S2 2019 ACC00724: Accounting for Managers Assignment 1 Solution

This assignment solution addresses an Accounting for Managers assignment, focusing on the preparation of financial statements for two businesses, Ken Kennett Building Services and Clive Calmer. The solution includes the creation of income statements and balance sheets based on provided financial data. Furthermore, the solution provides an analysis of the accounts payable turnover ratio for Ken Kennett's business, offering insights into the company's ability to meet its obligations to suppliers. Additionally, the solution examines the impact of owner withdrawals on Clive Calmer's capital and cash accounts, and provides related journal entries. References to relevant accounting literature are also included.

Running Head: ACCOUNTING FOR MANAGERS 1
ACCOUNTING FOR MANAGERS

ACCOUNTING FOR MANAGERS 2
Contents
Question 1..................................................................................................................................3
Part A......................................................................................................................................3
Part B......................................................................................................................................3
Question 2..................................................................................................................................4
Part A......................................................................................................................................4
PART B..................................................................................................................................5
References..................................................................................................................................6

ACCOUNTING FOR MANAGERS 3
Question 1
Part A
Key Kennet
Income statement
(For the month ending 31st July 20X9)
Particulars Amount Particulars Amount
Building supplies $ 3,10,000.00 By Building services $ 5,50,000.00
Electricity and telephone expenses $ 4,000.00
Motor vehicle expense $ 5,600.00
Wages $ 1,50,000.00
Net Profit $ 80,400.00
$ 5,50,000.00 $ 5,50,000.00
Key Kennet
Balance sheet
As at 31st July 20X9
Particulars Amount Particulars Amount
Capital $ 3,300.00 Current Assets
Add: net profit $ 80,400.00 Cash in bank $ 3,800.00
Less: Drawings $ -5,700.00 Cash in shoe box $ 500.00
Current liabilities Accounts Receivable $ 80,000.00
Accounts payable $ 30,000.00
Building supplies in
hand $ 18,000.00
Outstanding wages $ 3,500.00 Non-Current Assets
Non-Current Liabilities Equipment $ 68,000.00
Other liabilities $ 90,800.00 Motor vehicle $ 32,000.00
$ 2,02,300.00 $ 2,02,300.00
Part B
Accounting is regularly called "the language of business since it imparts the decision making
capacity of the owner, investors and majorly suppliers. This financial statement’s helps the
suppliers to make the decision of the trading of the business. These individuals are altogether
partners in the business, or, in other words they're keen on its exercises since they're
influenced by them.

ACCOUNTING FOR MANAGERS 4
Indeed, the motivation behind accounting is to enable partners to settle on better business
choices by furnishing them with money related data. Clearly, the firms wouldn't attempt to
run an association or settle on speculation choices without exact and opportune money unless
the data is prepared by the accountants.
Accounts payable turnover ratio Amount
Accounts payable * 365 $ 1,09,50,000.00
Cost of goods Sold $ 3,10,000.00
35.32
days
The suppliers are mainly affected by the payment capacity of the organizations due to which
they decide whether the suppliers are being paid on time or not. In order to decide whether
the company is performing better or not the accounts payable turnover ratio is also analysed.
The accounts payable ratio is 35.32 days under which indicate that the company is able to
clear the dues of the suppliers and hence, it is feasible for the suppliers to trade with the
organization effectively (Robinson, Henry, Pirie and Broihahn, 2015).
Question 2
Part A
Clive Calmer
Income statement
(For the month ending 31st July 20X9)
Particulars Amount Particulars Amount
Office supplies $ 840.00 Accounting service receipts $ 9,750.00
Telephone expenses $ 255.00
Motor vehicle expense $ 330.00
Advertising $ 510.00
Net Profit $ 7,815.00
$ 8,910.00 $ 9,750.00

ACCOUNTING FOR MANAGERS 5

ACCOUNTING FOR MANAGERS 6
Clive Carmer
Balance sheet
As at 31st July 20X9
Particulars Amount Particulars Amount
Capital $ 3,300.00 Current Assets
Add: net profit $ 7,815.00 Cash in bank $ 8,445.00
Accounts Receivable $ 1,500.00
Current liabilities Supplies in hand $ 1,500.00
Accounts payable $ 1,080.00
Non-Current Assets
Non-Current Liabilities Computer Equipment $ 8,250.00
Bank Loan $ 7,500.00
$ 19,695.00 $ 19,695.00
Particulars Amount
1 Profit and loss for the year $ 7,815.00
2 Total Assets at the end of the year $ 19,695.00
3 Total Liabilities at the end of the year $ 6,420.00
4 Clive Calmer's Capital Balance $ 11,115.00
Cash inflow $ 19,995.00
Cash Outflow $ 14,040.00
5 Net cash inflow and outflow of the year $ 5,955.00
PART B
If Clive Cramer’s wished to withdraw $3000 every year, the capital count will be decreased
by $3000 every year and simultaneously the cash account will be decreased by $3000 every
year, the drawings are the amount that have been used by the owner of the organisation to use
the finds for the personal use. Thus the decrease will be the overall effect from both the
capital of the Clive Cramer and the cash account (Ellwood and Greenwood, 2016).
The journal entry that has been passed in case of the funds withdrawn for the personal use is
Drawings A/c
To cash A/c