Bachelor of Accounting

ACC601 – Intermediate Financial Accounting 1

Semester 2
Assignment 2 – 10%

Instruction to Student
1. This assignment is worth 10% towards the student’s total assessment.
2. This is group assignment. Student needs to pair up for submission.
3. Use the School Assignment Cover Page (SACP) for your assignment.
4. Submit hardcopy (written typed) through school assignment box by 4.30 pm (22nd May 2021
Question 1 – Issue of Shares and Dividends (30 marks)
At 30 June 2017, ABC Ltd.’s equity was as follows
Shareholders’ equity $
Issue Capital:
200,000 ordinary shares issued at $1.20, fully paid 240,000
40,000 7% preference shares issued at $1, fully paid 40,000
280,000
Retained earnings 174,000
General reserve 35,000
Total Shareholders’ equity $489,000

The preference shares were non-participating. The following events occurred after 30 June 2017.
2017
Sept. 1 Final dividends out of retained earnings, as recommended in June, were paid in cash.
This included the 7% preference dividend for the year ended 30 June 2017 and a final
ordinary dividend of 10 cents per share.
Oct. 15 A prospectus was issued inviting subscriptions for 50,000 ordinary shares at an issue
price of $1.40, payable 80 cents on application and 60 cents on allotment.
Nov. 18 Applications closed, with applications having been received for 50,000 shares.
Applicants for 6000 shares had paid in full on application.
20 Shares applied for were allotted, with excess application money being applied to
allotment.
Dec. 11 The balance of allotment money due was received.
31 The directors transferred $20,000 to general reserve
2018
June 20 The directors paid the preference dividend for the year.
30 The directors recommended and paid a final dividend of 12 cents ordinary share.

Required
Journalise the above information in the general journal and prepare Shareholders equity part in the
statement of financial position of ABC Ltd for the year ended 30 June 2018.
Question 2 – Cash flows (30 marks)
Below is the financial statements for the years ended 30 June 2018 and 30 June 2017 for XY Screct
XY Screct
Comparative Statements of Financial Position
as at 30 June
2018 2017
ASSETS $ $
Cash at bank 6,000 15,000
Accounts receivable 10,000 14,000
Inventory 30,000 28,000
Plant 300,000 350,000
Accumulated depreciation – Equipment (100,000) (120,000)
Furniture 20,000 10,000
Accumulated depreciation – Furniture (6,000) (4,000)
$260,000 $293,000
LIABILITIES AND EQUITY
Accounts payable 60,000 70,000
XY Screct - Capital 200,000 223,000
$260,000 $293,000

XY Screct
Statement of Financial Performance
for the year ended 30 June 2018
$ $
Sales revenue 146,000
Less: Cost of sales 60,000
GROSS PROFIT 86,000
Proceeds from sales of furniture 6,000
92,000
Expenses:
Selling and general expenses 30,000
Carrying amounts of furniture sold 4,000
Depreciation of equipment 20,000
Depreciation of furniture 4,000 58,000
PROFIT $34,000

Additional information
XY Screct withdrew $21,000 for private use during the year ended 30 June 2018. Furniture which had
cost $10,000 and had a carrying amount of $4,000 was sold for $6,000 cash. No furniture was
purchased during the year.

Required
A. Prepare a statement of cash flows for the year ended 30 June 2018 in accordance with the direct
method.
B. Prepare a note to the statement reconciling cash flows from operating activities to profit.