1. David Jones is considering two possible business ownership types – a sole trader or a partnership with Zoe Zig. Advise Jones of the comparative advantages and disadvantages of the two ownership structures being considered. (4 marks)

ACC1101 Assignment Semester 1 2016

ACC1101
Assignment Semester 1 2016 – Total marks 15
Note: The maximum total of 83 marks will be converted to a mark out
of 15

Instructions

This
assignment is to be your own individual work. You are strongly urged to
complete this assessment yourself to receive clear feedback about your level of
understanding of the course material. You will find information regarding
plagiarism and academic misconduct, such as collusionand cheatingin
the course specification and on the USQ website. Penalties and/orreferral
for academic misconduct may be applied where students have failed to submit
their own work.

SUBMISSION
The
assignment must be submitted via the USQ Studydesk link.

Only ONE MS WORD document may be
submitted. An excel spreadsheet may be usedfor
calculations but this must be transferred (e.g. cut and paste) to the Word
document. If you use excel, please remember that you must nevertheless show all
formulae and workings in the Word document for any part marks to be allocated
for incorrect answers. An excel spreadsheet has been provided on studydesk for
your workings for question THREE, but you may choose to use word instead and,
as stated, any excel workings must be transferred to your Word document. Please
include your name and student number in either a header or a footer of your
submitted Word document.

There
are FOUR questions to complete (and question one has two parts).

A
cover sheet is not required.

Marks

Question 1:

(mods 1-2)

PART A

16

PART B

10

26

Question 2:

(mod 3)

15

Question 3:

(mods 4-5)

28

Question 5:

(mod 6)

14

Maximum

83

Converted to a mark out of 15

QUESTION
ONE (Total 26 marks) PART A (Modules 1 & 2)

16
Marks

David
Jones is planning a new business venture business called “Stardust
Singers”. Jones is lead singer of a music group that intends to sing at
weddings, birthdays, and other social functions as requested. The constant
member of the group is Jones as the lead singer but he usually sings with
regular backup instrumentalists/singers drawn from his circle of musician
friends. The most regular backing guitarist is his close friend Zoe Zig.

Prior
to opening the business he is doing some analysis of his expected costs for a
‘gig’.

The
average gig is expected to have a two hour duration. Sessional backing
singers/vocalists are paid $30 per hour and, including David Jones, the band
size is usually four people, and each bring their own instruments as necessary.
As these sessional musicians are self-employed contractors there are no
additional employment costs. David Jones would have to lease some better
quality sound equipment at a cost of $720 per month. David Jones would organise
travel to the gig via minibus at an expected cost for the band of $40 per gig.
Additionally refreshments for the band per gig amount to $15 for each band
member (including Jones). There is also a budget for costumes for Jones of $30
per gig. Insurance costs are $480 per annum. Jones expects to charge $500 per
gig and current demand is 10 gigs per month.

Jones
will need to give up his current part time job in order to start this business,
and he requires the monthly profit to be at least equal to his previous salary
of $1,500 per month.

Note:
All of these costs are excluding GST and you do not need to consider GST in
your calculations for this section.

Required:

1. David
Jones is considering two possible business ownership types – a sole trader or a
partnership with Zoe Zig. Advise Jones of the comparative advantages and
disadvantages of the two ownership structures being considered. (4 marks)

2.
Calculate the contribution margin per
gig. (4 marks)
3.
Calculate the monthly fixed costs. (1
mark)

4.
Calculate the number of
gigs per month needed to break even (round up to nearest gig if
required). (2 marks)

5. Calculate
the number of gigs required per month to attain a target profit equal to Jones’
previous monthly salary. Will the expected number of gigs be sufficient to
achieve this? (2 marks)

6.
Alternatively Jones
could charge $600 per gig, but he expects that demand will drop to eight gigs
per month. Advise him whether this is worth doing or not. (3 marks)

QUESTION
ONE – PART B (Module 1)
10
Marks

Refer
to the five desired graduate skills/attributes outlined in module one (see text
exhibit 1.13 p. 30 Threshold learning outcomes for accounting). Identify
aspects of David Jones’ proposed business (see Part A) which will require him
to use these skills. Identify at least one potential situation for each skill,
relevant to Jones’ business, where that skill would be useful, and for each
one, explain its usefulness in a few sentences.

