Week 1 Practice Questions and Template

ACC10008/HBC220N Financial Information Systems
Practice
Topic 1: Recording Transactions (I)
Week 1
Exercise 2.1 Preparing a balance sheet or Statement of Financial Position

(SOFP)
Financial items for George Karatsis IT Services on 31 May 2019 are presented below in
alphabetical order.
Accounts payable L $ 64 000 Land A $250 000
Accounts receivable A 70 000 Mortgage payable L 710 000
Building A 520 000 Office equipment A 180 000
Cash at bank A 61 000 Office supplies AD 34 000
Required
A. Prepare a balance sheet in account format as in figure 2.2. (Note that a major item is missing in
the list.)
B. Reformat the statement of financial position to present it in narrative form as in figure 2.3.
A. SOFP in Account Format
GEORGE KARATSIS IT SERVICES

Balance Sheet
as at 31 May 2019
ASSETS LIABILITIES
AR 70,000 AP 64,000
Building A 520,000 MP 710,000
Cash at bank 61,000
Land A 250,000
Office e 180,000 EQUITY 341,000
Office s 34,000
1,115,000 1,115,000
1
B. SOFP in Narrative Format
GEORGE KARATSIS IT SERVICES

Balance Sheet
as at 31 May 2019
ASSETS 70,000
Accounts receivable
Building 520,000
Cash at bank 61,000
Land 250,000
Office equipment 180,000
Office supplies 34,000
TOTAL ASSETS 1,115,000
LIABILITIES
Mortgage payable 710,000
Accounts payable 64,000
TOTAL LIABILITIES 774,000
NET ASSETS 341,000
EQUITY 341,000
George Karatsis, capital
TOTAL EQUITY 341,000
Exercise 2.2 Income statement or Statement of Comprehensive
Income (SOCI) and analysis
During the year ended 30 June 2019, Skilled Services, a provider of temporary secretary personnel,
had collected receipts from clients for a total value of $250 000. Wages of $136 000 had been paid
to the temporary workers, rental of office space and electricity costs were $12 000 and $13 700
respectively for the year, and the owners withdrew $20 000 for their personal use.
Required
A. Prepare an income statement or SOCI for the year for Skilled Services.
A.
SKILLED SERVICES
Income Statement
for the year ended 30 June 2019
INCOME $ $
Services income 250,000
EXPENSES
Wages 136,000
Office Rental 12,000
Electricity Costs 13,700
161,700
PROFIT 88,300
Exercise 2.3 Analysis of equity
Sarah Hodge is a self-employed piano teacher operating her business from home. She keeps her
accounting records for business activities completely separate from her records for personal
activities. At 30 June 2018, Sarah had business assets and liabilities worth $62 500 and $41 000
respectively. At 30 June 2019, Sarah had business assets and liabilities worth $56 000 and $38 000
respectively.
Required
A. Assuming Sarah did not contribute to or withdraw from the business during the financial year,
determine the profit/loss for the year.
B. Assuming Sarah had withdrawn $15 000 during the year, determine the profit/loss for the year.
C. Assuming Sarah had contributed $20 000 and withdrawn $12 000, prepare a statement of
changes in equity for the year.
A. Capital Contributions and Drawings are nil for the year.
(56,000-38,000)-(62500-41000)= -3,500
B. Capital Contributions nil and drawings $15 000 for the year.
(56,000-38,000)-(62500-41000)+15,000
C.
SARAH HODGE – PIANO TEACHER

Statement of Changes in Equity
for the year ended 30 June 2019
$
Sarah Hodge, Capital – 1 July 2018 21500
Add: Capital contribution for the year 20,000
(11500)
Less: Loss for the year*
12000
Less: Drawings during the year
Sarah Hodge, Capital – 30 June 2019 18000
* Loss is the balancing item.

Problem 2.18 Determining missing elements in accounting equation
Calculate the two missing amounts for each independent case below.
Case Total Total Total Total Total Profit

assets liabilities equity income expenses (loss)
A $90 000 $37 000 53000 $76 000 52000 $24 000
B $110 000 28000 $82 000 $45 000 $56 000 -11000
C 71000 $18 000 $53 000 $80 000 90000 ($10 000)
D $93 000 43000 $50 000 14000 $32 000 ($18 000)
E 175000 $55 000 $120 000 91000 $60 000 $31 000
Exercise 2.11 Recording transactions
Jones’ Mower Repairs began operations on 1 August 2019 and completed the following transactions during the
first month.
1. Darren Jones deposited $35 000 of his personal funds in a current account at a bank opened in the name of
the business.
2. Mower repair equipment was purchased at a cost of $24 000, of which $14 000 was paid in cash. A loan
payable was given for the remainder.
3. Darren collected $5000 from customers for repair services performed.
4. Shop rent was paid for the month of August, $1500.
5. Supplies amounting to $2100 were purchased on credit.
6. Wages of $1200 were paid as well as an account for electricity, $250.
7. Darren paid for the supplies purchased in (5) above.
8. Supplies used during August amounted to $750.
Required
A. Prepare a schedule. List the following assets, liabilities and equity as column headings: Cash at Bank;
Supplies; Equipment; Loan Payable; Accounts Payable; D. Jones, Capital.
B. Show the effects of each of the transactions on the accounts listed. Indicate totals after each
transaction and complete the schedule.
C. Prepare an income statement and a statement of changes in equity for the month ended 31 August
2019, and a balance sheet as at 31 August 2019.
A and B.
Assets = Liabilities + Equity
Cash at Accounts Loan D. Jones,

Supplies Equipment
Bank + + = Payable + Payable + Capital
(1) $35 000 = + + $35 000

(2) -14000 + $24 000 $10 000
21000 + 24 000 = 10 000 + 35 000
(3) + 5 000 + 5000
26 000 + + 24 000 = + 10 000 + ?
(4) -1500 – -1500
24 500 + 24 000 = + 10 000 + 38 500

(5)
(6)
(7)
(8)
20 950 + 1 350 + 24 000 = 0 + 10 000 + 36 300
C.
JONES’ MOWER REPAIRS

Income Statement
for the month ended 31 August 2019
INCOME $ $
Services income 5000
EXPENSES
Rent expense 1500
Wages expense 1200
Electricity expense 250
Supplies used 750
3 700
PROFIT 1 300

Statement of Changes in Equity
for the month ended 31 August 2019
$
D. Jones, Capital – 1 August 2016 35000
Add: Capital contribution 1300
Profit for the month
36 300
Less: Drawings during the month
D. Jones, Capital – 31 August 2016 36 300

Balance Sheet
as at 31 August 2019
ASSETS $
Cash at bank 20950
Supplies 1350
Equipment 24000
TOTAL ASSETS $46 300
LIABILITIES
Accounts payable 0
Loan payable 10000
TOTAL LIABILITIES 10 000
NET ASSETS $36 300
EQUITY
D. Jones, Capital $36 300
TOTAL EQUITY $36 300

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ACC10008/HBC220N Financial Information Systems

Exercise 2.1 Preparing a balance sheet or Statement of Financial Position

A. SOFP in Account Format

GEORGE KARATSIS IT SERVICES

GEORGE KARATSIS IT SERVICES

A. Capital Contributions and Drawings are nil for the year.

SARAH HODGE – PIANO TEACHER

* Loss is the balancing item.

Case Total Total Total Total Total Profit

Cash at Accounts Loan D. Jones,

(1) $35 000 = + + $35 000

24 500 + 24 000 = + 10 000 + 38 500

JONES’ MOWER REPAIRS

JONES’ MOWER REPAIRS

JONES’ MOWER REPAIRS

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