ACC202: Assume you Have just Joined Happy Ltd as the company accountant: Financial and Managerial Accounting Assignment, SUSS, Singapore

Question 1
Assume you have just joined Happy Ltd as the company accountant. You replaced the former accountant who resigned abruptly. Before he resigned, he has prepared the statement of financial position.

Happy Ltd
Statement of Financial Position for the Year Ended 31 December 2020

*$12,500 is for Accumulated Depreciation, Machinery and $27,500 is for Accumulated Depreciation, Motor vehicles (MV).
Assume the account balance in the statement of the financial position he has used is correct.

Present a corrected statement of financial position

Question 2
Harper Water Ltd was established on 2 January 2021. The company sells water purifier machines and uses the perpetual inventory system. The company started with 100 water purifier machines that cost $600 each. On 15 January 2021, the company bought another 100 machines that cost $500 each.

In January 2021, the company sold 120 machines. The first sale of 40 machines was made on 10 January. The second sale of 80 machines was made on 20 January. All the machines were sold at $1,500 each

(a) Present the ending inventory cost, cost of goods sold, and gross profit for January 2021 under:
(i) the FIFO method

(ii) Weighted average method

(b) Explain the effects of the weighted-average method on the value of ending inventory and gross profit for January 2021.

Question 3
Discuss the below comments by a business owner.

“I know the statement of financial position is one of the key financial statements which is used by various external users.

But how useful is the statement of financial position? This is because the statement of financial position is a “snapshot of the past”. I’m more interested in the company’s finances in the future. There are also other limitations of the statement of financial position.

I also hearsay that figures in the statement of financial position include estimates.” You are encouraged to do additional research and provide relevant examples in your answer.