Process of Preparing: Accounting Assignment

Process of Preparing: Accounting Assignment

Question  1       

Games Sports Inc. is a manufacturer of game switches and is in the process of preparing financial statements to 31. December.
Records of the accounting equation are available to the end of November. Transactions for December still require to be entered into the system, as do some other adjustments.  Process of Preparing: Accounting Assignment
The income statement for the 11 months to 30 November is provided as follows:


The retained profit at the start of the financial year on 01 January was  $49,839.
During December, the following transactions had occurred:

1. Raw materials costing  $3,720 were converted into finished goods, incurring direct labour costs of  $4,414.
2. Bank transfers amounting to  $22,411 were received from debtors.

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3. Raw materials costing  $3,000 were purchased on credit.
4. Finished goods inventory, costing  $14,679, was sold for  $27,000 on credit.
5. Monthly administration salaries of  $4,000 and advertising costs of  $2,456 were paid in cash.
6. Finished goods inventory, costing  $5,456, was sold for  $9,811 for cash.
7. Payments of  $8,365 were  $e to creditors.
8. Other expenses of  $1,277 and rent of  $1,333 were paid in cash

The accounts for the year to 31 December require the following adjustments:

1. The  $1,333 rent paid in December was for the quarterly factory rent, paid in advance, which relates to the period 01 January to 31 March next financial year.
2. Depreciation on equipment has to be provided for the whole year, calculated at 10% per annum on the reducing balance approach.
3. Depreciation on transport vehicles has to be provided for the whole year, calculated at 20% per annum on the reducing balance approach.Process of Preparing: Accounting Assignment

Required:

1. Prepare the accounting equation as at 31 December in tabular (spreadsheet) format, detailing all of the transactions for December, and all adjustments identified.
2. Prepare the Income Statement for the year to 31 December.
3. Prepare the Balance Sheet as at 31 December.

Question  2
The board of directors of Alpha Technology Limited is meeting to review the Income Statement and the Balance Sheet for its financial year to 30 November 2017. (See Appendix 1)
The CEO is wondering why the cash position of the company has not weakened in the year when the company has invested heavily in asset purchases and loan repayment.
A detailed cash analysis is proposed to get a better understanding of the company’s cash position and key movements in the Income Statements.
You are the financial manager tasked with the cash flow analysis in preparation for the next board meeting.

Required:

1. Prepare a Cash Flow Statement for the year to 30 November 2017 (based on the financial statements in Appendix 1) for discussion by the Board.
2. From your Cash Flow Statement, identify the main factors that have contributed to the increase in the company’s cash at bank.
3. From a review of the Income Statement, identify the key issues that should be covered in the Board’s discussion.

Process of Preparing: Accounting Assignment