ACC102 Financial Accounting Individual Assignment Semester 2, 2021 Assessment type: Individual Assignment composed of three questions. Submission: online via Moodle. Weighting: 30% of overall mark Due date/submission: Week 11- Friday 8 October 2021 by 11:59 pm. The assignment is a compulsory Individual assignment and is worth 30% of the marks of the subject.The cover page must have the student name and ID number.The assignment must be in MS word format, double-spacing and 12-pt Times New Roman font.Submissions must be properly referenced.Plagiarism is a serious academic misconduct. Students involved in plagiarism will be referred to the college’s appropriate authority.Maximum Similarity: 30%Late submission will attract penalty: Refer to GBC POLICY Question 1: Case study/analysis question (10 marks) Complete the requirements below using the most recent financial statements available on Westfarmers website. Obtain the statements on the Internet by following the steps below. (The formatting of the company’s website may have changed since these instructions were written.) Go to https://www.wesfarmers.com.au/ . Click on the “Annual Report” link.Go to the company’s financial statements. Required What was the company’s net income in each of the last three years?What amount of total assets did the company have at the end of the most recent year?How much retained earnings did the company have at the end of the most recent year?For the most recent year, what was the company’s cash flow from operating activities, cash flow from investing activities, and cash flow from financing activities?Because of the diversity of users, their different levels of knowledge, the varying information needs for particular decisions, and the general nature of financial statements, a variety of analysis techniques have been developed.Explain the ratio method of analysis and how this technique appears to provide the most relevant information in a given situation in terms of the users, objectives, decisions and outcomes of the selected ratios. Discuss and calculate 4 ratios of your choice based on data extracted from the financial statements. Briefly explain the interpretation of the result. Question 2: Critical Analysis questions (5 Marks) Jemma Swanson was a trustworthy employee of Blue Trust Bank. She was involved in everything. She worked as a teller, accounted for the cash at the other teller windows, and recorded many of the transactions in the accounting records. She was so loyal that she never took a day off, even when very sick. She routinely worked late to see that all the day’s work was posted into the accounting records, and never took a day’s vacation because they might need her at the bank. Aron and Sarah, CPAs, were hired to perform an audit, the first complete audit that had been done in several years. Johnson seemed somewhat upset by the upcoming audit, saying that everything had been properly accounted for and that the audit was a needless expense. When Aron and Sarah examined some of the bank’s internal control procedures, the firm discovered problems. In fact, as the audit progressed, it became apparent that a large amount of cash was missing. Numerous adjustments had been made to customer accounts with credit memorandums, and many of the transactions had been posted several days late. In addition, there were numerous cash payments for “office expenses.” When the audit was complete, it was determined that more than $100,000 of funds was missing or improperly accounted for. All fingers pointed to Swanson. The bank’s president, who was a close friend of Swanson, was bewildered. How could this type of thing happen at this bank? Required Prepare a written memo to the bank president, outlining the procedures that should be followed to prevent this type of problem in the future. Question 3: Problem question (15 Marks) The trial balance of Ripple Security Services Ltd. as of January 1, Year 11, had the following normal balances: Cash$ 113,718Petty cash100Accounts receivable39,390Allowance for doubtful accounts4,662Supplies210Merchandise inventory (48 @ $300)14,400Equipment9,000Van27,000Building125,000Accumulated depreciation28,075Land25,000Sales tax payable390Employee income tax payable1,000FICA—Social Security tax payable840FICA—Medicare tax payable210Warranty payable918Unemployment tax payable945Notes payable—Building92,762Bonds payable50,000Discount on bonds payable800Common stock50,000Retained earnings124,816 During Year 11, Ripple Security Services experienced the following transactions: Paid the sales tax payable from Year 10.Paid the balance of the payroll liabilities due for Year 10 (federal income tax, FICA taxes, and unemployment taxes).Issued 5,000 additional shares of the $5 par value common stock for $8 per share and 1,000 shares of $50 stated value, 5 percent cumulative preferred stock for $52 per share.Purchased $500 of supplies on account.Purchased 190 alarm systems at a cost of $310. Cash was paid for the purchase.After numerous attempts to collect from customers, wrote off $3,670 of uncollectible accounts receivable.Sold 210 alarm systems for $600 each plus sales tax of 5 percent. All sales were on account. (Be sure to compute cost of goods sold using the FIFO cost flow method.)Billed $125,000 of monitoring services for the year. Credit card sales amounted to $58,000, and the credit card company charged a 4 percent fee. The remaining $67,000 were sales on account. Sales tax is not charged on this service.Replenished the petty cash fund on June 30. The fund had $10 cash and receipts of $75 for yard mowing and $15 for office supplies expense.Collected the amount due from the credit card company.Paid the sales tax collected on $105,000 of the alarm sales.Collected $198,000 of accounts receivable during the year.Paid installers and other employees a total of $96,000 for salaries for the year. Assume the Social Security tax rate is 6 percent and the Medicare tax rate is 1.5 percent. Federal income taxes withheld amounted to $10,600. No employee exceeded $127,200 in total wages. The net salaries were paid in cash.On October 1, declared a dividend on the preferred stock and a $1 per share dividend on the common stock to be paid to shareholders of record on October 15, payable on November 1, Year 11.Paid $1,625 in warranty repairs during the year.On November 1, Year 11, paid the dividends that had been previously declared.Paid $18,500 of advertising expense during the year.Paid $6,100 of utilities expense for the year.Paid the payroll liabilities, both the amounts withheld from the salaries plus the employer share of Social Security tax and Medicare tax, on $88,000 of the salaries plus $9,200 of the federal income tax that was withheld.Paid the accounts payable.Paid bond interest and amortized the discount. The bond was issued in Year 10 and pays interest at 6 percent.Paid the annual installment of $14,238 on the amortized note. The interest rate for the note is 7 percent. Adjustments There was $190 of supplies on hand at the end of the year.Recognized the uncollectible accounts expense for the year using the allowance method. Ripple now estimates that 1 percent of sales on account will not be collected.Recognized depreciation expense on the equipment, van, and building. The equipment, purchased in Year 8, has a 5-year life and a $2,000 salvage value. The van has a 4-year life and a $6,000 salvage value. The building has a 40-year life and a $10,000 salvage value. The company uses straight-line for the equipment and the building. The van is fully depreciated.The alarm systems sold in transaction 7 were covered with a one-year warranty. Ripple estimated that the warranty cost would be 2 percent of alarm sales.The unemployment tax on the three employees has not been paid. Record the accrued unemployment tax on the salaries for the year. The unemployment tax rate is 4.5 percent and gross wages for all three employees exceeded $7,000.Recognized the employer Social Security and Medicare payroll tax that has not been paid on $8,000 of salaries expense. Required Record the preceding transactions in general journal form. Round all amounts to the nearest whole dollar.Post the transactions to the T-accounts.Prepare a trial balance.Prepare an income statement, a balance sheet, and a statement of cash flows.Close the temporary accounts to retained earnings.Post the closing entries to the T-accounts and prepare a post-closing trial balance.
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