MAA103 Accounting for Decision Making:Service Revenue

Question 1 (6 marks)
Ink Spill, a printing company, provides printing services to its customers. Customers normally pay for printing services in advance. In October 2020, Ink Spill received $20,000 from customers for services to be provided in November 2020. A senior accountant at Ink Spill wants to record the full amount as a liability in the company’s Balance Sheet at the end of October 2020.

Required:

Question 2 (3 + 1 = 4 marks)
Dark Room is a business servicing film photographers. In November 2021, Dark Room will be paying $12,000 to cover six months of various expenses between November 1, 2021 and April 30, 2022 and receiving $18,000 from a client for services to be delivered over the following twelve months between November 1, 2021 and October 31, 2022.

Required:
Calculate the monthly expenses, service revenue and profit/loss of Dark Room for the months of November 2021 and December 2021 under both cash and accrual accounting using the table below. Ignore GST.   (3 marks)

Question 3 (4 marks)
A manager at Stalemate, a chess business retailing chess boards and providing chess lessons, requires help with interpreting some of the accounting transactions that took place during the month of September 2021. The manager has provided you with a list of those transactions below.

Question 4 (2 + 3 = 5 marks)
Piece of Time is a manufacturer of wrist watches and relies heavily on advertising to promote its products. Its partially filled Prepaid Advertising account below is missing an additional $44,000 (GST-inclusive) prepaid in cash for advertising by Piece of Time on July 8, 2021 and the recognition of advertising expense for the month of July 2021.

Question 5 (6 marks)
Hill Riders is a local bicycle shop retailing and servicing mountain bikes. The following information pertains to the business for the month of August 2021.

1.On August 1, Hill Riders purchased additional equipment for $15,400 (GST-inclusive). The equipment was delivered on August 1 and the business paid 30% of that amount on the same day. Hill Riders paid the remaining amount on August 20.

2.Hill Riders started using equipment purchased on August 1 from the day of purchase. The management believes the equipment will last for five years. By the end of August 2021, no depreciation on that equipment had been recorded for the month.

3.Hill Riders received $16,500 (GST-inclusive) on July 29, 2021 for bike servicing to be provided in August 2021. By the end of August 2021, all services had been provided.

4.At the end of July 2021, Hill Riders recorded gross wages of $12,000 of which $3,300 was a PAYG withholding. The rest was payable to employees. On August 5, Hill Riders paid the outstanding amount to employees from the July transaction.

Question 6 (7 + 1 = 8 marks)
Porcelain is a manufacturer of ceramic products. Its management has provided the following accounts and their adjusted closing balances for the year ending June 30, 2021. The net loss for the year ending June 30, 2021 is $700.

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Tellus molestie nunc non blandit massa enim nec dui. Tellus molestie nunc non blandit massa enim nec dui. Ac tortor vitae purus faucibus ornare suspendisse sed nisi. Pharetra et ultrices neque ornare aenean euismod. Pretium viverra suspendisse potenti nullam ac tortor vitae. Morbi quis commodo odio aenean sed. At consectetur lorem donec massa sapien faucibus et. Nisi quis eleifend quam adipiscing vitae proin sagittis nisl rhoncus. Duis at tellus at urna condimentum mattis pellentesque. Vivamus at augue eget arcu dictum varius duis at. Justo donec enim diam vulputate ut. Blandit libero volutpat sed cras ornare arcu. Ac felis donec et odio pellentesque diam volutpat commodo. Convallis a cras semper auctor neque. Tempus iaculis urna id volutpat lacus. Tortor consequat id porta nibh.

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Hac habitasse platea dictumst vestibulum rhoncus est pellentesque. Amet dictum sit amet justo donec enim diam vulputate ut. Neque convallis a cras semper auctor neque vitae. Elit at imperdiet dui accumsan. Nisl condimentum id venenatis a condimentum vitae sapien pellentesque. Imperdiet massa tincidunt nunc pulvinar sapien et ligula. Malesuada fames ac turpis egestas maecenas pharetra convallis posuere. Et ultrices neque ornare aenean euismod. Suscipit tellus mauris a diam maecenas sed enim. Potenti nullam ac tortor vitae purus faucibus ornare. Morbi tristique senectus et netus et malesuada. Morbi tristique senectus et netus et malesuada. Tellus pellentesque eu tincidunt tortor aliquam. Sit amet purus gravida quis blandit. Nec feugiat in fermentum posuere urna. Vel orci porta non pulvinar neque laoreet suspendisse interdum. Ultricies tristique nulla aliquet enim tortor at auctor urna. Orci sagittis eu volutpat odio facilisis mauris sit amet.

Tellus molestie nunc non blandit massa enim nec dui. Tellus molestie nunc non blandit massa enim nec dui. Ac tortor vitae purus faucibus ornare suspendisse sed nisi. Pharetra et ultrices neque ornare aenean euismod. Pretium viverra suspendisse potenti nullam ac tortor vitae. Morbi quis commodo odio aenean sed. At consectetur lorem donec massa sapien faucibus et. Nisi quis eleifend quam adipiscing vitae proin sagittis nisl rhoncus. Duis at tellus at urna condimentum mattis pellentesque. Vivamus at augue eget arcu dictum varius duis at. Justo donec enim diam vulputate ut. Blandit libero volutpat sed cras ornare arcu. Ac felis donec et odio pellentesque diam volutpat commodo. Convallis a cras semper auctor neque. Tempus iaculis urna id volutpat lacus. Tortor consequat id porta nibh.