Financial Accounting ACT 501 Assignment

Set out below is your assignment covering the entire syllabus from week 1 to week 12. Please read the following instructions carefully: 1. 2. 3. This assignment will represent 15% of this subject in your MBA course You are required to complete this as a Group assignment You are free to choose members of your Group, but the Group size must be no more than 8 and no less than 5 unless pre-approved by me The assignments must be submitted with a coversheet in which the following must be included: a. Group Name b. Names of each member of the Group c. Student I/D of each member of the Group d. Signatures of each member of the Group You must communicate your Group name and members of who is in your Groups to me by 17 March 2012. Anyone not a Group by 17 March 2012 and not communicated to me by 17 March 2012 will not be accepted, resulting in nil marks being awarded The deadline for submission of the assignment is the 07 April 2012. Papers submitted after this deadline will not be accepted, resulting in nil marks being awarded The assignments must be completed using Microsoft word, hand written submissions will not be accepted. Tables prepared in Microsoft Excel may be inserted (cut & paste) into the Microsoft word submissions

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Financial Accounting ACT 501 Assignment

Q1 Network is a company that sells laptops and provides maintenance services for IT equipment. The business was established on 01 January 2008 as a limited company. Set out below is the Trial balance as on 31 December 2010 and a list of adjustments to be made. You are required to prepare the following: a) Calculate all the required adjustments showing your calculations (and T accounts if required, although this is not compulsory) b) The journals for all the adjustments required c) The adjusted trial balance as on 31 December 2010 d) Statement of Financial Position as at 31 December 2010 e) Statement of Comprehensive Income for the year ended 31 December 2010 f) Statement of changes in Equity as at 31 December 2010 Read all the adjustments carefully before you start as some will impact other adjustments. 75

Trial Balance for Networld Limited on 31 December 2010 Fixed Assets Cars Accumulated Depreciation - Cars Fixed Assets - Office Fixture & fittings Accumulated Depreciation - Office Fixture & Fittings Fixed Assets - Building Inventory Trade Debtors Allowance for Doubtful Debt Provision Cash Trade Creditors Loan Ordinary Shares (Owners Equity) Retained Earnings Sales Laptops Sales Returns - Laptops Sales Discounts - Laptops Sales - Maintenance fees Purchases Laptops Purchase Returns - Laptops Salaries expense Rent expense Insurance expense Advertising expense Utility expense Totals

Debit BDT 15,000,000

Credit BDT

5,000,000 6,500,000 731,250 46,000,000 5,500,000 16,636,000 368,140 41,766,500 19,725,000 45,000,000 20,000,000 11,765,610 139,500,000 1,550,000 6,897,500 7,000,000 85,150,000 910,000 15,000,000 6,600,000 900,000 1,500,000 1,000,000 250,000,000 250,000,000

Financial Accounting ACT 501 Assignment

1. 5 cars were purchased on 01 Jan 2008 at a cost of BDT3,000,000 each. The cars were estimated to have a residual value of BDT500,000 each and a useful economic life of 5 years. The cars are depreciated on a straight line basis and depreciation is charged on a yearly basis. The depreciation charge for 2010 has not yet been accounted for. On 15 December 2010, one car was sold for BDT1,600,000 for which cash was received. This has not yet been accounted for. On 25 April 2009 the company purchased fixtures and fittings for BDT6,500,000. The company uses the reducing balance method of depreciation for fixtures and fittings at the rate of 15% per annum. The company charges depreciation on a monthly basis and the cost of depreciation for 2010 has not yet been posted. The company opens a new office on 15/08/10. Costs associated with the office include: Construction materials 30,000,000 Management staff costs Architects fees 1,000,000 Construction labour costs Administrative staff costs 2,000,000 Site preparation costs Legal fees 1,000,000

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5,000,000 4,000,000 3,000,000

The accountant has included all of these costs as part of the initial cost of this asset, as recorded on the trial balance on 31 December 2010. Correct any errors made. The useful life of the office is estimated to be 15 years and it is estimate that the residual value of the branch is 15% of its initial cost. The company uses the straight line method of depreciation. The company charges a full years depreciation in the year of acquisition and the cost of depreciation for 2010 has not yet been posted in the accounts 5. Included within the Trade Debtor balance were two debtors who were considered to be irrecoverable, Customer A owed BDT250,000 and Customer G owed BDT90,000, both of these balances were more than 90 days overdue. These trade debtor balances need to be written off. The trade debtor balance and its aging analysis is provided below (this is prior to adjustments required in 5 above). The estimation basis for doubtful debts is also provided below. Update the Allowance for doubtful debt account and any other accounts affected by this adjustment. Debtors Ledger as at 31/12/10 - before write off Number of days past due Total Not Yet Due 5,490,000 0.0% 1 - 30 days 5,086,000 1.0% 31 - 60 days 2,140,000 2.5% 61 - 90 days 2,580,000 5.0% Over 90 days 1,340,000 25.0%

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Total Estimation 7.

