ACC1101Assignment Semester 1 2016 â Total marks 15Note: The maximum total of 83 marks will be converted to a mark outof 15
Thisassignment is to be your own individual work. You are strongly urged tocomplete this assessment yourself to receive clear feedback about your level ofunderstanding of the course material. You will find information regardingplagiarism and academic misconduct, such as collusionand cheatinginthe course specification and on the USQ website. Penalties and/orreferralfor academic misconduct may be applied where students have failed to submittheir own work.
SUBMISSIONTheassignment must be submitted via the USQ Studydesk link.
Only ONE MS WORD document may besubmitted. An excel spreadsheet may be usedforcalculations but this must be transferred (e.g. cut and paste) to the Worddocument. If you use excel, please remember that you must nevertheless show allformulae and workings in the Word document for any part marks to be allocatedfor incorrect answers. An excel spreadsheet has been provided on studydesk foryour 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. Pleaseinclude your name and student number in either a header or a footer of yoursubmitted Word document.
Thereare FOUR questions to complete (and question one has two parts).
Acover sheet is not required.
Converted to a mark out of 15
QUESTIONONE (Total 26 marks) PART A (Modules 1 & 2)
DavidJones is planning a new business venture business called âStardustSingersâ. Jones is lead singer of a music group that intends to sing atweddings, birthdays, and other social functions as requested. The constantmember of the group is Jones as the lead singer but he usually sings withregular backup instrumentalists/singers drawn from his circle of musicianfriends. The most regular backing guitarist is his close friend Zoe Zig.
Priorto opening the business he is doing some analysis of his expected costs for aâgigâ.
Theaverage gig is expected to have a two hour duration. Sessional backingsingers/vocalists are paid $30 per hour and, including David Jones, the bandsize is usually four people, and each bring their own instruments as necessary.As these sessional musicians are self-employed contractors there are noadditional employment costs. David Jones would have to lease some betterquality sound equipment at a cost of $720 per month. David Jones would organisetravel 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 bandmember (including Jones). There is also a budget for costumes for Jones of $30per gig. Insurance costs are $480 per annum. Jones expects to charge $500 pergig and current demand is 10 gigs per month.
Joneswill 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 salaryof $1,500 per month.
Note:All of these costs are excluding GST and you do not need to consider GST inyour calculations for this section.
1. DavidJones is considering two possible business ownership types â a sole trader or apartnership with Zoe Zig. Advise Jones of the comparative advantages anddisadvantages of the two ownership structures being considered. (4 marks)
2.Calculate the contribution margin pergig. (4 marks)3.Calculate the monthly fixed costs. (1mark)
4.Calculate the number ofgigs per month needed to break even (round up to nearest gig ifrequired). (2 marks)
5. Calculatethe number of gigs required per month to attain a target profit equal to Jonesâprevious monthly salary. Will the expected number of gigs be sufficient toachieve this? (2 marks)
6.Alternatively Jonescould charge $600 per gig, but he expects that demand will drop to eight gigsper month. Advise him whether this is worth doing or not. (3 marks)
QUESTIONONE – PART B (Module 1)10Marks
Referto the five desired graduate skills/attributes outlined in module one (see textexhibit 1.13 p. 30 Threshold learning outcomes for accounting). Identifyaspects of David Jonesâ proposed business (see Part A) which will require himto use these skills. Identify at least one potential situation for each skill,relevant to Jonesâ business, where that skill would be useful, and for eachone, explain its usefulness in a few sentences.
(Note:Further information regarding the skills can be found in the powerpointpresentation on employability posted to studydesk in Module 1/week 1).
QUESTIONTWO (Module 3) 15 Marks
BlissfulBubbles imports and sells bottles of flavoured mineral water. Blissful Bubbleshas forecast the following sales of bottled mineral water for January â March2016.
Jan50,000; Feb 40,000; Mar 30,000 (and it is assumed sales will remain at thislevel until September 2016).
Actualsales for November and December 2015 were 50,000 and 60,000 bottlesrespectively.
