Company Accounting 2015 Q1 Mid Sem Exam SOLUTIONS GUIDE 1

Topics: Balance sheet, Income statement, Cash flow statement Pages: 5 (679 words) Published: April 19, 2015
200400 COMPANY ACCOUNTING

Q1, 2015

MID-SEMESTER EXAM – SOLUTIONS GUIDE

PART A
Question 1 (5 marks)
(a)
See lecture slide 14, Topic 1:
Statement of Financial Position
Statement of Comprehensive Income
Statement of Changes in Equity
Statement of Cash Flows
Notes

(b)
See lecture slide 6, Topic 1:
providing information to users who are unable to command the preparation of reports tailored to their particular information needs

Also refer to Chapter 4, Problem 4.15, p.89 (H/W Topic 1):
GPFRs are designed to satisfy the common information needs of a wide range of users and potential users.

Question 2 (20 marks)
See Demonstration Problem, Topic 2

SATURDAY PTY LTD
Statement of Cash Flows
for the year ending 30 June 2014
$
Operating activities
Cashreceipts from customers
Payments to suppliers and employees
Cash flow from operating activities
Investing activities
Proceeds from sale of land
Proceeds from sale of plant
Payment for plant
Cash flow from investing activities
Financing activities
Dividends paid
Cash flow from financing activities
Net increase in cash
Cash at beginning of year
Cash at end of year

33,720
(28,100)
5,620
16,800
1,440
(7,200)
11,040
(5,500)
(5,500)
11,160
(6,000)
5,160

weconciliation of net cash from operating activities to net profit after tax 13,060
trofit after tax
bon-cash items
(4,800)
Less: gain on sale land
360
Add: loss on sale plant
2,400
(2,040)
Add: depreciation expense
aovement in current assets and liabilities
(1,600)
Increase on accounts receivable
(200)
5ecrease in allowance doubtful debts
(4,800)
Increase in inventory
1,200
Increase in accounts payable
(5,400)
5,620
Cash flow from operating activities

Note 2: Reconciliation of cash and cash equivalents
At start of year
Bank overdraft

(6 000)

Cash at bank

CA – mid semester

Page 1

At end of year
-

-

5 160

(6 000)

5 160

Quarter 1, 2015

Question 3 (20 marks)
See SQ3-2

1. Calculation of Current Tax Consequences for Y/E 30 June 2014

(8 marks)

Calculation of taxable income and current tax liability Y/E 30 June 2014 97,200 }
} Tax Expense

Accounting Profit Before Tax
Permanent differences:
Add back: Goodwill impairment
Entertainment
Subtract: exempt dividend revenue

16,000
2,000
(8,000)

Temporary differences:
Doubtful debts expense
Bad debts written off
Insurance expense
Insurance paid
Accounting Depreciation-machinery
Tax Depreciation-machinery
Warranty expense
Warrnty paid
LSL expense
LSL paid
Taxable Income

CA – mid semester

4,000
(4,400)
10,000
(6,800)
32,000
(40,000)
14,000
(4,000)
12,000
- 18,800

Page 2

107,200 } = 107,200 x 30% =

32,160

(400)
3,200
(8,000)
10,000
(6,800) Tax Payable
105,200 } = 105,200 x 30% =

Quarter 1, 2015

31,560

2. Worksheet and journals

(12 marks)

Carrying
Amount

Tax Base

$

$

48,000
800
96,000

50,000
80,000

Assets
A/C Rec - net
Prepaid Ins
Plant - net
Liabilities
Prov warranty
Prov LSL

Deductible
Taxable
Tax Expense
Temporary Temporary
Differences Differences
$
$
$

20,000
1,200

2,000

$

(2,000)
800
16,000

800
16,000

20,000
1,200

Temporary differences at period end
Less: Prior period amounts
Movement for the period
Tax affected @ 30%
Tax on taxable income
Income tax adjustments required

Current Tax
Payable

(20,000)
(1,200)

23,200
20,400
2,800
840

16,800
12,000
4,800
1440

840

1440

(6,400)
(8,400)
2,000
600
31560
32160

31560
31560

Journal for current and deferred tax consequences:
Dr DTA
Dr Income tax expense
Cr DTL
Cr Current tax payable

840
32,160
1,440
31,560

Balance of DTA and DTL accounts before set-off journal:
DTA
O/Bal
Tax journal

DTL
O/Bal
Tax journal

6120
840
C/Bal

6960
6960

6960

C/Bal

5040
5040

5040

Set-off journal:
Dr DTL
Cr DTA

CA – mid semester...
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