Please advise if you are able to complete and cost. I have attached PDF documentation that shows solutions.. the excel spreadsheet is in need of completion.
Test 1 FNSACC504 – Prepare financial reports for corporate entities – Solutions to Sample Workplace Simulation (Test) Task 1 a) On 1 January 2015 the company issued a prospectus to raise an additional $1,000,000 cash by issuing 10,000 9% debentures, each with a face value of $100. The debenture issue was fully subscribed and all the debentures were issued on 1 April 2015. b) On 30 September 2016, the company redeemed 4,000 of the $100 debentures at a price of $102.50 each. Required: Prepare, General Journal entries to record (Note: narrations are not required): (i) the application for and issue of the debentures; (ii) the redemption of the debentures and profit and loss transactions involved. Solution: General Journal Date Particulars Debit Credit 1/4/15 Trust bank account (10,000* $100) Debenture holders 1,000,000 1,000,000 Debenture holders 9% Debentures 1,000,000 1,000,000 General bank account Trust bank account 1,000,000 1,000,000 30/9/16 9% Debentures (4,000*$100) Premium on redemption Debenture holders 400,000 10,000 410,000 Debenture holders General bank account 410,000 410,000 Profit & loss Premium on redemption 10,000 10,000 Notes: Use a trust account for the issue; Don’t forget the transfer to P&L 2 Task 2 Tiger Pty Ltd and Magpie Supplies Ltd are struggling as independent suppliers and have been losing market share to some larger businesses. They decide to join forces to be more competitive. The new business will be called Maggers Ltd. It was agreed that Tiger Pty Ltd would acquire the assets and liabilities of Magpie Supplies for $1,100,000 and create the new company on 1 July 2016. The acquisition would be funded through the issue of new shares in Tigers Pty Ltd (prior to changing its name to Maggers). Prior to the acquisition and conversion, Magpy Supplies’ trial balance was: Debit Credit $ $ Cash at bank 21,450 Accounts receivable 58,700 Inventory 88,100 Land 800,000 Buildings 250,000 Motor vehicles 65,000 Office equipment 350,000 Allowance for doubtful debts 2,700 Accumulated depreciation – buildings 25,000 Accumulated depreciation – office equipment 84,300 Accounts payable 51,250 Mortgage 620,000 Capital 800,000 General reserve 50,000 1,633,250 1,633,250 At the date of acquisition and conversion of the business to a company, the fair value of the assets was determined as: $ Cash at bank 21,450 Accounts receivable 54,000 Inventory 88,100 Land 1,000,000 Buildings 300,000 Motor vehicles 60,000 Office equipment 250,000 The business’ liabilities were accepted at the balance listed in the trial balance. 3 Required: Prepare general journal entries to record the above in Tiger Pty Ltd’s books (prior to changing its name to Maggers Ltd) (Note: narrations are not required). Solution: Date Particulars Debit Credit 1/7/16 Cash at bank Accounts receivable Inventory Land Buildings Motor vehicles Office equipment Gain on acquisition Allowance for doubtful debts Accounts payable Mortgage Vendor – Tackle 21,450 58,700 88,100 1,000,000 300,000 60,000 250,000 2,300 4,700 51,250 620,000 1,100,000 Vendor – Tackle Share capital 1,100,000 1,100,000 Gain on acquisition Profit & loss 2,300 2.300 Notes: Remember to use the full value of accounts receivable and use the difference as the allowance for doubtful debts Equity is NOT acquired (share capital, reserves or retained earnings) Don’t forget to transfer any gain to P&L 4 Task 3 Required: Prepare the general journal entries to reflect the following events during the year: a) The final dividend declared at the end of the previous year of $140,000 was paid on 30 September 2015 b) On 1 April 2016, land and buildings were revalued from $1,500,000 to $1,700,000 c) An interim dividend was declared on 14 February 2016 and paid on 31 March 2016 for $60,000 d) On 30 June 2016 the company declared a fin al dividend of $100,000. e) On 30 June 2016, the company decided to transfer $50,000 from retained earnings to the general reserve. (Note - Narrations and dates are required.) Solution: Date Particulars Debit Credit 30 Sep 2015 Final dividends payable 140,000 Bank 