TACC401 Principles of Accounting
Top Education Institute
Sydney City School of Business
Individual Assignment
TACC401 Principles of Accounting
Semester 2 2018
Refer to the handouts on Moodle on business report writing skills.
Word limit - 2,500 words
Font type - Times New Roman (size 12)
Paragraph spacing - 1.5
Assignments must be submitted on www.moodle.com.au using the Turnitin link.
Do not lodge by EMAIL nor at Academic Office
Retain a copy of your assignment paper
Due Date: Sunday 23 September at 23:59 (Submission is not
accepted by the Moodle system after the deadline.)
The assignment must be lodged on or before the due date.
Submit your assignment as one document using Word format only.
This assignment paper has three case studies. All case studies are compulsory.
Do not include the questions in your assignment. Only include the answers to the
questions.
Semester 2 2018
Page 1 of 4
TACC401 Principles of Accounting
Top Education Institute
Sydney City School of Business
Case #1 (60 points)
Preparation of worksheet, financial statements and closing entries
The ledger of HNM Medical Service contains the accounts and account balances shown below
on 30 June 2017:
Account
Cash at Bank
Accounts Receivable
Prepaid Insurance
Land
Building
Accumulated Depreciation – Building
Equipment
Accumulated Depreciation – Equipment
Accounts Payable
Mortgage Payable
Owner, Capital
Owner, Drawings
Fees Earned
Rent Revenue
Salaries Expense
Telephone Expense
Interest Expense
Insurance Expense
Debit
$ 12 600
11 800
1 800
180 200
196 000
Credit
$86 900
32 300
8 800
16 400
64 000
236 950
86 500
262 430
14 400
124 600
4 520
3 080
36 480
$689 880
$689 880
The following account titles are included in the chart of accounts:
Interest Payable
Salaries Payable
Rates Payable
Unearned Fees
Depreciation Expense – Building
Depreciation Expense – Equipment
Rates Expense
The following information has not yet been recorded:
1. Rates owing at 30 June, $4820.
2. Depreciation on the equipment is $3680. Depreciation on the building is $9600.
3. An advance fee payment of $600 for minor surgery to be performed in July 2017 was
credited to Fees Earned.
4. The mortgage contract provides for a monthly payment of $1000 plus accrued interest. The
June payment was not made. The interest of $260 is accrued on the mortgage.
Semester 2 2018
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TACC401 Principles of Accounting
Top Education Institute
Sydney City School of Business
5. Prepaid insurance of $1340 has expired.
6. Salaries earned but not paid amount to $2360.
Required
A.
B.
Prepare a 10-column worksheet for the year ended 30 June 2017. (20 points)
Prepare an income statement, a statement of changes in equity and a balance sheet. (30
points)
Journalise the closing entries. (10 points)
C.
Case #2 (20 points)
Samantha Kennedy owns and manages a craft and material shop called Magic Thread. Most of
the revenue of Magic Thread is derived from the sale of craft materials, although some revenue
is made by giving craft lessons to groups of six customers at a time. As Samantha’s shop relies
on a large number of suppliers of small amounts of different craft materials, she has difficulty
keeping track of all her accounts payable. Samantha is not very well organised and so struggles
to send out accounts to her customers or collect money from them. Samantha is considering
implementing a computerised accounting system as she has been doing a computer course at a
local college and feels that it could help her to be more organised.
Required
A.
What source documents would be required in a manual accounting system in order
to record the sales to customers and receipt of cash, and to ensure correct payment
of money to suppliers? (10 points)
B.
In her computer course, Samantha learnt that the focus in accounting should not be
on bookkeeping but on the use of the information ‘inside the computer’ to make
better decisions and to better manage the business. In what ways could a
computerised accounting package help Samantha make better decisions and
manage her business better? (10 points)
Semester 2 2018
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TACC401 Principles of Accounting
Top Education Institute
Sydney City School of Business
Case #3 (20 points)
Derek Brown and Kate Wilson set up a partnership to run a small retail business. Derek contributed $60 000 to begin the business and Kate’s contribution was $50 000. Derek is confident
with numbers and accounting whereas Kate prefers to deal with people and to ignore anything
requiring numbers. Kate has put her trust in Derek to set up the financial side of the business.
Derek has decided that all profits should be distributed according to the initial capital
contribution by each of the partners.
During the second year of operation, Derek bought a new house and to finance the deposit
he withdrew $20 000 from his capital investment in the partnership. Kate accepted that this
was reasonable and did not even think about the implications for profit distribution. The
following year Derek withdrew another $20 000 from his capital investment in the partnership
to reduce his house mortgage. Kate accepted that as Derek had put the money into the
partnership, it was only fair that he could take it out again.
Derek and Kate both worked actively in the business and generally worked well together as
business partners. They both were entitled to a salary of $30 000 on the assumption that they
would contribute equally to the management of the business.
Required
A. Who are the stakeholders in this situation? (5 points)
B. Does Derek appear to be doing anything wrong? Explain your response. (10 points)
C. Are there any ethical issues involved here? If so, identify them. (5 points)
Semester 2 2018
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