Accounting Answers

Shelly Ryce was employed at Tele Company for 10 years. In recent times, Shelly was made redundant & as a part of her redundancy payment package, she received $2,000,000. Shelly has always loved wearing hair extensions, & realizing how lucrative the hair business. She decided to start a hair supplies store, called “Shelly Hair.” Shelly started operations on May 1, 2021.

The following transactions:

May 1 Miss Ryce paid a cheque for the first month’s rent for the store, along with an

equal amount for a deposit of $30,000 to Mr. Steve Johnson.

May 18 Miss Ryce paid her cashier a cheque of $15,000 for her fortnightly salary.

a. Journalize & post adjusting entries, using the following information:

• The cashier complained that she was short-paid $2,500. Investigations revealed that she was in fact short-paid for the month of May 2021.
• The insurance for "Shelly Hair" was due & payable by May 1. The annual premium is $72,000 & the expense is incurred on a pro-rata basis.

a). Journalize and post adjusting entries, using the following information:

• The actual light bill received from Light Company is $10,000.
• Depreciation for a G Wagon has not been taken into account for the month. The business uses the reducing balance method to depreciate motor vehicles at a rate of 12% per annum.
• The furniture and point-of-sale machine in the business are to be depreciated using the straight-line method at a rate of 8%. Depreciation for furniture & point-of-sale

the machine has not been taken into account.

The following transactions:

July 1 Miss Ryce stated business with a G Wagon valued at $1,200,000.

July 2 Miss Ryce purchased store furniture from Royal Cabinets Limited using a cheque

amounting to $120,000.

July 3 Miss Ryce paid Telesales Electronics $15,000 with a cheque to set up her point-of-sale machine at the store.

July 22 Miss Ryce paid cash for the following utility bills for the month:

Utility Amount

Light Company $13,000

1. Journalize each of the transactions below.

Dec. 18 Miss Ryce paid her cashier a cheque of $15,000 for her fortnightly salary.

Dec. 19 One of the Kera Care Kit was returned by Miss Sonia Jarrett.

Dec. 20 Miss Sonia Jarrett paid the balance outstanding on her account by cheque,

receiving a discount of 5%.

Dec. 22 Miss Ryce paid cash for the following utility bills for the month:

Utility Company Amount

Light Company $13,000

National Water Company $2,350

Telecommunications Company $5,300

Dec. 22 Miss Ryce also paid cheque for security fees for the month totaling $23,000.

Dec. 25 During the period Dec. 17 – Dec. 25, Miss Ryce sold merchandise for

cash totalling $380,000.

Dec. 8 Miss Ryce approved the sale of merchandise on credit to the following customers:

Customer’s Name Item Quantity Cost per Item

Sharon Nelson Lace Front Wig 1 $10,000

Kim Samuels Hair Relax 20 $750

Nadine Patterson Braiding Hair 15 $350

Sonia Jarrett Hair Care Kit 5 $4,500

Dec. 25 Miss Ryce made a cash lodgement of $300,000 to the bank.

Dec. 27 Miss Ryce paid cheques to Mr. Xinghu Chung for $250,000, receiving a 2%

discount, and to Cherry’s Wholesale Hair Supplies for $100,000, receiving a 2%

discount.

Dec. 29 After almost a month in business, Miss Ryce felt like she wanted to treat herself

to a weekend at the Secrets Wild Hotel in Montego. She withdrew $30,000 cash

from the business to supplement her personal expenses.

Dec. 31 All other customers who had taken goods on account on Dec. 8, 2021, cleared

their outstanding balances, by paying with a cheque.

snowline limited has a purchasing system that works as follows. the raw material inventory manager notifies purchasing department when inventory falls below reorder point. purchasing department issues a purchase order to supplier. the goods and invoices go to the receiving department where they are counted and the packaging slip matched against a copy of purchase order. at the end of the month, the billing department checks that all adequate departmentation is present and produces a payment voucher which is processed by cash disbursement clerk who prepares a cheque for the accountant's signature. the cheque is forwarded to the supplier by the acoount's office. draw a context diagram and level 0 DFD for teh system

Following are the information related to a company:

Gross Profit Ratio 20 %

EPS Rs.2

No. Of Shares (Rs.10 each) 25000

Profit 25 % of Share Capital

Current Ratio 3:1

Acid Test Ratio 1.5:1

Quick Assets Rs. 30000

Inventory Turnover 10 times

Operating Ratio 90%

Closing stock is less by Rs. 6000 than opening stock

From the above derive as much additional information as you can

scenarios that can lead to a deviation in the accounting standard IAS 16

Accounting

C. Discuss the difference between non-value adding activities and business process reengineering with examples relating to the above scenario in the question. (5 Marks)

The accountant for HHH Ltd, Ms Stephanie, has sought your advice on an accounting issue that has been puzzling her. When preparing the acquisition analysis relating to HHH Ltd’s acquisition of Orton Ltd, she calculated that there was an excess on acquisition of $10,000. Being unsure of how to account for this, she was informed by accounting acquaintances that this should be recognized as income. However, she reasoned that this would have an effect on the consolidated profit in the first year after acquisition date. For example, if Orton Ltd reported a profit of $50,000, then consolidated profits would be $60,000. She is unsure of whether this profit is all post-acquisition profit or a mixture of pre-acquisition profit and post-acquisition profit.

Required:

How should the excess be accounted for? What is the effect of its recognition on subsequent consolidated financial statements?

What Scenarios can lead to a deviation from the proper use of the accounting standard IAS 16 Property, Plant and Equipment in an organisation.