Full Answers for Level 2 Accounting Learning Workbook Full Answers for Level 2 Accounting Learning Workbook

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    Level 2 Accounting Learning Workbook

    Anne Dick

  • Full Answers for Level 2 Accounting Learning Workbook

    Anne Dick

    ESA Publications (NZ) Ltd

    ISBN 978-0-947504-80-9

    Level 2 Accounting Learning Workbook fi rst published in 2008 by ESA Publications (NZ) Ltd

    Full Answers fi rst published separately in 2009 by ESA Publications (NZ) Ltd

    This edition published in 2017 by ESA Publications (NZ) Ltd

    Copyright © ESA Publications (NZ) Ltd

    Copyright © Anne Dick

    This book is copyright 2017 by ESA Publications (NZ) Ltd.

    This book is sold on the basis that it will be used by an individual teacher or student.

    No part of this publication may be copied, stored or communicated in any form by any means (paper or digital), including recording or storing in any electronic retrieval system, without the prior written permission of the publisher.

    Copying permitted under licence to Copyright Licensing New Zealand (CLNZ) does not extend to any copying from this book.

    Copying or scanning from this workbook is subject to the New Zealand Copyright Act which limits copying to 3% of this workbook. Copyright Licensing Ltd may be contacted on freephone 0800 480 271 or www.copyright.co.nz

    Infringements will be prosecuted.

    Editor: Glennis Moriarty Compositor: Barnaby McBryde Proofreader: Dina Cloete

    ESA Publications (NZ) Ltd PO Box 9453, Newmarket, Auckland, New Zealand

    Phone: 09 256 0831 Freephone: 0800 372 266 Fax: 09 256 9412 Email: info@esa.co.nz Internet: www.esa.co.nz

    Printed in New Zealand LY12ACAN3-1

  • © ESA Publications (NZ) Ltd, ISBN 978-0-947504-80-9 – Copying or scanning from ESA workbooks is limited to 3% under the NZ Copyright Act.

    ANSWERS

    Activity 1A: Analysing transactions (page 3)

    1. Bank A Inventory A Loan L

    Insurance Ex Rent received I Accounts receivable A

    Shop wages Ex Accounts payable L Advertising Ex

    Mortgage L Purchases Ex Drawings Eq

    Sales I Vehicles A Fees received I

    Interest on mortgage Ex Interest on term deposit I Depreciation on vehicles Ex

    GST payable L Furniture A Accrued expenses L

    Bank overdraft L GST receivable A Accountancy fees Ex

    Prepayments A Goodwill A Capital Eq

    2. a. Bank

    Accounts receivable

    Furniture/ Equipment Expenses

    Accounts payable Loan Capital Income

    i. +3 000 +1 000 +4 000

    ii. –276 +276

    iii. –300 +300

    iv. +4 600 +4 600

    v. +368 +368

    vi. –500 –500

    vii. –184 +184

    viii. +92 +92

    ix. +138 +138

    x. –600 +200 –400

    xi. –480 –500 +20

    xii. +90 +90

  • © ESA Publications (NZ) Ltd, ISBN 978-0-947504-80-9 – Copying or scanning from ESA workbooks is limited to 3% under the NZ Copyright Act.

    2 Full Answers for Level 2 Accounting Learning Workbook

    b. Account name Element Increase/ Decrease Debit/ Credit Amount $

    i. Bank Asset Inc Dr 3 000

    Furniture Asset Inc Dr 1 000

    Capital Equity Inc Cr 4 000

    ii. Furniture Asset Inc Dr 240

    GST Liability Dec Dr 36

    Bank Asset Dec Cr 276

    iii. Wages Expense Inc Dr 300

    Bank Asset Dec Cr 300

    iv. Bank Asset Inc Dr 4 600

    GST Liability Inc Cr 600

    Fees received Income Inc Cr 4 000

    v. Supplies Expense Inc Dr 320

    GST Liability Dec Dr 48

    Accounts payable Liability Inc Cr 368

    vi. Drawings Equity Dec Dr 500

    Bank Asset Dec Cr 500

    vii. Electricity Expense Inc Dr 160

    GST Liability Dec Dr 24

    Bank Asset Dec Cr 184

    viii. Telephone Expense Inc Dr 80

    GST Liability Dec Dr 12

    Accounts payable Liability Inc Cr 92

    ix. Accounts receivable Asset Inc Dr 138

    GST Liability Inc Cr 18

    Fees received Income Inc Cr 120

    x. Loan Liability Dec Dr 400

    Interest on loan Expense Inc Dr 200

    Bank Asset Dec Cr 600

    xi. Accounts payable Liability Dec Dr 500

    Discount received Income Inc Cr 20

    Bank Asset Dec Cr 480

    xii. Dividends Income Inc Cr 90

    Bank Bank Inc Dr 90

    3. Transaction Capital Revenue

    Purchase new cash register

    Paid for installation of cash register

    Paid shop assistant’s wages

    Painted wall to remove graffi ti

    Paid for new shelves to display the books

    Paid for monthly advertising

    Paid for new sign for the front of the store

  • © ESA Publications (NZ) Ltd, ISBN 978-0-947504-80-9 – Copying or scanning from ESA workbooks is limited to 3% under the NZ Copyright Act.

