ACC202: On 1 July, the Company Established that They cannot Collect $8,000: Financial and Managerial Accounting Assignment, SUSS, Singapore

Question 1

The following were transactions of Delphi Enterprise for the month of July:

1. On 1 July, the company established that they cannot collect $8,000 from a customer and this amount has to be written off. Assumes the company uses the allowance method.
2. On 15 July, the company purchased $3,000 of supplies on credit.
3. On 18 July, the company received a utilities bill amounting to $400.
4. On 20 July, the company entered a contract to buy a new machine costing $20,000 3 months later. The machine will be paid entirely in cash.
5. On 23 July, a customer paid $5,000 owed to Delphi Enterprise.
6. On 25 July, the company declared dividends of $20,000 to be paid 1 month later.
7. On 31 July, the company hired new staff at a monthly salary of $3,100. The new staff will start work on 1 September.

Analyse the above and record the journal entries. Narrations are not required.

• An analysis of the liquidity and efficiency ratios for CBA Ltd shows the following results.

Use the above financial ratios to analyse the financial performance of CBA Ltd.

Question 2

• On 1 May 2020, Ron Trading purchased a new machine. The following payments relate to the machine.

• Identify and compute the cost of the machine to be recognised. Explain your reasoning.
• Journalise the transactions. Assume the above payments are paid in cash.
• Smart Enterprise bought a machine costing $40,000 on 1 January 2015. The machine has a useful life of 4 years. The supplier which sold the machine had agreed to take back the machine for $4,000 at the end of the useful life. The company fiscal year-end is 31 December.

Compute the depreciation expense, accumulated depreciation, and net book value of the machine for the years 2015, 2016, 2017, and 2018 using:

• The straight-line method.
• The double-declining balance method.

Question 3

• LCM Trading has the following beginning inventory, purchases, and sales of a particular product for the month of May:

Using a perpetual inventory system, compute the cost of goods sold for May and the cost of the ending inventory on 31 May using the weighted average method.

• Extracts of the statement of cash flows for three companies in the same industry follows.

Examine the above information and explain which company you would invest in.

Question 4

• Lean Technologies develops and installs learning software for companies.

In January this year, the company generated sales of $155,000 and incurred the following costs:

Assume there is no beginning and ending inventory.

Define and compute the following for Lean Technologies for January this year:

• Prime cost.
• Conversion cost.
• Operating income.
• Hendon Company produces and sells table lamps. For the year 2019, the company sold 60,000 units at $56 per unit. Other information includes:

• Use CVP analysis to determine the breakeven point in units and breakeven point in dollars.
• Use CVP analysis to determine the margin of safety in units and in dollars. (4 marks)
• Suppose Hendon Company is considering spending more on advertising in the year 2020. They estimate that sales would increase by $200,000 (compared to the year 2019) with extra advertising costing $168,000. Describe how to use CVP analysis to explain whether the company should go ahead with the plan. Show workings.