Clarissa Operates an Outlet Offering Consultation to Clients: Accounting Assignment, NUS, Singapore

Question 1

Clarissa operates an outlet offering consultation to clients who would like to start a business. The following are transactions for the month of August 2020.

• Clarissa started her business with $50,000 in the business bank account.
• A personal cheque of $25,000 was issued to buy office equipment.
• Furniture of $28,000 was bought from Miko Ltd. A business cheque of $8,000 was issued as partial payment and the remainder to be paid 6 months later.
• Received a cheque of $18,000 for a consultation to a client, Mako.
• Invoiced Stanley $12,000 for consultation services rendered.
• Bought a van costing $50,000 on account from Toastie Co.
• Issued a cheque to pay advertising $8,400.
• Clarissa withdrew $500 cash from the bank for office use.
• Received a cheque from Stanley for the amount owing.
• Took a bank loan of $80,000. Full payment was made to Toastie Co.
• Issued a cheque to pay salaries of $10,500.
• Clarissa issued a personal cheque of $6,000 to pay for a holiday to Japan.
• Received $4,200 rent from a tenant by cheque.

Required:

• For each of the above transactions, write the accounts and amounts to be debited and credited.
• Compute the amount of closing capital as at 31 August 2020 of Clarissa’s business. (Workings and formulae are to be shown clearly).

Question 2

Abigail’s cashbook on 31 May 2020 showed a credit balance at the bank of $1,010 while the bank statement of the same date had a credit balance of $3,836.

Subsequently, the following discoveries were made:

• Bank transfer of $12,600 from debtor Bella appeared in the bank statement but it has not been dealt with in the cash book.
• Cheque number 101 for $282 in favor of Eleanor has been correctly recorded in the bank statement, but included in the cash book as $228.
• Amounts received in the last few days of May 2020 from CW Trading totaling $1,800 and recorded in the cash book have not been included in the bank statements until 5 June 2020.
• Cheques paid according to the cash book from May to Watson Co. amounting to $409 were not presented for payment to the bank till June 2020.
• Interest on an overdraft of $56 and bank commission charges of $119 had been charged by the bank.
• The bank statement shows that a cheque for $2,494 received from Light Enterprise was returned by the bank due to insufficient funds.
• A standing order payment on 30 May 2020 to Tik Tok Trading for materials bought of $3,640 has been recorded in the bank statement but not recorded in the cash book.

Required:

• Bring the cash book up to date.
• Prepare a statement to reconcile the difference between your amended cash book balance and the balance in the bank statement on 31 May 2020.
• State the amount of cash at the bank to be put into the Statement of Financial Position as at 31 May 2020.
• List down TWO reasons for a returned cheque by the bank besides insufficient funds.

Question 3

Joy Co. is a manufacturing company with two production departments Cutting and Finishing. Budgeted overhead costs for the second quarter of 2020 are listed below:

Other information:

Cutting Department is machine intensive while Finishing Department is largely labour based.

Required:

• Calculate the overhead absorption rate in each department by completing the table. You are required to use the most appropriate basis to apportion the relevant overhead costs.
• One of the products of Joy Co. is Onde. Cost information to produce one unit of Onde is as follows:

Direct materials                       2 kg at $3.50 per kg

Direct labour                           2.5 hours at $5.00 per hour

Time spent in:

Cutting Department                 2.5 machine hours

Finishing Department              4.0 labour hours

Find the cost per unit of Onde.

(Please show detailed workings and round up your answers to two decimal places.)

Solutions:

Question 4

Define the terms of production costs and period costs.

Give THREE examples of each for a company that manufactures furniture.