Professional Documents
Culture Documents
Suggested solutions
QUESTION 1 (9 MARKS)
a. 2 marks
General Journal
Date
Details Debit Credit
2020
Explanation
The accrued wages need to be recognised by the business at 31 December 2020 as the
expense has been incurred but not yet paid. The period assumption requires the business to
recognise the expenses incurred for the reporting period. The accrual basis assumption
requires the business to match expenses incurred against revenue earned in order to
calculate an accurate profit for the period.
a. 4 marks
General Journal
Date Details Debit Credit
2021
30/06 Rent Expense 6 100
Prepaid Rent Expense 6 100
30/06 Insurance Expense 1 200
Prepaid Insurance Expense 1 200
Date Date
Cross-reference Amount Cross-reference Amount
2021 2021
01/01 Balance 2 000 30/06 Rent Expense 6 100
15/02 Bank 3 000 30/06 Balance 2 200
15/05 Bank 3 300
8 300 8 300
01/07 Balance 2 200
Rent Expense
Date Date
Cross-reference Amount Cross-reference Amount
2021 2021
30/06 Prepaid Rent Expense 6 100 30/06 Profit and Loss Summary 6 100
6 100 6 100
Explanation
The balance day adjustment for Rent Expense will result in a decrease in Net Profit of $6 100
in the Income Statement due to an increase in Rent Expense. There will be a decrease in the
assets of $6 100 in the Balance Sheet due to Prepaid Rent Expense decreasing and a
decrease of $6 100 of owner's equity of $6 100 due to the decrease in Net Profit. There will
be no effect on the Cash Flow Statement of Store It.
a. 3 marks
Explanation
Depreciating the computer would result in the Income Statement and the Balance Sheet
providing a faithful representation of the real-world economic event it represents. The
depreciation represents the cost of the computer, which has been consumed by the business,
and will ensure that the Balance Sheet and Income Statement are complete.
Calculation
Year ended 31 December 2020 – $4 000 * 0.3 = $1 200
Year ended 31 December 2021 – $2 800 * 0.3 = $ 840
Explanation
When considering the appropriate method to use to depreciate a non-current asset, the
revenue earning pattern of the non-current asset needs to be considered. The reducing
balance method is more appropriate for assets that generate more revenue at the beginning
of their life than at the end, while the straight-line method is more appropriate for assets that
generate revenue equally over their useful life. The computer would generate more revenue
in the initial years of its life when it is working at peak performance as opposed to the end of
its life when it slows down.
d. 3 marks
Accumulated Depreciation – Computer
a. 7 marks
General Journal
Date
Details Debit Credit
2020
31/12 Advertising Expense 12 000
Prepaid Advertising Expense 12 000
31/12 Accounts Receivable – Bob's Barbers 2 200
Sales 2 000
GST Clearing 200
Cost of Sales 1 000
Inventory 1 000
31/12 Electricity Expense 800
Accrued Electricity Expense 800
31/12 Inventory 1 600
Inventory Gain 1 600
b. 5 marks
TRIMMIT
Income Statement (extract) for year ended 31 December 2020
$ $
Revenue
Sales 142 000
Less Sales Returns 1 000 141 000
Less Cost of Goods Sold
Cost of Sales 70 500
Gross Profit 70 500
Add Inventory Gain 1 600
Adjusted Gross Profit 72 100
Add Other Revenue
Discount Revenue 200
Interest Revenue 4 000 4 200
76 300
Explanation
The electricity would be reported as a current liability (accrued electricity expense of $800),
as it would represent a present obligation (amount owing) of Trimmit to transfer an economic
resource (cash) as a result of a past event (use of electricity) within the next 12 months.
Teacher notes
This assessment task requires students to complete questions manually.
Students need the following materials to complete the task:
Question book
Answer book.
Teachers are supplied with:
suggested solutions for questions that are manually answered.
It should be noted that on the advice of the Victorian Curriculum and Assessment Authority
(VCAA), tasks available in the public domain should be sufficiently modified to minimise
authentication concerns. Refer to the following Authentication advice for further details.
Authentication advice
'Where commercially produced tasks are being used for School-based Assessment, the
school should ensure the tasks meet the requirements of the study design and that they have
been sufficiently modified to enable student work to be authenticated.'
— VCE and VCAL Administrative Handbook 2021, VCAA, 2021, page 76
This task provides an opportunity for students to demonstrate aspects of Outcome 1 as stated in
the VCE Accounting Study Design (2019–2024), VCAA, page 26.
Outcome 1
'Record financial data and balance day adjustments using a double entry system, report
accounting information using an accrual-based system and evaluate the effect of balance day
adjustments and alternative methods of depreciation on accounting reports.'
This assessment task addresses selected key knowledge and key skills in Area of Study 1,
which are listed on pages 26–27.
Note: Some key knowledge points and key skills in the area of study are not covered in this
resource. Where part of a key knowledge point or key skill is covered, the relevant part is
highlighted in bold.
Key knowledge
Key skills
Copyright notice: Compak is a membership service of the Victorian Commercial Teachers Association
(VCTA). Copyright of Compak material is vested in VCTA and individual contributors, subject to the
Copyright Act 1968 (Cth).
VCTA gives permission for the reproduction or alteration of Compak material if used by VCTA members
for non-commercial, educational (classroom) purposes. For purposes other than classroom use,
permission to reproduce, alter or transmit Compak material should be sought from VCTA.
Compak articles must not be placed on publicly accessible online spaces (including those accessed by
students).
Some Compak material includes links to external (third-party) websites. These are provided for information
purposes only and VCTA does not exercise any editorial control over these sites or endorse any of the
opinions of the individual or organisation. In addition, VCTA does not take any responsibility for the content
of those sites.
Every effort has been made to trace the copyright holders of all third-party content where this is included in
Compak articles.
Disclaimer: This resource has been written by the author (Darrell Cruse) for use with students of VCE
Accounting. This does not imply that it has been endorsed by the Victorian Curriculum and Assessment
Authority (VCAA). The current VCE Accounting Study Design (2019–2024) can be accessed directly via
the VCAA website. VCE is a registered trademark of VCAA. While every care is taken, VCTA accepts no
responsibility for the accuracy of information or advice contained in Compak. Teachers are advised to
preview and evaluate all Compak classroom resources before using them or distributing them to students.