University Accounting Assignment: Financial Statement Analysis, 2024

This document presents a comprehensive solution to an accounting assignment, covering a wide array of financial accounting concepts. The solution begins with journal entries for Jim's Cleaning Services, illustrating the recording of various transactions. It then provides a bank reconciliation statement for M&N Windows Ltd., clarifying the process of reconciling bank and business records. The assignment further delves into accounting for receivables, including journal entries for bad debts and the aging of accounts receivable. The solution then addresses inventory costing methods, specifically FIFO, to determine ending inventory and cost of goods sold, along with an income statement for XY Ltd. Depreciation methods, including straight-line and diminishing balance, are explored to calculate asset values. Finally, the assignment discusses liabilities, categorizing them into current, non-current, and contingent liabilities, providing examples and explanations for each type. The assignment helps students to understand and apply key accounting principles to real-world financial scenarios.

Accounts

Table of Contents
TASK 1............................................................................................................................................3
QUESTION 1...................................................................................................................................3
Q1: Journal of Jim's Cleaning Services for the month of July....................................................3
QUESTION 2...................................................................................................................................3
A) Bank reconciliation statement for M&N Windows Ltd. at June 30, 2019:...........................3
(b) Reconciliation statement.......................................................................................................4
QUESTION 3...................................................................................................................................4
a) Journal entries by using net credit sales & ageing of account receivable...............................4
c) Calculation of amount of bed debts........................................................................................7
d) Reason of calculation difference between credit sales method and account receivable
method.........................................................................................................................................7
QUESTION 4...................................................................................................................................7
a) Determine the Ending inventory and Cost of Sales for the month of June, using the FIFO
costing method............................................................................................................................7
(b) Income statement of XY Ltd for the year ended 30 June 2019.............................................9
c) Perpetual Inventory system...................................................................................................10
QUESTION 5.................................................................................................................................10
Calculation of value of assets by using straight line and diminish rate method of depreciation.
...................................................................................................................................................10
Straight line method..................................................................................................................11
c) Value of heavier bass beat....................................................................................................12
d) Factors which consider in selecting appropriate method of depreciation.............................13
Q6: Liabilities and its elements:................................................................................................13
REFERENCES..............................................................................................................................16

TASK 1
QUESTION 1
Q1: Journal of Jim's Cleaning Services for the month of July
(a)
Date Particulars Debit Credit
01/07/20 Rent a/c Dr. 3600
To Cash a/c 3600
01/07/20 Insurance Policy a/c Dr. 1560
To Cash a/c 1560
10/07/20 Cash a/c Dr. 2800
To Unearned Revenues 2800
15/07/20 Purchases a/c Dr. 2340
To Cash a/c 2340
28/07/20 Salaries a/c Dr. 6080
To Cash a/c 5320
To Outstanding salaries 760
(b)
31/07/20 Unearned Revenues a/c Dr. 840
To Sales 840
QUESTION 2
A) Bank reconciliation statement for M&N Windows Ltd. at June 30, 2019:
Particulars Amount
Credit Balance as per bank statement 101160
Add: Deposit in transit 12540

Less: Interest earned on bank account -75
Add: Cheque recorded above value 540
Less: Unrepresented cheques -37407
Less: Service charges included in bank statement -150
Less: Electronic transfer from customer -3864
Add: Dishonoured cheque 3900
Less: Suspense -780
Debit Balance as per cash book 75864
(b) Reconciliation statement
A bank reconciliation statement refers to a summary of business and banking transactions
which reconciles an organisation's financial records with its bank account transactions and
amount. The statement focuses on the banking activities of the business like withdrawals,
deposits and other transactions which affect the bank account of the organisation or individual.
Bank reconciliation is still necessary even when most of the transactions take place using
electronic transfer of funds because it helps the business to establish effective financial internal
control to prevent frauds and errors. The reconciliation further helps and identify the difference
between bank balance and financial records (de Menezes Neto and Aguiar, 2019).
QUESTION 3
a) Journal entries by using net credit sales & ageing of account receivable.
Journal entries of
InvisiGuard Ltd
InvisiGuard Ltd
Debtors a/c 210000

Journal entries of
InvisiGuard Ltd
InvisiGuard Ltd
To sales 210000
Cash 20000
To sales 20000
Sales return 80000
To debtors 80000
Bed debts 5250
To debtors 5250
Credit sales 210000
Cash sales 20000
Total sales 230000
Bed debts expenses = 0
Account receivables 593000
Credit sales 210000
Ending balance 803000
Assets
Cash 21000000
Account receivables 593000

