ACC201 FA1/3T2015/Assignment Page 1 of 4

ACC201 FA1/3T2015/Assignment Page 1 of 4 Assessment Information – Trimester 3, 2015 Subject Code: ACC 201 Subject Name: Financial Accounting 1 Assessment Title: Individual assignment Weighting: 20% of the overall mark for this subject Total Marks: 40 Marks Due Date: Due on Friday 5 February 2016 by 5.00 PM (AEDT). Note: The above time is AEDT. Brisbane and Adelaide must allow for time difference . Assessment Description You are required to answer the following three tasks. The assignment must be completed individually and submitted before the above due date to avoid any late penalties. Please make sure you follow the guidelines noted in your subject outline especially those relating to presentation of written work, late policy and academic integrity. Submission: The assignment will need to be submitted electronically through the student portal – use the link under “Assessments overview and submission” to submit the information (The portal will close at 5.00 pm AEDT – students in Adelaide and Brisbane please note to adjust for the time difference accordingly). ACC201 FA1/3T2015/Assignment Page 2 of 4 Task 1: (15 marks) (Word limit: 600 - 750 words) The All That Sparkles Store sells expensive limited edition jewellery items and maintains its inventory records manually, keeping a separate card for each type of jewellery in store. Every time jewellery is purchased or sold, the card for that item is adjusted. Once a year, staff count the inventory of jewellery and compare the amount with the cards. Appropriate alterations are made for differences between inventory on hand and the cards. Prue Diamond is in charge of the shop and she has decided that it is time to install a computer-based system. She has heard that there are two ways to account for inventory but she is not sure which method she has been using and which method to use if she computerises the inventory records. You are an accounting student working part time in the shop, so Prue approaches you for help. Required A. Explain the main differences between the two methods of accounting for inventory and how each method works. B. Which method of inventory has the All That Sparkles Store been using? C. Which inventory method would you recommend when the computerised accounting system is installed, and why? Task 2: (5 marks) (Word limit: 200 - 250 words) The Claremont Cricket Club collects membership fees of $100 in advance from its members at the beginning of October each year for the summer season, which ends in April. This entitles members to free entry to all games played at the home ground for the season. The club’s financial year ends on 31 December. Required Should the club make any adjusting entry in its accounts at the end of the year in relation to membership fees received? Why or why not? Explain. ACC201 FA1/3T2015/Assignment Page 3 of 4 Task 3: (10 + 10 = 20 marks) Lana Priest set up a home sewing business on 1 July 2016. Usually, Lana collects $20 per hour for sewing on the completion of each day’s work and pays for the maintenance of her machine with cash. Lana did an accounting subject at secondary school and so has kept her own accrual-based accounting records. At the end of the first year, Lana produced the following unadjusted trial balance: Unadjusted Trial Balance as at 30 June 2017 Account Debit Credit Cash at bank $ 2??550 Accounts receivable 40 Sewing machines 3??000 Motor vehicle 24??000 Lana Priest, Capital $19??000 Lana Priest, Drawings 17??570 Sewing revenue 38??400 Sewing supplies expense 4??840 Insurance 2??300 Repairs to machines 2??560 Sundry expenses 540 $57??400 $57??400 The following adjustments were required at the year-end. ? Sewing supplies on hand at year-end, $230. ? An account was received for repairs done to machines before year-end but not recorded, $270. Ignore the GST in your answers. Required 1. Prepare an income statement for the year ended 30 June 2017 using accrual accounting. 2. Lana was not sure whether she could use cash accounting rather than accrual accounting for her business records. From the information provided, decide whether Lana should use accrual or cash accounting, and explain to her the reasons for your decision. ACC201 FA1/3T2015/Assignment Page 4 of 4