Accounting for Business Decisions Supplementary Assessment

Student Number: (enter on the line below)
Student Name: (enter on the line below)
HI5001
ACCOUNTING FOR BUSINESS DECISIONS
SUPPLEMENTARY ASSESSMENT
TRIMESTER 1, 2022
TIME ALLOWED: 4.5 hours
All answers must be submitted within this time frame. Late submissions are not accepted.
Assessment Weight: 50 total marks
Instructions:
 All questions must be answered by using the answer boxes provided in this paper.
 Your answers must be submitted in this document to Blackboard by the published
due date and time. Late submissions are not accepted.
 Before commencing, save this document with your Student Number and Unit Code
as the file name e.g EMY5678 HI5001
Please do not save your document with any other details.
The file must remain in MICROSOFT WORD format.
Please make sure you follow the submission instructions at the end of this paper.
Purpose:
This assessment consists of six (6) questions and is designed to assess your level of
knowledge of the key topics covered in this unit.
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Question 1 (7 marks)
Lucy’s Hardware Ltd. collected its latest bank statement on 1 July 2022.
All entries appearing in the bank statement that had not been entered into the cash journals
were entered therein. The cash journals were posted and the resulting balance of the Cash at
Bank account in the ledger at 30 June was $55,311 Dr. The balance shown on the bank statement
at 30 June was $51,050 Cr.
The following items recorded in the cash journals did not appear in the bank statement.
1. A deposit made on 30 June of $6,883.
2. Cheques written during June that had not been presented for payment were:
#1051 $976
#1053 $1,637
A cheque written for $56 appeared incorrectly in the bank statement as $65.
Required
Prepare the bank reconciliation statement at 30 June 2022.
ANSWER: ** Answer box will enlarge as you type
Particular Amount
Balance as per the bank statement (Cr) 51050
Add: Cheque deposited but not collected by the bank 6883
Less: Cheques issued but not presented for payment
#1051
#1053
(976)
(1637)
Less: Error made by bank (9)
Balance as per the cash at bank account in the ledger 55311
Question 2 (10 marks)
Brown Brothers uses the allowance method to record bad debts expense. At the end of June, the
accountant conducted an ageing analysis of its accounts receivables. It is estimated that, for the
accounts receivables not due yet, 0.5% of them would be uncollectible; for the receivables
overdue by 1 month, 2% of them would be uncollectible; for the receivables overdue by more
than 2 months, 5% of them would be uncollectible.
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Accounts receivable at 30 June 2022 are $450,000. Of the total $450,000, $300,000 not yet due,
$110,000 overdue by 1 month, and $45,000 overdue by more than 2 months. The Allowance for
doubtful debts has a credit balance of $3,800 before adjustment.
Required
(a) Prepare the ageing analysis for Brown Brothers to estimate its uncollectible debts. (5 marks)
ANSWER a):
Due Category Account receivables
Total
Uncollectible
percentages
Total
Not yet Due 300000 0.5% 1500
Due by 1 month 110000 2% 2200
Due by 2 months 45000 5% 2250
Total estimated uncollectible 5950
(b) Prepare the adjusting journal entry to record bad debts expense for the year ended 30 June
2022. (2 marks)
ANSWER b):
The prior period balance appearing in would be subtracted from the current estimation made
with regards to the allowance for doubtful debts and accordingly,
Allowance for doubtful debt = 5950 – 3800 = 2150
Adjusting journal entry for this event would be as follows:
Bad debt expense 2150
To Allowance for doubtful account 2150
(Being estimated bad debts recorded)
(c)Show the relevant section of the balance sheet. (3 marks)
ANSWER c):
Assets
Current assets
Account receivables 450000
Less: Allowance for doubtful account (5930)
Net Account Receivables 444070
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