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Assessment 3 Assignment BUS1AFX – Accounting and Finance Fundamentals 2 © Didasko 2020. All rights reserved. Content Development Review Academics are required to perform the following checks on the content development plans contained within this document. Please ensure that the plan for content development: 1. is relevant to the subject matter, SILOs and your planned delivery 2. sufficiently covers the breadth of the subject (no missing key topics, concepts or terms) 3. sufficiently covers the depth of the subject appropriate for the year level 4. is well-ordered to support learners’ growing understanding of the subject, and to match your delivery Declaration I have completed all aspects of the above review. Name: Date: Version number: © Didasko 2020. All rights reserved. 3 Before you begin Objectives This is an individual assignment. Students are not permitted to work in a group when writing this assignment. Copying and Plagiarism This is an individual assignment. Students are not permitted to work in a group when writing this assignment. Plagiarism is the submission of another person’s work in a manner that gives the impression that the work is their own. La Trobe University treats plagiarism seriously. When detected, penalties are strictly imposed. Further information can be found on http://www.latrobe.edu.au/students/academic- integrity/explanation/plagiarism Submission Guidelines Your assignment submission should be typed, not written/drawn by hand. Submit the electronic copy of your assignment through the subject LMS. Submission after the deadline will incur a penalty of 5% of the available assignment mark per day capped at 5 days. No assignment will be accepted after 5 days. If you have encountered difficulties that lead to late submission or no submission, you should apply for special consideration. 4 © Didasko 2020. All rights reserved. Background Assessment type: Assignment Word count: 1,000 Task weighting: 20% The assignment consists of 4 case studies. You are required to attempt all tasks from these 4 case studies. The Marks for this Assignment will be calculated as follows: Case Study 1 75 Case Study 2 40 Case Study 3 50 Case Study 4 35 Total Unadjusted Mark 200 Total Adjusted Mark 20 Tasks This assessment requires you to analyse, compute, present and interpret accounting and financial information as it applies to for-profit and not-for-profit entities. To help with this, you have been set 4 case studies, each with specific tasks. To satisfy the task requirements you will use techniques covered within multiple topics of BUS1AFX. To do well in this assessment, you must attempt and complete each case study and its specific tasks. Your responses should be clear, concise and supported by strong quantitative evidence. Marks for each Case Study and its’ specific tasks are clearly labelled in the marking rubric below. Once completed, save your file as ‘BUS1AFX_Assessment3_xxxx.docx’ (where xxxx is your student number) and upload it to the learning portal through the assessment 1 link. © Didasko 2020. All rights reserved. 5 Case Study 1 (75 marks) Acer Vale is a new suburb of an Australian capital city. There are many young families with primary-school aged children. On 1 July 2019, 100 residents of Acer Vale got together to establish a junior soccer club – AV United. In the first year of operation, AV United completed the following transactions. You are the treasurer. Transaction Details 1 On 1 July 2019, 200 people each contributed $120 to establish– AV United. A bank account in that name was opened at Big Bank. 2 On the same day, AV United held a registration day for junior soccer players. 220 juniors each paid their annual registration fee of $20. 3 On 15 July 2019, AV United signed an agreement with Acer Vale Council, whereby AV United would rent from council a soccer ground until 30 June 20X9 at a cost of $2,000. AV United paid that amount immediately. 4 On 1 August 2019, AV Untied purchased 300 club jumpers from Merino Ltd at a total cost of $6,000. Merino Ltd required a cash payment of 30% with the balance due on 1 July 20X9. AV United will sell the jumpers to its junior soccer players. 5 During the month of August, AV United sold 200 club jumpers to its junior soccer players at a mark-up from cost price of 20%. Half of sales were cash sales; the rest will be due within one year. 6 On 1 September 2019, AV United purchased portable soccer goals for $2,500 cash. The useful life is assessed as 10 years. 