Accounting Answers

Sheen Ltd manufactures garden tools and has decided to expand operations. The new
operations are expected to increase EBIT from the current level of $500 000 to $1 million p.a.
Sheen has a capital structure that utilizes bonds, ordinary equity, and preference shares. The
$500 000 of issued bonds pay 6% p.a. Preference shares pay an annual fixed dividend of $70
000. The company has 1 000 000 ordinary shares that are trading at $5.1 per share. The
Australian corporate tax rate is 30%. Most of the shareholders of Sheen live outside Australia
and cannot fully utilize dividend imputation credits?

What is profit?

Sheen Ltd manufactures garden tools and has decided to expand operations. The new
operations are expected to increase EBIT from the current level of $500 000 to $1 million p.a.
Sheen has a capital structure that utilises bonds, ordinary equity and preference shares. The
$500 000 of issued bonds pay 6% p.a.. Preference shares pay an annual fixed dividend of $70
000. The company has 1 000 000 ordinary shares that are trading at $5.1 per share. The
Australian corporate tax rate is 30%. Most of the shareholders of Sheen live outside Australia
and cannot fully utilise dividend imputation credits.
Sheen needs to raise $700 000 to fund the expansion. Assuming the company can issue new
shares at the current market price, what is the impact on EPS new shares are issued to fund the
centre? If new debt can be raised at a 9% interest rate, what is the impact on EPS of using debt
rather than a new equity issue?

Sheen Ltd manufactures garden tools and has decided to expand operations. The new
operations are expected to increase EBIT from the current level of $500 000 to $1 million p.a.
Sheen has a capital structure that utilises bonds, ordinary equity and preference shares. The
$500 000 of issued bonds pay 6% p.a.. Preference shares pay an annual fixed dividend of $70
000. The company has 1 000 000 ordinary shares that are trading at $5.1 per share. The
Australian corporate tax rate is 30%. Most of the shareholders of Sheen live outside Australia
and cannot fully utilise dividend imputation credits. Sheen needs to raise $700 000 to fund the expansion. Assuming the company can issue new shares at the current market price, what is the impact on EPS new shares are issued to fund the centre? If new debt can be raised at a 9% interest rate, what is the impact on EPS of using debt rather than a new equity issue?

State in each case below whether the transaction includes VAT .give a brief exaplanation for each answer.

1-purchase of a delivery truck from TATA ,a VAT vendor .
2-purchase of fuel from a VAT vendor.
3-pay employees monthly salaries.
4-sell goods worth R10 000 to receivable D.
5-purchase of a computer for business use from a non-VAT vendor.

Explain when and why the cost of an assets,such as the computer ,for initial measurement must exclude VAT.

Indicate why differentiation is made between current assets and non-current assents?

Indicate why differentiation is made between financial assets and non financial assets?

Indicate why differentiation is made between current assets and non-current assets

Process the journal entries for the following transactions in the Journal worksheet provided.2/4/2016 Durable Pty Ltd receives a cheque (no 683) from Perth News. The cheque is attached to a remittance advice that refers to invoice 1638 issued by Durable Pty Ltd in 12/4/06. Perth News is paying the balance of its account. 650.00
3/4/2016 Durable Pty Ltd issues Invoice 1692 and stock to News Plus relating to its order dated 14/4/05
for magazines 1025.00