(Note:
Further information regarding the skills can be found in the powerpoint
presentation on employability posted to studydesk in Module 1/week 1).

QUESTION
TWO (Module 3) 15 Marks

Blissful
Bubbles imports and sells bottles of flavoured mineral water. Blissful Bubbles
has forecast the following sales of bottled mineral water for January – March
2016.

Jan
50,000; Feb 40,000; Mar 30,000 (and it is assumed sales will remain at this
level until September 2016).

Actual
sales for November and December 2015 were 50,000 and 60,000 bottles
respectively.

The average selling price for a bottle
of mineral water is $4 and the cost to buy and import them is $1.50. Purchases
are paid for in the month following purchase. Sales are 70% cash (to retail
customers) and 30% credit (to supermarkets). Credit customers pay 50% in the
month following the sales and 50% in the month following that.

Blissful
Bubbles has a policy of maintaining a closing stock of bottled water equal to
20% of the following month’s sales (in units).

Required:

1.
Prepare the sales budget
for the quarter January – March 2016 (showing each month and the total for the
quarter) and include a schedule of expected cash collections (see format p.
101
Exhibit 3.6) (8 marks)
2. Prepare
the purchases budget for Blissful Bubbles (see format p.105 Exhibit 3.8) (6
marks)
3. Why
do you think a business plans for an ending inventory level? (1 mark)

QUESTION
THREE (modules 4-5)
28 Marks

The
following are the transactions for June 2016 of Paulina Willcox, a specialist
watch repairer working from a workshop at her home.

2
June

Repaired
a watch and was paid cash

$120

4
June

Paulina
won $2,000 in a lottery and after spending $500 on presents

$1,500

decided to
invest the remaining amount in the business and paid the

cash into the
business bank account

6
June

Completed
a job for a regular client and sent him an invoice for the

$350

work done

14
June

Purchases
supplies (parts etc.) on credit

$1,200

15
June

Received
$50 from a customer for work previously invoiced in May

$50

16
June

The
owner, Paulina Willcox, withdrew cash from the business bank

$500

account to buy
a birthday present for her husband

23
June

Did
repair jobs and received cash

$1,400

23
June

Received
a phone bill for the business phone line. Payment is due on

$80

5th
July and the business pays invoices on the day that they are due.

29
June

Completed
repairs to a valuable antique watch for a client and sent an

$900

invoice

30
June

Received
full payment from the customer invoiced on 6th
June

30
June

Did
a stock count of supplies in the store and found that $800 of

Adjusting

supplies is
remaining, the rest having been used up.

entries

The business
needs to record one month’s depreciation of the motor

needed

vehicle ($60).

Note:
Paulina is not registered for GST and you do not
need to consider GST in your calculations for this section. So please
ignore all GST implications

The
ledger accounts of Paulina Wilcox are given below with their balances as at 1st
June 2016.

Required:

1. Enter
the transactions above in a General journal (including the adjusting entries
required on 30th
June). (see example Exhibit 5.3 p. 189) (closing entries are not required). (12
marks)

2. Post
the journal entries to the General Ledger Accounts (see example Exhibit 5.7 p.
196) (6 marks)

3. Balance
the accounts and prepare a trial Balance as at 30th
June (see example Exhibit 5.11 p. 207) (3.5 marks)

4. Prepare
a Profit and Loss/Income statement for the year ended 30th
June 2016 (see Exhibits 5.12 p. 208 but remember that this is a service
business not retail, so the revenue will be service revenue and there will be
no cost of goods sold). (1.75 marks)

5. Prepare
a Statement of Changes in Owner’s Equity for the year to 30th
June (see Exhibit 5.13) (1.25 marks)

6. Prepare
a Balance Sheet as at 30th
June 2016. ( Use the format in Exhibit 5.14 p.211 i.e. A = L + OE) (3.5 marks)

Note:
There is an excel spreadsheet on studydesk which may help you with this
question.

