Miss Nancy started a lawn moving business in Gold Coast, Queensland, Australia. For this purpose, she purchased a group of new lawn mowers for $20 000. The accountant of Miss Nancy told her that she must have to decide the useful life and residual value of these new lawn mowers. After an initial consultation with the stakeholders, she decided that the mowers to last five years and have negligible resale value at that point. The business plan projects cutting 5000 lawns over five years. The yearly projection is as follows: • 1st Year: 500 lawns,

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HA1020
ACCOUNTING PRINCIPLES AND PRACTICES
FINAL ASSESSMENT
TRIMESTER 2, 2021
Assessment Weight: 50 total marks
Instructions:
• All questions must be answered by using the answer boxes provided in this paper.
• Completed answers must be submitted to Blackboard by the published due date and time.
Submission instructions are at the end of this paper.
Purpose:
This assessment consists of six (6) questions and is designed to assess your level of knowledge of the key topics covered in this unit

Question 1 (7 marks)
Miss Nancy started a lawn moving business in Gold Coast, Queensland, Australia. For this purpose, she purchased a group of new lawn mowers for $20 000. The accountant of Miss Nancy told her that she must have to decide the useful life and residual value of these new lawn mowers. After an initial consultation with the stakeholders, she decided that the mowers to last five years and have negligible resale value at that point. The business plan projects cutting 5000 lawns over five years. The yearly projection is as follows:
• 1st Year: 500 lawns,
• 2nd Year: 1 000 lawns,
• 3rd Year: 1 200 lawns,
• 4th Year: 1 800 lawns, and
• 5th Year: 500 lawns.
Required:
1. Calculate the accumulated depreciation balance at the end of the second year using each of the following depreciation bases: (a) straight-line [1.5 Marks]; (b) reducing balance (25 per cent rate) [2 Marks]; and (c) units-of-production [1.5 Marks].
2. Based on your calculations, which depreciation basis would produce the highest retained profits at the end of the second year? (2 Marks)
ANSWER: ** Answer box will enlarge as you type
Question 2 (7 marks)
We have discussed the accounting for liabilities in Week 10 and 11. Based on this discussion, please explain the relationship between liabilities and expenses. Provide five examples where they both increase at the same time (4 Marks). Why are some liabilities interest-bearing and others are not (3 Marks). [Words Limit: Up to 100 Words]
ANSWER:
Question 3 (11 marks)
The accountant of ABC Limited has prepared the following unadjusted trial balance of ABC Limited on 30th June 2021.
Yellow Limited
TRIAL BALANCE
AS AT 30th JUNE 2021
Accounts Debit ($) Credit ($)
Cash at bank 13 985
Account receivables 26 200
Prepaid insurance 3 900
Office Supplies 4 680
Office equipment 14 100
Accumulated depreciation – equipment 2 850
Accounts payable 315
Salary payable
Unearned service revenue 1 230
Loan payable 10 500
Capital 33 300
Drawings 60 000
Service revenue 159 270
Salary expenses 66 000
Depreciation expenses – equipment
Miscellaneous expenses 18 600
TOTAL 207 465 207 465
The following additional information is available at the end of June for adjustments:
• Mr Emmanuel is working as the inventory clerk. He performs the physical count of the office supplies on 30th June 2021. This physical count reveals that the unused office supplies of $550 are on hand.
• The rate of depreciation for the office equipment is 15% per annum and ABC Limited used the straight-line method of depreciation.
• Of the $1230 unearned service revenue, $300 is still unearned
• 60% of prepaid insurance is expired during this period.
• Salaries owed but not yet paid $1920.
• Provided consultancy service of $2000 on credit. This was not recorded for the month.
Required:
a) Prepare adjusting entries at the end of 30 June, 2019. (6 marks)
b) Calculate the balance of the total revenue of the company after adjustment. (2 marks)
c) Explain why accrual accounting adjustments are required? (3 marks)
ANSWER:
Question 4 (11 marks)
HARDA Limited is a retailer of office stationery and art supplies. The internal auditor of the business is concerned about the inventory management of the speciality pen (a product with the highest level of sale). The following information is extracted from the records of HARDA Limited. The company uses the perpetual inventory system to record the inventory of its products. Its monthly reporting date is 30 October.
Date Purchased Sold Balance
1/10 600 @ 5.00
6/10 400 @ 5.20
15/10 800 @ 10
20/10 600@4.75
25/10 400@12
30/10 100 (Sales Return from 25/10 Sales)
Total 1000 1100
Required:
a) Complete the inventory stock record below for the speciality pen of HARDA Limited. All transactions occurred in the month of October. Ignore GST. (7 marks)
b) Calculate the Cost of Sales (COS) for 30 October, assuming the FIFO Method. (2 mark)
c) Calculate the Ending Inventory on 30 October, assuming the FIFO Method. (2 mark)
(Note: please write your answers in by completing the table, as provided below.)
Date Purchases Cost of Goods Sold Balance
Units Unit
cost Total
$ Units Unit cost Total
$ Units Unit cost Total
$

ANSWER:
Question 5 (7 marks)
The accountant of Paul Shop Fitter Private Limited has provided the following data on the Assets, Liabilities, Equity, Income and Expense amounts as at 30th June 2021.
$ $
Equipment 221,800 Supplies 84,200
Prepaid Insurance 24,000 Cash in Bank 88,400
Accounts receivable 182,800 Accounts payable 101,100
Capital ? Bank loan 30,000
Service income 1,158,000 Salary expense 483,000
Advertising expense 15,000 Supplies expense 142,500
Required:
a) Prepare a Balance Sheet in the narrative (vertical) format as at 30th June 2021. (5 marks)
b) Explain what key information the Balance Sheet provides to users of the financial statements. (2 marks)
ANSWER:
Question 6 (7 marks)
The bank statement balance and cash account balance do not agree. The owner of E-Bite Limited has requested to prepare a bank reconciliation to reconcile these balances. For this purpose, the following information is given.
a) Deposits in transit are $9,800.
b) Outstanding cheques totalled are $3200.
c) The bank service charge is $24.
d) The collection of note by the bank is $800.
e) The bank statement balance is $9,000.
f) The cash account balance is $14,824.
ANSWER:
END OF FINAL ASSESSMENT
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