Assets
- Allowance for doubtful debtors 2800
Particular Days Balance 7 of estimated
uncollected
Account not paid 351200 3512
Account overdue 10-30 days 92000 2760
31 -60 78000 7800
61-120 40800 12240
121 to days over 31000 18600
Total value of
estimated bed debts
44912
Bed debts 2800
To Allowance to bed debts 2800
Bed debt expenses 44912
To account receivables 44912
b) Ledger
Ledger (Debtor)
Date Particular L.F Amount Date Particular L.F Amount
To sales
a/c
210000 By bad
debts
5250
By 204750

Ledger (Debtor)
balance
c/d
Sales
Date Particular L.F Amount Date Particular L.F Amount
By Cash 20000
By debtors 210000
Cash
Date Particular L.F ad debts Date Particular L.F Amount
To sales
a/c
20000 By
balance
c/d
20000
Bad debts
Date Particular L.F Amount Date Particular L.F Amount
To
allowance
to bed
debts
2800 By
balance
c/d
52962
To
account
44912

Bad debts
receivable
s
To debtor 5250
52962 52962
Account
receivable
s
Date Particular L.F Amount Date Particular L.F Amount
To balance
b/d
593000 By
allowance
to debtor
2800
By bed
debts
expense
44912
By
balance
c/d
545288
c) Calculation of amount of bed debts.
Bed debts = 980
Account receivables 593000 – Allowances value = 44192+2800 = 545028
d) Reason of calculation difference between credit sales method and account receivable method.
When manager choose to adopt credit sale method for the purpose of valuation of bed
debt amount in that case value of bed debts is estimated on the % of sales which is not
universally accepted and reliable to determine accurate result. On the other side in account
receivable method , it is based on balance sheet method in which account receivables and bed

debts are consider and assumed to be uncollected. Thus both methods showcase different balance
of bed debts (Kuter, Gurskaya, Andreenkova and Bagdasaryan, 2018).
QUESTION 4
a) Determine the Ending inventory and Cost of Sales for the month of June, using the FIFO
costing method.
Units
Beginning inventory 1,050.00
Total Purchases 1,950.00 (750+450+750)
Less: Ending Inventory - 975.00
No. of units sold 2,025.00
FIFO- Ending Inventory
Units Unit Cost Total Cost
June 23 Purchase 750.00 21.00 15,750.00
June 15 Purchase 225.00 19.80 4,455.00
Total ending inventory 975.00 20,205.00
FIFO- Cost of Goods
Sold
Units Unit Cost Total Cost
Beginning Inventory 1,050.00 18.00 18,900.00
June 10 Purchase 750.00 18.90 14,175.00
June 15 Purchase 225.00 19.80 4,455.00
Total COGS 2,025.00 37,530.00
InvisiGuard Ltd sells security doors. Majority of its sales are on credit except small amount of
cash (Malitskaya, Chirkova, Shirobokov and Volkova, 2019).
sales each year. The accounting records at 30 June 2019 reveal the following. Ignore GST

(b) Income statement of XY Ltd for the year ended 30 June 2019
Particulars Amount
Sales (50*2025) $101250
Less: Cost of goods sold $37530
Gross profit $63720

c) Perpetual Inventory system
It is a system which is used for the purpose of management of inventory. XY Ltd’s needs
to implement this system for following reason:
This system is useful in record transaction at the time when they are accrued, or
manager purchase or sale any kind of goods for their organization.
Chance of error are nil as effective computerised system and software is use for recording of
transaction (Nasritdinov and Berdiyorov, 2020).
This system is useful in managing inventory in such a manner which beneficial in
proving accurate and reliable business data as well as control cost for managing stock.
QUESTION 5
Calculation of value of assets by using straight line and diminish rate method of depreciation.
Depreciation
account
Date Particular Amount Date Particular Amount
01/03/19 To Sound
system
406.25 31/03/19 By balance b/d 406.25
01/04/19 To balance b/d 406.25 30/04/19 By balance c/d 812.25
30/04/19 To Sound
system
406.25
812.25
01/05/19 To balance b/d 812.25 31/05/19 By balance c/d 1218.5
31/05/19 To Sound 406.25

Depreciation
account
system
01/06/19 To balance b/d 1218.5 30/06/19 By balance c/d 1625
To Sound
system
406.25
Calculation of assets' value
( Sound system)
Month To lightning system Value of assets
38593.75 406.25 39000 – 406.25 = 38593.25
April 406.25 38187
May 406.25 37780.25
To lightning system 406.25 37537
Sound system
Month Diminishing rate Amount Value of assets
March 12.50% 406.25 39000-406.25 =38594
April 12.50% 402 38190
May 12.50% 398 37792
June 12.50% 393 37400