Opening General Ledger Balances for
Paulina Willcox (see also the spreadsheet on studydesk):

Cash at bank

101

1-Jun-16

Balance

12,800

Accounts receivable

102

1-Jun-16

Balance

50

Supplies

103

1-Jun-16

Balance

300

Motor vehicle

104

1-Jun-16

Balance

5,000

Accumualted depreciation -motor vehicle

105

1-Jun-16

Balance

1,380

Accounts payable

201

1-Jun-16

Balance

0

Capital, Paulina Willcox

301

1-Jun-16

Balance

6,000

Drawings, Paulina Willcox

302

1-Jun-16

Balance

4,000

Service Revenue

401

1-Jun-16

Balance

18,000

Supplies expense

501

1-Jun-16

Balance

0

Vehicle expense

502

1/06/2016

Balance

2,200

Telephone & internet expense

503

1-Jun-16

Balance

370

Depreciation expense

504

1-Jun-16

Balance

660

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QUESTION
FOUR (module 6)
14 Marks

Rose
Gamgee has just started small florist shop. She has kept basic accounting
records for her first month, but so far has never prepared a bank
reconciliation statement.

Details of the
relevant records that she has kept are as follows:
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Rose Gamgee: Cash payments Book

Date

Chq No.

Item

Payment $

June
2016

4

001

Bulky landscaping

$300.00

9

Cash

Drawings by owner

$250.00

13

002

Bouncy Tyres Ltd

$ 90.50

14

003

BP fuel

$ 65.50

18

004

Wages for cleaner

$100.00

26

005

Flower wholesalers

$400.00

28

006

KJ Rentals

$600.00

TOTAL PAYMENTS

$1,806.00

Rose Gamgee: Cash
receipts Book

Date

Rec No.

Item

Payment
$

June 2016

1

Cash invested by
owner

$6,000.00

9

1

Cash sales week 1

$380.00

16

2

Cash sales week 2

$420.50

14

3

Accounts rec. F.
Baggins

$ 65.00

23

4

Cash sales week 3

$400.00

30

5

Cash sales week 4

$630.50

30

6

Accounts rec. A. Elf

$100.00

TOTAL RECEIPTS

$7,996.00

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Rose Gamgee: General Ledger

Cash at bank account
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Date

Item

DEBIT

CREDIT

BALANCE

June 2016

Receipts

$7,996

Payments

$1,806

$6,190 Dr

Dr

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Statement of Account

B. Wolf Bank – Easy Street,
Brisbane
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Account Number: 10065

Page No. 1

Date

Particulars

Debit

Credit

Balance

1-Jun-16

Balance forward

$

0

2-Jun-16

C/C

$6,000.00

$

6,000.00

CR

3-Jun-16

B. Wolf Bank
establishment fee

$202.00

$

5,798.00

CR

Rapacious Insurance
Co.

$1,200.00

$

4,598.00

CR

9-Jun-16

Cash withdrawal

$250.00

$

4,348.00

CR

13-Jun-16

001

$300.00

$

4,048.00

CR

C/C

$380.00

$

4,428.00

CR

17-Jun-16

C/C

$420.50

$

4,848.50

CR

20-Jun-16

C/C

$65.00

$

4,913.50

CR

21-Jun-16

002

$90.50

$

4,823.00

CR

23-Jun-16

004

$100.00

$

4,723.00

CR

24-Jun-16

C/C

$400.00

$

5,123.00

CR

30-Jun-16

005

$500.00

$

4,623.00


Price: £ 79

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