect the reputation of the accounting firm if the
client considers the report to have come from an internet search or any other source other
than you as a representative of Michell & Jones Accounting Specialists Pty Ltd

(Continued next page)

QUESTION 3: Accounting Concepts (continued)

Cashflow Statements
For the year ending the 30th June 2020

‘Travel Lightly’ ‘Clean as a Whistle’

Cashflows from Operating (20 000) 20 000
Activities
Cashflows from Investing 79 000 (23 000)
Activities
Cashflows from Financing 32 000 32 000
Activities
Net Increase (decrease) in 91 000 29 000
cash held
Cash at start (10 000) (10 000)
Cash at end 81 000 19 000

Up to an additional 3 marks will be awarded for adhering to the following the formatting
requirements.

Formatting hints:

 Date your letter the 3rd February 2021

 Address your letter to Ms Spark, ‘Keep Me Tidy’, 23b Clearway Court, Pt Shine, 5888. Any
formal business letter format is acceptable (a template has not been provided - students are
expected to research business letter formats themselves).
 Consider an appropriate way to address and sign off your letter.
 Set out your letter with subheadings to separate each part of your letter as you address the
criteria required
 No specific word count is prescribed. However, given the nature of the questions, it would
be expected that the entire letter (including address and sign-off) should require no more
than two single A4 pages.

Answer question 3 on the following page.

QUESTION 3: Accounting Concepts (continued)

(type letter below – do not embed any other document)

Reference List
Please list any references used to complete this assignment.
Harvard referencing principles must be followed.
Please see this link for more information:
https://lo.unisa.edu.au/pluginfile.php/1396048/mod_resource/content/5/HRG%202018%20Dec.pdf
(Developed by Learning Advisers and Librarians @UniSA, December 2018)
QUESTION 4: Cash Flow Statement (15 marks)

Cedar is also a good friend of Joy Spark. Cedar owns ‘Green Your Space’, a nursery that specialises in
vertical gardens and roof top gardens for apartments. Cedar enjoys bookkeeping and does most of
the business bookkeeping himself except for Cashflow Statements which he finds quite difficult to
do. Joy Spark has been pleased with the work you have done for her, so she suggested that Cedar
asks Michell & Jones Accounting Specialists Pty Ltd to prepare the Cashflow Statement for him. You
are the graduate accountant working at Michell & Jones Accounting Specialists Pty Ltd and are now
responsible for preparing the Cashflow Statement for ‘Green Your Space’.

You are provided with the following financial information for ‘Green Your Space’:

GREEN YOUR SPACE

COMPARATIVE BALANCE SHEETS
AS AT JUNE 30

2020 2019
Current Assets
Cash on Hand $1 200 $4 000
Cash at Bank 9 000 7 000
Accounts Receivable (net) 17 200 4 500
Inventory 28 000 18 000
Prepaid Expenses 1 650 $57 050 650 $34 150
Non Current Assets
Plant & Equipment 83 500 64 000
less Acc. Depreciation (23 000) 60 500 (17 600) 46 400
Land 80 000 180 000
Total Assets 197 550 260 550

Current Liabilities
Bank Overdraft 6 402 -
Accounts Payable 13 000 14 800
Expenses Payable 780 790
Tax Payable 1 790 21 972 1 200 16 790
Non Current Liabilities
Bank Loan 20 000 20 000
Total Liabilities 41 972 36 790
Net Assets $155 578 $223 760

Equity
Capital 155 578 223 760
 $155 578 $223 760

(continued over page)

GREEN YOUR SPACE

INCOME STATEMENT
FOR THE YEAR ENDED 30th JUNE 2020

Net Sales $134 000

Cost of Sales 45 200
Discount Received 280
Gross Profit: 89 080
Other Revenue:
Interest Revenue 40 40
89 120
Expenses:
Selling & Admin Expense 31 500
Doubtful Debts Expense 354
Depreciation Expense 5 400
Interest Expense 3 800 41 054
Profit before tax 48 066
Income tax expense 4 278
Profit $43 788

Additional Information

The land was sold for $100,000 cash.

ANSWER THIS QUESTION ON THE PRO FORMA PROVIDED

REQUIRED:

a. Prepare a Statement of Cash Flows in the pro forma provided below and show all calculations
(an answer without supporting calculations will receive zero marks).
(15 marks)
 GREEN YOUR SPACE
Cash Flow Statement
for the year ended 30th June 2020

$ $
Cash Flows from Operating Activities
Receipts from Customers
Payments to Suppliers & Employees
Cash generated from operations
Interest Paid
Income Tax Paid
Interest Received
Cashflows from Operating Activities

Cashflows from Investing Activities

Purchase of Equipment
Proceeds from Sale of Land
Cashflows from Investing Activities

Cashflows from Financing Activities

Drawings

Net Increase (decrease) in cash held

Cash at start
Cash at end

Calculations below & on next page please.

DO NOT DELETE THE FOLLOWING

The following aspects of students’ written communication skills development are also awarded a
total of 9 marks.

PARAPHRASING
 Presenting ideas and information that student read in their own words,
 Not simply taking what someone else has written and changing a few words. It is about
translating another person’s ideas into the student’s own words.

Mark (maximum 3):

BEING RELEVANT
Does what is written contribute to answering the question(s)
 Setting out to specifically answer the question(s) by using relevant information,
 Staying ‘on track’ with answers,
 Avoiding straying from the question and going off on irrelevant tangents.

Mark (maximum 3):

WRITING FOR A PROFESSIONAL BUSINESS AUDIENCE (including good presentation)

 The written work is clear and understandable,
 Where applicable, the written work is based on the facts and available evidence,
 Exaggeration and bold statements which are not supported by the facts and evidence are
avoided.

Good presentation
 The written work contains no spelling and grammatical errors. Obvious evidence of editing
displayed. (Where the work contains any spelling and grammatical errors, it cannot be awarded
3 marks),
 Any headings and sub-headings are displayed properly, and are used consistently throughout
the document,
 Page numbering is used. It is usual for page numbering to commence on page 2 of a business
document as “2”,
 Font size and font style are used consistently throughout the document,
 If applicable, requested templates are used.
Mark (maximum 3):

TOTAL WRITTEN COMMUNICATION SKILLS MARK (maximum 9)