7 On the same day, 20 soccer balls were purchased for $50 each. The soccer balls will be used for training and matches until 30 June 20X0 and then replaced. 8 On 1 March 2020, a gala movie event raised $30,000 before deducting costs. The purpose of the event was to enable AV United to purchase a minibus to assist some junior soccer players getting to games in neighbouring suburbs. The cost of the event was $10,000 which was paid to the venue operator on that day. 9 On 1 June 2020, AV United paid the utilities bill for $3,000 for training usage. 10 On 30 June 2020, AV United purchased a second-hand Ford Transit Minibus for $30,000. AV united takes 5-year loan for half of this purchase. The useful life is assessed as 10 years. 6 © Didasko 2020. All rights reserved. Task 1 Prepare the worksheet for AV United. (30 marks) Task 2 Prepare the Income Statement for the year ended 30 June 2020. (15 marks) Task 3 Prepare the Statement of Financial Position (Balance Sheet) as at 30 June 2020. (15 marks) Task 4 Prepare the Statement of Cash Flows (using the Indirect Method) for the year ended 30 June 2020. Notes to the Statement of Cash Flows are not required. (15 marks) © Didasko 2020. All rights reserved. 7 Case Study 2 (40 marks) In August 2019, Sara Ricci was researching two companies listed on the Australian Securities Exchange (ASX). The companies operate in the same industry. She has collected the following information for Delta Ltd and Epsilon Ltd for the financial years ended 30 June 2018 and 2019. Delta Ltd Epsilon Ltd 30 June 20X8 30 June 20X9 30 June 20X8 30 June 20X9 INCOME STATEMENT $m $m $m $m Product Revenue 1,000 1,250 2,000 2,100 Service Revenue 2,500 2,908 7,805 8,494 Total Income 3,500 4,158 9,805 10,594 Cost of Sales 1,690 1,710 5,800 5,922 Gross Profit 1,810 2,448 4,005 4,672 Rent Expense 200 210 400 410 Depreciation Expense 398 585 1,300 1,025 Utilities Expense 111 125 152 158 Interest Expense 2 23 130 128 Net Profit before tax 1,099 1,505 2,023 2,951 Income Tax 400 500 800 1200 Net Profit after tax 699 1,005 1,223 1,751 BALANCE SHEET Cash 68 70 35 65 Accounts Receivables 100 117 350 350 Inventories 412 400 950 1,200 Equipment 100 110 800 850 Motor Vehicle 200 210 2000 2,300 PPE 134 424 4,840 4,515 Total Assets 1,014 1,331 8,975 9,280 Accounts Payables 68 74 200 195 Current Borrowings 26 80 104 84 Mortgage Payable 10 11 100 120 Long-term Borrowings 0 150 2,606 2,406 Total Liabilities 104 315 3,010 2,805 Capital 685 719 5458 5690 Retained Earnings 225 297 507 785 Equity 910 1,016 5,965 6,475 Sara also collected some information for the financial year ended 30 June 2017: Delta Ltd: Account Receivable: $90 m, Inventories: $380 m Total Equity $700m; Total Assets $740m Epsilon Ltd: Account Receivable: $300 m, Inventories: $870m Total Equity $4,000m; Total Assets $6,850m 8 © Didasko 2020. All rights reserved. Task 1 For the two years ended 30 June 2018 and 30 June 2019, which company have better collection of receivables given the credit term for both companies are 10 days? and which company have better inventory conversion period given the industry standard is 60 days? Ensure you support your answer using calculation. (20 Marks) Task 2 For the two years ended 30 June 2018 and 30 June 2019. Which company is more profitable? and which is financially stretched? Ensure you support your answer using calculation (20 marks) © Didasko 2020. All rights reserved. 9 Case Study 3 (50 marks) Marcello’s grandfather gave him $10,000. Answer the tasks that follow. Each task is independent of the previous task(s). Task 1 Marcello has the opportunity to invest $100,000 cash in a high interest savings account that pays 3.95% annual interest. How much money will be in the account in seven year if the interest is calculated on compounding basis? How this answer will change if the interest is calculated on simple interest? (10 marks) Task 2 Marcello is told about a company that is looking to borrow funds. The company will pay you $100,000 at the end of five years. How much would Marcello be willing to spend today to acquire this investment, if he can earn 6.5% per annum on an alternative investment of equal risk? Will Marcello eager to spend more money if the other investment turn out to yield 8% instead? (10 marks)