VCAA 2008 exam help

[cleo_xo]

i was just wondering in the vcaa 2008 1.4.2 question how did they get theaccum depn of shop fittings as 1100?
thanks for any help

[LFTM]

the ones that were disposed of had total depn of 1100. The business purchased it on the 1 january 2007 and disposed of it on the 30 september 2009, so thats 2 years and 9 months of depn. 0.1x4000= 400 per year
400x2years=800 then add 9 more months (400/12)x9=300

800+300=1100

[_avO]

Yep the acc'm dep'n is only disposed when sold so you can disregard the other shop fittings bought on 1 July 2009 (which will have depreciated 200 by end of period)

[cleo_xo]

thank you both now i get it 

[cleo_xo]

another couple of questions from 2008
is the assessment report wrong for q 2.1.1 in the cash at bank shouldnt the total be 664000 making the balance 33700?
and why is q 2.3.1 31 december an increase in assets?
thanks heaps

[eeps]

I think you mean the transaction on 31 December 2010 - 15 single beds delivered to Great Southern Motels (Invoice No. BB34) - This one also confused me. :S

If you think about it logically, the 15 beds which were delivered would reduce stock, thus reduce assets - and it would also reduce liabilities owing to the debtor - Great Southern Motels, as it is Prepaid Sales Revenue. GST Clearing would also decrease. I don't know how/why the solutions had a decrease in Assets.

I suppose you could just work out if Assets, Liabilities and Owner's Equity decrease/increase by applying the actual figures given.

If someone else could explain... it would be of great help.

[LFTM]

Don't assets increase because debtors increase? 15 beds were delivered but they only received 20% deposit.

I'm really not sure, i haven't attempted this exam yet.

[eeps]

Don't assets increase because debtors increase? 15 beds were delivered but they only received 20% deposit.

Oh right, that makes sense. Since 15 beds out of the 20 have been delivered, debtor - Great Southern Motels is still owing since 5 beds haven't been delivered yet. If you work out the figures... $2,000 is the deposit paid (Prepaid Sales Revenue). Sales would be $7,500 (15*500), GST would be $550... I think. If you subtract $2,000 from $7,500, you would get the amount which is owing to the debtor + GST = $6,050.

The amount owing to the debtor (who paid in advance) - Debtors Control is more than the decrease in stock (i.e. beds), resulting in the increase in Assets. Liabilities decrease because part of what was owing (15/20 beds) has been delivered. Owner's Equity increases since Sales Revenue increases.

The question was rather... gay.

It was difficult to comprehend the information, but if you work it out using the figures, it should get you the right answer.

Hope this made some sense! =P

[LFTM]

Don't assets increase because debtors increase? 15 beds were delivered but they only received 20% deposit.

Oh right, that makes sense. Since 15 beds out of the 20 have been delivered, debtor - Great Southern Motels is still owing since 5 beds haven't been delivered yet. If you work out the figures... $2,000 is the deposit paid (Prepaid Sales Revenue). Sales would be $7,500 (15*500), GST would be $550... I think. If you subtract $2,000 from $7,500, you would get the amount which is owing to the debtor + GST = $6,050.

The amount owing to the debtor (who paid in advance) - Debtors Control is more than the decrease in stock (i.e. beds), resulting in the increase in Assets. Liabilities decrease because part of what was owing (15/20 beds) has been delivered. Owner's Equity increases since Sales Revenue increases.

The question was rather... gay.

It was difficult to comprehend the information, but if you work it out using the figures, it should get you the right answer.

Hope this made some sense! =P

The debtor ( great southern motels) still owe us (Baxters beds) money, which is why assets increase(i think).

[eeps]

The debtor ( great southern motels) still owe us (Baxters beds) money, which is why assets increase(i think).

Yeah, that's what I'm thinking.

[LFTM]

A couple of questions in regards to the 2008 exam:

2.1.1 The cash at bank account, is there an error in the assesment report?
2.3.1 How do liabilities increase in the last transaction?
2.3.2 I basically got most of this question wrong, cam someone explain how you do this.