16,636,000

On 01 July 2010 the company rented new premises for 5 years. The total amount paid was BDT6,600,000 which represented 25% advance for 5 years plus the remaining rent due for 2010. The accountant debited the rental expense account for the full amount paid. Make the required corrections. The insurance for fixed assets was renewed for 1 year on 01 October 2010 for which BDT900,000 was paid. The accountant debited the rental expense account for the full amount paid. Make the required corrections.

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Financial Accounting ACT 501 Assignment

9. The company paid BDT1,500,000 for a billboard 1 year advertising contract which started on 01 April 2010. The accountant debited the advertising expense account for the full amount paid. Make the required corrections.

10. The utility company issues its bills two months after the end of the month to which the bill relates. The company had paid BDT1,000,000 in 2010 covering the bills relating to 2010 received to date 11. The company took out a loan of BDT45,000,000 for 10 years on 01 May 2010. Interest is payable annually at 13.5% 12. Included within maintenance sales fee is an amount of BDT3,600,000 relating to a 2 year maintenance contract starting from 01 August 2010 13. The stock shown in the trial balance is the opening stock vlue relating to 5,000 units. The company uses the periodic inventory system and uses the FIFO stock valuation system. No purchase discounts are received from suppliers. The unit selling price of laptops in 2010 was BDT1,550.

Purchases & Purchase Returns Date 15-Feb-10 15-Mar-10 15-May-10 15-Jun-10 15-Jul-10 15-Aug-10 15-Sep-10 15-Oct-10 31-Dec-10 Details Purchase Purchase returns Purchase Purchase Purchase returns Purchase Purchase Purchase returns Purchase Units 20,000 (200) 16,000 18,000 (300) 14,000 19,000 (500) 5,000 Unit Cost 1,000 1,000 1,000 950 950 850 850 850 800

14. BDT10,000,000 of dividends was paid in cash on 31 December 2010 but this transaction has not yet been recorded 15. Retained profit shown in the trial balance is the opening balance for 2010.

Financial Accounting ACT 501 Assignment

Q2 Set out below is the Statement of Financial Position for Glaxo SK (BD) as at 31 DEC 2009 & 31 DEC 2010.
31-Dec-10 ASSETS: Non-Current Assets: Property, Plant and Equipment-Carrying Value Deferred tax asset 390,107,000 368,102,000 22,005,000 367,218,000 348,815,000 18,403,000 31-Dec-09

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Current Assets: Inventories Trade Debtors Other Debtors Cash and Cash Equivalents

1,824,178,000 695,231,000 410,286,000 52,618,000 666,043,000

1,334,284,000 610,525,000 369,661,000 39,803,000 314,295,000

TOTAL ASSETS SHAREHOLDERS' EQUITY AND LIABILITIES: Shareholders' Equity: Share Capital Retained Earnings

2,214,285,000

1,701,502,000

1,381,151,000 120,465,000 1,260,686,000

1,163,718,000 120,465,000 1,043,253,000

Non-Current Liabilities: Retirement benefit obligations Loans Deferred Tax Liability

129,738,000 80,020,000 3,639,000 46,079,000

108,627,000 66,919,000 4,939,000 36,769,000

Current Liabilities: Current tax liabilities Trade Creditors Other Creditors Loans TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES

703,396,000 69,219,000 504,501,000 128,378,000 1,298,000

429,157,000 66,521,000 256,500,000 104,963,000 1,173,000

2,214,285,000

1,701,502,000

Financial Accounting ACT 501 Assignment

Set out below is an extract from the Statement of Comprehensive Income for Glaxo SK (BD) for the year 2010 9numbers in red are negative numbers, i.e. expenses.
2010

PROFIT FROM OPERATIONS Other Income Finance Income Finance Expense NET PROFIT BEFORE TAX Provision for Income Tax Provision for Deferred Income Tax

531,456,000 4,141,000 17,983,000 820,000 552,760,000 136,875,000 5,708,000

NET PROFIT AFTER TAX

410,177,000

Prepare the Statement of Cash Flow for Glaxo SK (BD) for the year ending 31 DEC 2010 showing your calculations where relevant.

Additional information required is as follows: 1. The fixed asset notes to the accounts provided the following data (presented in BDT 000s):
Fixed Asset Note Cost Opening Balance Additions Disposals Closing Balance

2010 Accumulated Depreciation

796,776 Opening Balance

75,626 Charged

21,450 Disposals

850,952 Closing Balance

2010

447,962

53,691

18,803

482,850

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Items included within Other Income are as follows (presented in BDT 000s):
Other Income Note Gain on disposal included in the Profit for the year Other income 2,257 1,884 4,141

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There were no accruals or prepayments relating to finance income or finance expense as at 31 DEC 2009 and 31 DEC 2010.