140,000 Payment of final dividend from year ended 30/6/15 1 Apr 2016 Land & buildings 200,000 Asset revaluation reserve 200,000 Revaluation of land & buildings 14 Feb 2016 Retained earnings 60,000 Interim dividends payable 60,000 Interim dividend declared 31 Mar 2016 Interim dividends payable 60,000 Bank 60,000 Interim dividend paid 30 June 2016 Retained earnings 100,000 Final dividend payable 100,000 5 Final dividend declared 30 Jun 2016 Retained earnings 50,000 General reserve 50,000 Transfer to general reserve Task 4 Key Flick Ltd commenced operations on 1 July 2015. For the year ended 30 June 2016, the company recorded an accounting profit before tax of $299,000. On 30 June 2016, the accounting balance sheet and the taxation balance sheets disclosed the following: Accounting (Carrying Amount) Taxation (Tax Base) $ $ Assets Motor vehicles (at cost) 240,000 240,000 Accumulated depreciation – motor vehicle -48,000 -60,000 Office furniture (at cost) 500,000 500,000 Accumulated depreciation – office furniture -75,000 -60,000 Bank 57,200 57,200 Inventories 48,500 48,500 Accounts receivable (net) 56,500 61,500 779,200 787,200 Liabilities Bank loan 350,000 350,000 Accounts payable 55,000 55,000 Provision for annual leave 8,000 Nil 413,000 405,000 Net Assets 366,200 382,200 Included in the calculation of accounting profit were the following items, which have to be treated differently for taxation purposes: Accounting Entries Taxation Entries $ $ Depreciation of motor vehicles 48,000 60,000 Depreciation of office furniture 75,000 60,000 Entertainment expenses (not tax deductible) 4,500 Nil Transfer to provision for annual leave 11,000 Nil Transfer to allowance for doubtful debts 6,500 Nil 6 Additional information: All depreciation is calculated using the straight line method. Income tax rate is 30%. Motor vehicles totalling $240,000 were purchased on 1 July 2015. For accounting purposes, these vehicles are being depreciated at 20% per year. For taxation purposes it is being depreciated at 25% per year. Office furniture was acquired on 1 July 2015 for $500,000. For accounting purposes, the equipment is being depreciated at 15% per year. However, for taxation purposes, it is depreciated at 12%. Annual leave amounting to $3,000 was paid during the year and charged against the provision. This amount is a taxation deduction. During the year, a bad debt of $1,000 was written off and charged against the allowance for doubtful debts. This amount is a taxation deduction. Required: (i) Prepare a statement of taxable income for the year ended 30 June 2016. (ii) Prepare general journal entries to record income tax expense and deferred tax in accordance with AASB 112, including the offset between deferred tax assets and deferred tax liabilities. (Note: narrations are not required) Solution: a) Calculation of Taxable income Accounting profit 299,000 Add: Accounting depreciation – motor vehicle 48,000 Accounting depreciation – off. equipment 75,000 Entertainment expenses 4,500 Transfer to provision for annual leave 11,000 Transfer to allowance for doubtful debts 6,500 145,000 Less: 444,000 Tax depreciation – machinery 60,000 Tax depreciation – off. equip. 60,000 Annual leave paid 3,000 Bad debt written off 1,000 228,100 124,000 320,000 7 Tax base calculation (not required to be completed – but useful) Carrying Amount Tax Base DTA DTL Motor vehicles 192,000 180,000 3,600 Office furniture 425,000 440,000 4,500 Bank 57,200 57,200 Inventories 48,500 48,500 Accounts receivable 56,500 61,500 1,500 779,200 787,200 Bank loan 350,000 350,000 Accounts payable 55,000 55,000 Provision for annual leave 8,000 Nil 2,400 413,000 405,000 Net Assets 366,200 382,200 b) General Journal 30/6/16 Income Tax Expense 96,000 Provision for Income Tax 96,000 (tax payable on taxable income) Income Tax Expense 3,600 Deferred Tax Liability 3,600 (temporary difference created) Deferred Tax Asset 8,400 Income Tax Expense 8,400 (temporary difference created) Deferred Tax Liability 3,600 Deferred Tax Asset 3,600 (offset deferred tax liability against deferred tax asset) Notes: Remember it is the tax effect of the differences – so multiply them by 30% Don’t forget the offset between DTA and DTL for the lower