    Answers 3

    Activity 1B: Preparation of fi nancial statements (page 10) 1. Petra’s Picture Framing

    Income Statement for the year ended 30 June 2020

    Revenue

    Fees received 136 800

    Other income

    Discount received 620

    137 420

    Less Expenses

    Framing expenses

    Advertising 1 260

    Wages – framers 35 500

    Supplies used 50 000

    Depreciation on framing equipment 9 000

    Rent – framing 17 500 113 260

    Administrative expenses

    General expenses 800

    Electricity 650

    Insurance 900

    Rent – offi ce 7 500

    Stationery 3 000

    Telephone and fax 1 070

    Depreciation on offi ce furniture 1 950 15 870

    Finance costs

    Interest on loan 1 100 1 100

    Total expenses (130 230)

    Profi t for the year $7 190

    Petra’s Picture Framing Statement of Financial Position

    as at 30 June 2020

    Assets

    Current assets

    Accounts receivable 2 900

    Bank 3 000

    GST 3 218

    Supplies on hand 1 500

    Prepayments 240 10 858

    Non-current assets

    Intangible assets

    Goodwill 4 000

    Property, plant and equipment (Note 1)

    39 650 43 650

    Total assets 54 508

    Less Liabilities

    Current liabilities

    Accounts payable 1 938

    Accrued expenses 500

    Income in advance 3 200 5 638

    Non-current liabilities

    Loan 5 000 5 000

    Total liabilities (10 638)

    Net assets $ 43 870

    Equity

    Opening capital 45 680

    + Profi t for the year 7 190

    – Drawings (9 000)

    Closing capital $ 43 870

    Note 1 – Property, plant and equipment

    Framing equipment

    Offi ce furniture Total

    Cost 65 000 13 000 78 000

    Accumulated depreciation (32 800) (5 550) (38 350)

    Carrying amount 32 200 7 450 39 650

    Depreciation is calculated on the straight-line basis at the following rates:

    • Framing equipment $9 000 p.a. • Offi ce furniture at 15% of cost p.a.

  • © ESA Publications (NZ) Ltd, ISBN 978-0-947504-80-9 – Copying or scanning from ESA workbooks is limited to 3% under the NZ Copyright Act.

    4 Full Answers for Level 2 Accounting Learning Workbook

    2. Cross Town Couriers Income Statement

    for the year ended 31 March 2021

    Revenue

    Fees received 164 000

    Other income

    Gain on sale of furniture 600

    Dividends 420 1 020

    165 020

    Less Expenses

    Courier expenses

    Advertising 1 500

    Supplies used 20 000

    Insurance – vehicles 6 450

    Petrol and oil 45 360

    Wages – courier drivers 45 000

    Depreciation on vehicles 9 600 127 910

    Administrative expenses

    Electricity 1 110

    Insurance – general 2 150

    Telephone and fax 1 050

    General expenses 2 500

    Discount allowed 1 000

    Depreciation on furniture and fi ttings 800

    Depreciation on buildings 1 750 10 360

    Finance costs

    Interest on overdue account 150

    Interest on mortgage 1 100 1 250

    Total expenses (139 520)

    Profi t for the year $ 25 500

    Cross Town Couriers Statement of Financial Position

    as at 31 March 2021

    Current assets

    Accounts receivable 6 200

    Bank 4 130

    Supplies on hand 500

    Accrued income 120

    Prepayments 540 11 490

    Non-current assets

    Intangible assets

    Goodwill 2 000

    Property, plant and equipment (Note 1)

    74 350

    Investment assets

    Shares in Drivers Ltd 15 000 91 350

    Total assets 102 840

    Less Liabilities

    Current liabilities

    Accounts payable 1 984

    Accrued expenses 1 100

    GST 816 3 900

    Non-current liabilities

    Mortgage 25 000 25 000

    Total liabilities (28 900)

    Net assets $73 940

    Equity

    Opening capital 60 440

    + Profi t for the year 25 500

    – Drawings (12 000)

    Closing capital $ 73 940

    Note 1 – Property, plant and equipment

    Vehicles Furniture

    and fi ttings Buildings Total

    Cost 48 000 8 000 35 000 91 000

    Accumulated depreciation

    (11 400) (3 500) (1 750) (16 650)

    Carrying amount

    36 600 4 500 33 250 74 350

    Depreciation is calculated on the straight-line basis at the following rates: • Vehicles – 20% p.a. • Furniture and fi ttings – $800 per year • Buildings – 5% of cost per year

  • © ESA Publications (NZ) Ltd, ISBN 978-0-947504-80-9 – Copying or scanning from ESA workbooks is limited to 3% under the NZ Copyright Act.

    Answers 5

    3. Blooming Nice Flowers Cash Flow Statement

    for the month ended 30 September 2023

    Receipts

    Interest received 150

    C