Accounting for Managers
Trimester 2, 2013
DUE DATE: Monday, 26th August VALUE: 20% of TOTAL ASSESSMENT
Using the supplied templates attached, prepare answers to the following four questions. All questions must be attempted and answers must not be copied from a text book, another student or website. Ensure you answer each question in your own words. Plagiarism penalties will apply.
You are required to hand in one hard copy of your assignment to the campus administration/front office with a completed and signed assignment cover sheet attached. Assignments with no cover sheets WILL NOT BE MARKED. All answers must be hand written in pen. Assignments which are written in pencil will NOT be marked .Any work which has been copied or shared between students will result in a Fail grade. This assignment must be your own work.
Question 1 13 marks
Apple Accountants, owned by John Juicy showed the assets were reported at $450,000 and liabilities were $320,000 as at 1st July 2012. The following transactions occurred during the year ended 30th June 2013:
Wages paid $80,000
Telephone used $ 3,200
Insurance paid and used up $24,000
Purchased Motor vehicle on credit $50,000
Amounts owing from customers $10,000
Loan outstanding $100,000
With cash $800
On credit $10,000
Performed Accounting Services for clients:
On credit $135,000
For cash $ 16,000
• The owner withdrew $52,000 cash during the year.
• The owner contributed $50,000 in capital contributions out of his own personal savings account.
Using the appropriate information above, prepare the following:
(a) An Income statement for the year ended 30th June 2013 (7 marks)
(b) A Statement of changes in equity for 30th June 2013 (6 marks)
(Hint: use the accounting equation to work out the opening balance at 1st July 2012)
Question 1 (a) (7 marks)
Question 1(b) (6 marks)
(a) You are working as the CFO of Jeans Co. The company is currently seeking a new supplier for their goods. There are two main suppliers of choice, XYZ Ltd and ABC Ltd. The contract would be worth over $2 million in sales per annum to the successful supplier. You also own a large majority of the shares as shareholder in XYZ Ltd. The directors have asked you for a recommendation.
Discuss the ethical issues involved in this situation.
What would be the best course of action by you as manager? (10 marks)
QUESTION 3 (12 marks)
(a) Comment on the following three (3) ratios and provide analysis on the profitability, asset efficiency and liquidity of the entity:
Ratio 2013 2012
Profit Margin 9% 12%
Days Inventory 100 70
Days Debtors outstanding 65 45
Current Ratio 2.7:1 1.9:1
(a) Womble Limited provides you with the following information: (5 marks)
Accounts Receivable 100,000 70,000
Accounts Payable 150,000 280,000
Accrued Expenses 500 1000
Sales revenue 350,000
Additional information: Depreciation of $50,000 is included in the total Expenses given above.
Calculate the following:
(a) Receipts from customers: (Show all calculations) (2 marks)
(b) Payments to suppliers: (Show all calculations) (2 marks)
(c) Payments for other expenses: (Show all calculations) (1 mark)
(b) Classify each of the following transactions as either an operating, investing or financing activity or a non-cash transaction for the purposes of a cash flow statement. If it is a cash transaction, indicate if it is a cash inflow or outflow.
Collected $300,000 from Accounts Receivable:
Recorded depreciation for equipment:
Received a dividend from an investment company:
Purchased a new machine:
Owner withdrew cash (drawings) for private use:
End of Assignment