Thanks for any help.

[sam.utute]

A couple of questions in regards to the 2008 exam:
2.3.1 How do liabilities increase in the last transaction?

GST Clearing Liability is increased as a result of the sale of 5 beds.

2.3.2 I basically got most of this question wrong, cam someone explain how you do this.

The deposit (.2x10000=$2000) would have been recorded by the business as Prepaid Sales Revenue. The delivery of 15 beds (total selling price of $7500) results in the Prepaid Revenue being earned through the provision of stock (which was why the liability arose in the first place; the business had an obligation to provide stock). The General Journal is used to adjust the Prepaid Sales Revenue account.
Entry:
                 DR. Prepaid Sales Revenue 2000
                            CR. Sales Revenue 2000
The cost of sales relating to above adjustment can be recorded in the Sales Journal for convenience.
The debtor Great Southern Motors is yet to pay for the rest of the bed (2000/500=4, meaning they have paid for 4 beds, still owe for 11). The 11 beds must be treated as a normal credit sale.
Entry in Sales Journal:
Date, Debtor, Inv.No. as per normal
Cost of Sales = 4500 (4*300+11*300 OR 15*300)
Sales = 5500 (11*500, as 4 have already been paid for through the deposit)
GST = 750 (GST is calculated on the whole amount of $7500. Any form of deposit does NOT include GST - confirmed by Neville Box)
Total Debtors = 6250 (5500+750)

Q2.1.1
Yes, I'm pretty sure that assessment report is incorrect. As if 14300+650000=663300 LOL

Sam

Phew! Sorry for the long post, but I tried to explain it in depth.

[LFTM]

A couple of questions in regards to the 2008 exam:
2.3.1 How do liabilities increase in the last transaction?

GST Clearing Liability is increased as a result of the sale of 5 beds.

2.3.2 I basically got most of this question wrong, cam someone explain how you do this.

The deposit (.2x10000=$2000) would have been recorded by the business as Prepaid Sales Revenue. The delivery of 15 beds (total selling price of $7500) results in the Prepaid Revenue being earned through the provision of stock (which was why the liability arose in the first place; the business had an obligation to provide stock). The General Journal is used to adjust the Prepaid Sales Revenue account.
Entry:
                 DR. Prepaid Sales Revenue 2000
                            CR. Sales Revenue 2000
The cost of sales relating to above adjustment can be recorded in the Sales Journal for convenience.
The debtor Great Southern Motors is yet to pay for the rest of the bed (2000/500=4, meaning they have paid for 4 beds, still owe for 11). The 11 beds must be treated as a normal credit sale.
Entry in Sales Journal:
Date, Debtor, Inv.No. as per normal
Cost of Sales = 4500 (4*300+11*300 OR 15*300)
Sales = 5500 (11*500, as 4 have already been paid for through the deposit)
GST = 750 (GST is calculated on the whole amount of $7500. Any form of deposit does NOT include GST - confirmed by Neville Box)
Total Debtors = 6250 (5500+750)

Q2.1.1
Yes, I'm pretty sure that assessment report is incorrect. As if 14300+650000=663300 LOL

Sam

Phew! Sorry for the long post, but I tried to explain it in depth.

Thanks for the reply.
I got the same GST and cost of sales as you but why does the assessment report say cost of sales is 3300 and GST is 550?

[sam.utute]

Cost of Sales was 3300 because they used the General Journal to record the cost price of the Prepaid Sales Revenue (remember that 4 have been paid for through the deposit, so 4x300=1200). Not sure about the GST.

[LFTM]

Cost of Sales was 3300 because they used the General Journal to record the cost price of the Prepaid Sales Revenue (remember that 4 have been paid for through the deposit, so 4x300=1200). Not sure about the GST.

But if i didn't record cost of sales in the general journal then i could have cost of sales as 4500 right?