Accounting for Managers (ACC00724) S2, 2019 Assignment 1 (20 Marks) QUESTION 1 (10 Marks) Ken Kennett Building Services is a local business operating in the housing industry. Ken Kennett has no formal...

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Accounting for Managers (ACC00724) S2, 2019
Assignment 1 (20 Marks)
QUESTION 1 (10 Marks)
Ken Kennett Building Services is a local business operating in the housing industry. Ken Kennett has no formal accounting system and does not use financial statements for decision making. However, he is negotiating a contract with a supplier of building materials who wants to see his financial statements to ensure that Ken can meet his payments each month. Ken has asked you to prepare financial statements. Based on his last tax return and the content of his shoebox (where he keeps his invoices and receipts) for this year, you have recorded the following items:
Cash in the shoebox (with the receipts and invoices)             $500
Cash in the bank account                         3,800
Building services provided                        550,000
Amounts owed by customers                         80,000
Wages paid to employees                        150,000
Wages owed to the employees                         3,500        
Equipment                                 68,000
Building supplies used                            310,000
Building supplies on hand                         18,000
Amounts owed to suppliers                         30,000
Motor vehicle                                 32,000
Motor vehicle expenses                             5,600
Electricity and telephone expenses                     4,000
Cash used by Ken for personal expenditure                 5,700
A. Using the information above, prepare a statement of financial performance (income statement) and a statement of financial position (balance sheet) for Ken Kennett Building Services. ( 6 Marks)
B. How would the financial statements you provide help the supplier of building materials decide whether or not to trade with Ken? What parts of the financial statements would be positive indicators that Ken Kennett Building Services would be able to pay for supplies on time and what items may cause some concern for the suppliers? (4 Marks)
QUESTION 2 (10 Marks)
Clive Calmer offers accounting services to the local small business owners! He has set up a sole proprietorship business named CC Accounting. Clive has collected the following information relating to his business activities at the end of financial year:
Office supplies            $1,500
Office supplies expense         XXXXXXXXXX
Telephone expense         255
Motor vehicle expense         330
Accounts receivable         1,500
Bank loan             7,500
Accounts payable          1,080
Cash at bank             8,445
Computer equipment         8,250
Advertising expense         510
Accounting service income     9,750
The following information was also disclosed from examining Clive’s bank statement:
Accounting service income receipts    $8,250
Initial contribution by Clive         3,300
Bank loan received             9,000
Payments to suppliers              2,355
Repayment of loan             1,500
Computer equipment purchase         8,250
A. Without preparing formal financial statements, calculate the following: (6 Marks)
1. Profit/loss for the yea
2. Total assets at the end of the yea
3. Total liabilities at the end of the yea
4. Clive Calmer’s capital balance at the end of the yea
5. Net cash inflow/outflow for the yea
B. If Clive had withdrawn $3,000 in cash during the year, what effect would this have (increase, decrease, no effect) on the figures you calculated in requirement A? (4 Marks)

Answered Same DayAug 09, 2021ACC00724Southern Cross University

Answer To: Accounting for Managers (ACC00724) S2, 2019 Assignment 1 (20 Marks) QUESTION 1 (10 Marks) Ken...

Khushboo answered on Aug 14 2021
65 Votes
Solution 1:
The balance sheet and income statement of Ken Kennett is as below:
    Balance sheet - Ken Kennett Building Se
    Capital (Balancing figure)
    Net profit
    Cash in hand
    Less: Cash used for personal exp
    Cash at Bank
    Accounts receivable
    Wages payable
    Building supplies
    Accounts payable
    Motor vehicle
    Income Statement
    Building services
    Wages expense
    Building supplies
    Motor vehicle expense
    Electricity and telephone exp
    Net Income
The financial statements play important role to determine about the financial strength and financial performance of an entity. All...

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