Formal Exams SP52, 2021 Exam

BU1002/ BU1902 Accounting for Decision Making

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BU1002/ BU1902 ACCOUNTING FOR DECISION MAKING

Formal Exams SP52, 2021
Final Examination for JCUS student only
College of Business, Law & Governance
Examination Duration

You must complete this assessment within 3 hours of your scheduled exam start time.

Exam Conditions

You must complete this exam within the scheduled 3 hour time frame. Email exams-
singapore@jcu.edu.au if you have any problems during the exam. Late submissions will not be
processed.

Exam Advisory
Students are advised not to share their answer scripts with other students, copy material
from online and offline sources as well as discuss their answers.

Students caught through plagiarism checks, will be referred to the Exam misconduct panel with
a possibility of their exam attempt being voided or shown a failure in the subject.

Instructions To Students:
1. Students answer the exam by typing on a word document or hand write on paper
2. Type/Write your full name, JCU number and Subject Code on the top right -hand corner
of each answer page
3. Number your answer clearly on each answer page.
4. Upon completion of the answer script:
a. For Handwritten scripts on paper: students are to take pictures of their answer
scripts using the Clear Scanner app, save the answer script into a single PDF file
b. For those typed on a word document: students to save the file
5. Upon completion of the answer script: Submit your answer to the designated Drop-Box
in LearnJCU
6. This is an open book examination.
7. Failure to submit the exam answers by the time deadline may lead to reduction of marks.

Answer all 5 questions. Each question is worth marks as indicated in

parenthesis This examination is worth 50 marks.

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Formal Exams SP52, 2021 Exam
BU1002/ BU1902 Accounting for Decision Making

Question 1 (10 marks)

The following information contained the financial accounts of Matrix Accounting Firm for
the accounting year ended 31st December 2020:
Account description Amount $
Professional fee earned 2,250,000
Corporate secretariat fee earned 75,000
Rental of office 100,000
Staff salaries 470,000
Air conditioner servicing fee 22,000
Cash at bank 30,000
Accounts payable 50,000
Office expenses 65,000
Mainframe server 800,000
Loss on disposal of assets 10,500
Accrued expenses 30,000
Prepaid expenses 28,500
Rent deposit paid 88,000
Accumulated depreciation of Mainframe
server 80,000
Inventory 37,500
Owner’s equity ?
Unearned professional fees 80,000
Fees overdue from clients 55,000
Bank loan 450,000
999 year leasehold property 500,000

Required:
a) Prepare a fully classified Balance Sheet for Matrix Accounting Firm for the year
ending 31st December 2020. Use the accounting equation to determine the value of
Equity at the end of the year. (6 marks)
b) Discuss and elaborate how ‘Unearned professional fees’ meets the definition and
recognition criteria according to the Conceptual Framework to allow it to be
recorded in the Balance Sheet. (4 marks)
(6 + 4 = 10 marks)

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Formal Exams SP52, 2021 Exam
BU1002/ BU1902 Accounting for Decision Making

QUESTION 2 (10 Marks):

These following financial statement balances are for Mandy Hardware Shop for the end of
the financial year, 31 December 2020:

Account description Amount $

Accounts payable 21,000
Accounts Receivable 19,800
Accumulated Depreciation Building 24,000
Advertising incurred 11,200
Advertising Payable 11,200
Bank Loan 120,000
Building 150,000
Capital 173,000
Cash 35,000
Depreciation 27,000
Drawings 20,200
Sales Revenue 210,000
Inventory 30,000
Land 130,000
Motor Vehicle Expenses 35,000
Other Expenses 48,000
Rent Revenue 70,000
Rent Revenue Received in Advance 12,000
Salaries Expense 65,000
Supplies used 43,000

Required:
a) Prepare a Statement of Profit or Loss for Mandy Hardware Shop at 31 December
2020.
(5 marks)
b) By referering to specific items within Mandy Hardware Shop’s statement of profit
or loss, name several key stakeholders and discuss how the statement be useful to
these stakeholders.
(5 marks)

(5 + 5 = 10 marks)

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Formal Exams SP52, 2021 Exam
BU1002/ BU1902 Accounting for Decision Making

Question 3 (10 marks)

The following are transactions of Delta Force Company for year ending 30 June 2021:
Description $
Proceeds received from Bank loan 75,000
Proceeds of share issue 125,000
Payment for purchase of motor vehicle 115,000
Depreciation expense 47,000
Dividends paid 35,000
Sales revenue 825,500
Loss on sale of equipment 30,000
Proceeds from sale of equipment 65,000
Commission received in cash 28,050
Dividends received from investment 29,500
Employee salaries paid 380,000
Depreciation expense 38,600
Cash paid to suppliers 316,010
Cash collected from customers 825,500
Opening cash balance, 1 July 2020 60,000

Required:
a) Prepare the Statement of Cashflow for the end of the financial year, 30 June 2021
for Delta Force Company. (5 marks)
b) Discuss and explain how the Statement of Cash Flow prepared is beneficial to
Delta Force Company’s long term financial health? (5 marks)
(5 + 5 = 10 marks)

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Formal Exams SP52, 2021 Exam
BU1002/ BU1902 Accounting for Decision Making

Question 4 (10 marks)

The CFO of DigiTech Ltd. has obtained the following budget information for the first
three months of the coming financial year.
March April May
$ $ $
Sales 800,000 700,000 600,000
Manufacturing costs 300,000 350,000 400,000
Selling and administrative expenses 48,400 46,400 40,400

Sales include both cash and credit sales. The company expects to sell 30% of its
merchandise for cash. Of sales on credit, 60% are collected in full in the month of the sale,
20% are collected in the second month of sale, and the remainder in the third month
following the sale.
One-quarter of the manufacturing costs are paid in the month in which they are incurred,
and the balance is paid in the following month. Depreciation of $6,400 is included within
the monthly selling and administrative expenses. Of the remaining balance of the selling
and administrative expenses, one-half are paid in the month in which they are incurred,
and the balance is paid in the following month. The company is required to repay the
loan, amounting to $100,000, on the 31st May.
The balance of cash at the bank on 1st May is $770,500.
Required:
a) Prepare a monthly cash budget for the end of month of May only . (5 marks)

b) Explain to DigiTech’s management what the cash budget prepared in part a) reveals
about their business.. (5marks)
(5 + 5 = 10 marks)

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Formal Exams SP52, 2021 Exam
BU1002/ BU1902 Accounting for Decision Making

Question 5 (10 marks)

Camview Ltd. produces high quality 3D Cameras. The information relating to the
production of their cameras for 2021 is given below:

Annual sales volume 1,370 units

Selling price $890

Variable materials cost $460

Annual fixed overheads $108,000

Variable selling and distribution costs $190

Annual fixed manufacturing costs $180,000

Required:
a) Calculate the contribution margin and the contribution margin ratio for 3D
Cameras in 2021. (2 marks)

b) Calculate the breakeven point of Camview’s product in units and sales dollars for
2021. (2 marks)
c) Calculate the margin of safety. (1 mark)
d) The marketing department proposes that if they spend a further $50 variable
marketing cost per unit, the company will be able to increase annual demand.
Calculate the new breakeven point in units under this proposal. (2 marks)
e) In reference to your calculations in part (d), assume if the marketing department
increased variable costs by $50 per unit, it would result in an increase in annual
demand to 1,450 units. Briefly discuss if you would recommend management
accept this proposal. Provide support for your recommendation. (3 marks)
(2 + 2 + 1 + 2 + 3 = 10 marks)

~ End of Paper ~

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