The average selling price for a bottleof mineral water is $4 and the cost to buy and import them is $1.50. Purchasesare paid for in the month following purchase. Sales are 70% cash (to retailcustomers) and 30% credit (to supermarkets). Credit customers pay 50% in themonth following the sales and 50% in the month following that.
BlissfulBubbles has a policy of maintaining a closing stock of bottled water equal to20% of the following monthâs sales (in units).
1.Prepare the sales budgetfor the quarter January â March 2016 (showing each month and the total for thequarter) and include a schedule of expected cash collections (see format p.101Exhibit 3.6) (8 marks)2. Preparethe purchases budget for Blissful Bubbles (see format p.105 Exhibit 3.8) (6marks)3. Whydo you think a business plans for an ending inventory level? (1 mark)
QUESTIONTHREE (modules 4-5)28 Marks
Thefollowing are the transactions for June 2016 of Paulina Willcox, a specialistwatch repairer working from a workshop at her home.
Repaireda watch and was paid cash
Paulinawon $2,000 in a lottery and after spending $500 on presents
decided toinvest the remaining amount in the business and paid the
cash into thebusiness bank account
Completeda job for a regular client and sent him an invoice for the
Purchasessupplies (parts etc.) on credit
Received$50 from a customer for work previously invoiced in May
Theowner, Paulina Willcox, withdrew cash from the business bank
account to buya birthday present for her husband
Didrepair jobs and received cash
Receiveda phone bill for the business phone line. Payment is due on
5thJuly and the business pays invoices on the day that they are due.
Completedrepairs to a valuable antique watch for a client and sent an
Receivedfull payment from the customer invoiced on 6thJune
Dida stock count of supplies in the store and found that $800 of
supplies isremaining, the rest having been used up.
The businessneeds to record one monthâs depreciation of the motor
Note:Paulina is not registered for GST and you do notneed to consider GST in your calculations for this section. So pleaseignore all GST implications
Theledger accounts of Paulina Wilcox are given below with their balances as at 1stJune 2016.
1. Enterthe transactions above in a General journal (including the adjusting entriesrequired on 30thJune). (see example Exhibit 5.3 p. 189) (closing entries are not required). (12marks)
2. Postthe journal entries to the General Ledger Accounts (see example Exhibit 5.7 p.196) (6 marks)
3. Balancethe accounts and prepare a trial Balance as at 30thJune (see example Exhibit 5.11 p. 207) (3.5 marks)
4. Preparea Profit and Loss/Income statement for the year ended 30thJune 2016 (see Exhibits 5.12 p. 208 but remember that this is a servicebusiness not retail, so the revenue will be service revenue and there will beno cost of goods sold). (1.75 marks)
5. Preparea Statement of Changes in Ownerâs Equity for the year to 30thJune (see Exhibit 5.13) (1.25 marks)
6. Preparea Balance Sheet as at 30thJune 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 thisquestion.
Opening General Ledger Balances forPaulina Willcox (see also the spreadsheet on studydesk):
Cash at bank
Accumualted depreciation -motor vehicle
Capital, Paulina Willcox
Drawings, Paulina Willcox
Telephone & internet expense
QUESTIONFOUR (module 6)14 Marks
RoseGamgee has just started small florist shop. She has kept basic accountingrecords for her first month, but so far has never prepared a bankreconciliation statement.
Details of therelevant records that she has kept are as follows:.gif”>.gif”>.gif”>
Rose Gamgee: Cash payments Book
Drawings by owner
Bouncy Tyres Ltd
Wages for cleaner
Rose Gamgee: Cashreceipts Book
Cash invested byowner
Cash sales week 1
Cash sales week 2
Accounts rec. F.Baggins
Cash sales week 3
Cash sales week 4
Accounts rec. A. Elf
Rose Gamgee: General Ledger
Cash at bank account.gif”>
.gif”>.gif”>.gif”>.gif”>Statement of Account
B. Wolf Bank – Easy Street,Brisbane.gif”>
Account Number: 10065
Page No. 1
B. Wolf Bankestablishment fee