N/a
Question 1 Cam Ltd provided the following cash book information for the year ended 30 June 2020: Receipts Payments Opening balance Accounts Receivable Cash Sales Sale of Plant Share Captial 1,920 8,130 1,350 1,200 1,800 Accounts Payable New Plant Purchased Other Operating Expenses Salaries and Wages Current Tax Paid Dividends Payable Closing Balance 3,300 1,000 4,500 1,100 500 600 3,400 14,400 14,400 Comparative Account Balances 30 June 2019 30 June 2020 Assets Bank Accounts receivable Prepaid other operating expenses Inventory Land and buildings Plant (cost) Accumulated Depreciation – Plant Goodwill net 1,520 1. 1,080 1,920 1,600 20 800 2,400 440 150 1,080 ─ 980 3,400 7,340 490 420 2,400 100 120 7,330 14,270 Liabilities Accounts Payable Accrued Salaries and Wages Dividends Payable Current Tax Payable Share Capital General Reserve Retained earnings 420 60 600 500 1,800 1,600 2,350 3,440 80 1,200 900 3,600 1,600 3,450 7,330 14,270 Cam Ltd Profit and Loss Summary for year ended 30 June 2020 Sales (13,870 + 1,350) Less: Cost of Goods sold Gross Profit Less Operating expenses Deprecation Salaries and Wages Loss on Sale of Plant Impairment of Good will Other Operating expenses Operating profit before Tax Less income Tax expense Operating Profit after tax 220 1,120 120 30 4,030 15,220 6,700 8,520 5,520 3,000 900 2,100 Required: 1. Prepare a Statement of Cash Flows in accordance with AASB107. 1. Prepare a statement in accordance with AASB107 reconciling net cash provided by operating activities to operating profit after income tax. Question 2 The following relates to Roberto Limited for the year ended 30 June 2020. Sale of goods $2,050,000 Interest income 12,500 Consultancy fees received 60,000 Cost of sales 325,000 Finance costs 44,500 Distribution expenses 60,000 Marketing expenses 115,000 Occupancy expenses 250,000 Administration expenses 55,000 Other expenses 110,000 Income tax expense 440,000 Additional Information: 1. The balance of the asset revaluation reserve at 1 July 2019 was $40,000. On 30 June 2020 the carrying value of land was restated to directors’ valuation resulting in a credit to the Asset Revaluation reserve of $150,000. 1. Retained earnings 1 July 2019 $150,000 1. 400,000 issued fully paid ordinary shares at 1 July 2019 $400,000 1. Dividends paid and proposed: 1. - Interim dividend paid, fully franked $30,000 1. - Final dividend proposed, fully franked $22,500 1. Transfer from retained earnings to general reserve $35,000 1. General reserve at 1 July 2019 $ Nil 1. 100,000 ordinary shares issued fully paid on application $100,000 1. Pending legal action against the company for infringement of a patent for $500,000. The directors don’t believe that this action will be successful. 1. One of the directors provided warehouse services for $50,000 in the current financial year. This service was provided at arm’s length. Required: 1. Prepare a statement of Comprehensive Income, a Statement of Changes in Equity and notes to the financial statements at 30 June 2020. 1. How might a personal relationship between you and one of the directors of the company impact your ability to produce the financial statements? Question 3 The following relates to People Ltd as at 30 June, 2020 $ $ Cash at Bank 22,000 Receivables 500,000 Share capital- ordinary shares fully paid (2,000,000) 2,300,000 Accounts payable 590,000 Provision for long service leave 30,000 General Reserve 700,000 Allowance for doubtful debts 20,000 Plant & equipment at cost 330,000 Accumulated Depreciation – Plant and equipment 30,000 Land – at cost 220,000 Buildings – at cost 1,000,000 Accumulated Depreciation – buildings 150,000 Goodwill at cost 300,000 Accumulated impairment – goodwill 100,000 Shares in Sicily Ltd – at cost 730,000 8% unsecured notes in Sicily Ltd – cost $1,100,000 1,100,000 Inventories 850,000 Prepaid Insurance 6,000 Prepaid rent 4,000 Asset Revaluation reserve (balance 1 July 2019) 100,000 Current Tax payable 272,000 Retained earnings 30/6/2020 400,000 Dividend payable 370,000 4,062,000 5,062,000 Additional information: 1. Receivables comprise loans to directors (due for repayment 30/05/2021) $100,000 and trade receivables $400,000. 1. Inventories comprise: Raw materials at cost 100,000 Work in progress at cost 50,000 Finished goods at cost 700,000 TOTAL 850,000 1. Land at directors valuation 30 June 2020 – to $250,000 1. Buildings at directors Valuation 30 June 2020 - 1,500,000 1. Shares in Sicily Ltd, have a value on the stock exchange at the 30 June, 2020 $800,000 1. Long service leave expected to be taken next year $10,000. 1. Impairment testing of goodwill determined that a loss $50,000 was recognised in the above figures 1. Net profit after tax $100,000 is included in the above retained earnings 1. No new shares were issued during the year. 1. The opening balance of retained Earnings was $670,000. Required information: Prepare the Statement of Financial Position, the Statement of Changes in Equity and appropriate notes to the financial statements at 30 June 2020. Question 4 When is the preparation of consolidated financial statements not necessary? Question 5 On 01 July 2019, Ning Ltd paid $350,000 for Nong Ltd. On 30 June it was found that when Ning Ltd and Nong Ltd were to prepare the consolidated accounts that Goodwill had been impaired by $10,000. The following information has been extracted from the accounts of Nong Ltd as at 1 July 2019. Share Capital 200,000 Retained Earnings 40,000 General Reserve 80,000 Required: Prepare the consolidated Journal Entries in the consolidated worksheet and complete the worksheet for year ended 30 June 2020. Consolidated worksheet 30 June 2020 Ning Ltd Nong Ltd Eliminations Consolidation Balances Dr Cr Sales 600,000 200,000 Less cost of sales 350,000 70,000 Gross Profit 250,000 130,000 Less: Expenses 90,000 50,000 Operating Profit before tax 160,000 80,000 Less Tax expense 48,000 24,000 Profit after tax 112,000 56,000 Retained earnings 01/07/19 118,000 40,000 Retained earnings 30/06/20 230,000 96,000 Share Capital 450,000 200,000 General Reserves 40,000 80,000 Liabilities 110,000 54,000 830,000 430,000 Shares in Nong Ltd 350,000 0 Current assets 200,000 200,000 Non- Current Assets 280,000 230,000 Goodwill on Consolidation 830,000 430,000 Question 6 On 1 July 2018 John Ltd acquired all of the issued share of Yoko Ltd for $120,000 at the date of acquisition the shareholder’s equity of the subsidiary was: Share capital 100,000 General Reserve 10,000 Retained Earnings 2,000 Impairment testing of Yoko Ltd has determined that a loss is to be recognized by reducing the carrying amount of Goodwill. For the year ended 30 June 2020, Goodwill is to be impaired by $1,000. Additional information: 1. For the year ended 30 June 2020 inter – company sales are: John Ltd to Yoko Ltd $32,000 Yoko Ltd to John Ltd $18,000 1. Inventory on hand at 30 June 2020 include the following unrealised profits: