Explaining the accountant’s position
Assessment Description
You are required to answer the following three tasks. The assignment must be completed individually and submitted before the above due date to avoid any late penalties. Please make sure you follow the guidelines noted in your subject outline especially those relating to presentation of written work, late policy and academic integrity.
Task 1: (5 marks) (Word limit: 500 words) – Respond to the owner, explaining the accountant’s position
On 31 March, Padbury Publishers received a subscription of $480 for the supply of twelve monthly magazines, beginning in April. At the end of the reporting period, 30 June, the accountant suggested that the owner make an adjusting entry to defer the revenue on nine issues until the New Year. The owner of the business was reluctant to do so, claiming that he had already received the subscriptions in cash and could see no reason for the delay in recognizing the revenue. Do you agree with the owner or the accountant? Respond to the owner, explaining the accountant’s position. Ignore GST.
Task 2: (5 marks) (Word limit: 500 words) – Response to the accounting student
Recently, a new student of accounting was overheard making the following remarks: ‘Why are we learning how to use the double-entry system of recording in the accounting cycle? Surely there are good computer packages available these days which can handle all of these details.’ Provide a suitable reply.
Task 3: (30 marks)
– Adjusting entries
– 10 column worksheet
– Income statement
– Statement of changes in equity
– Balance sheet
Additional information
1. Petrol purchased on credit for $780 plus GST of 10% and used during the last week in June has not been paid for or recorded.
2. A physical count showed office supplies totalling $240 were still on hand at 30 June.
3. Depreciation for 1 year on the hire cars is $12 400. Depreciation on the office equipment is $980.
4. The balance in the Advertising Expense account includes $600 prepayment (net of GST) for an advertising campaign beginning in July.
5. The balance in the Unearned Hire Fees account includes $1800 received in May for hire services completed in June.
6. The June insurance premium of $900 plus GST is overdue and has not been recorded. A tax invoice has not been received.
7. Wages earned but not paid amounted to $2150.
Required
A. Prepare the necessary adjusting entries.
B. Prepare a 10-column worksheet for the year ended 30 June 2016.
C. Prepare the income statement for the business for the year ended 30 June 2016.
D. Prepare a statement of changes in equity for the year ended 30 June 2016.
E. Prepare a balance sheet as at 30 June 2016.