MPA702-Business and Law Review Writing – Accounting and Finance Assignment Help

Task

Question 1.

The following accounts for the financial period ending 30 June 2022 have been provided by Happy Pets, a wholesale of pet food products:

Additional information:

The following items are the incurred expenses not recorded by 30 June 2022:

· Electricity expense is $2,000.

· Plant & Equipment is depreciated using the straight-line method. The useful life is 6 years and the residual value at the end of the useful life is $8,640.

· Motor Vehicles are depreciated using the straight-line method. The useful life is 5 years and there is no residual value.

· Computer equipment is depreciated at 30% reducing balance.

· Ignore PAYG and Income Tax.

Required:

i. How much is profit (Loss) for the period?

ii. Prepare the balance sheet as at 30 June 2022.

iii. Ms Kumar, the accountant of Happy Pets, estimates that at 30 June 2022 the net realisable value of Inventory is $130,000. Should the value of inventory in the balance sheet be changed? Explain your answer.

Question 2.

Ms Marple is considering acquiring a small business located in the high street of her neighbourhood. The business has very loyal customers and a strong reputation for high quality service. Her financial adviser has obtained the balance sheet of the small business but advises Ms Marple not to use the balance sheet figures to estimate the business’ purchase price.

Required:

i. Explain the meaning and purpose of the balance sheet.

ii. Explain why there might be a difference between a business’ market value and the value of the net assets in the balance sheet.

Question 3.

Fox Mulder, the owner of Mulder Removal, bought a new truck for his removal business. Costs incurred are listed below:

Fox has been advised to use the “unit of production” method of depreciation as the basis for determining the new truck’s depreciation expense. He estimates that the expected kilometres over the truck’s useful life are 500,000 kilometres, and a residual value of $10,000.

Required:

i. Calculate the depreciation charge for 80,000 km of use in year 1.

ii. Calculate the depreciation charge for 100,000 km of use in year 2.

iii. Calculate the accumulated depreciation balance at the end of year 2.

Question 4. 

a. The following budgeted sales and purchases data have been compiled for the preparation of the cash budget for Zenith Pty Limited for July 2021:

Additional Information:

· 90% of sales are sales on credit and 10% are cash sales.

· Cash collections from credit customers are as follows:

• 70% in the month following the sale

• 20% two months after the sale

• 10% three months after the sale.

· All purchases are made on credit and payments are made as follows:

• 20% of purchases are paid for in the month of purchase

• 80% of purchases are paid for in the month following the purchase.

· Equipment costing $50,000 is expected to be bought in June and paid for in July.

· A loan of $60,000 will be taken out in July 2021 to allow for business expansion to be undertaken over the next few months.

· Selling and distribution expenses are $40,000 per month. General and administrative expenses are $35,000 per month. This includes $3,000 per month for assets depreciation expense. Expenses are paid in the month they are incurred.

· The cash balance on 1st July 2021 is expected to be $14,000.

Required:

a. Prepare a cash budget for the month of July 2021.

b. Briefly explain if comparison between budget and actual results might help in the improvement of future budgeting.

Question 5. 

a. Taylor Pty Ltd provides you with the following information in relation to budget predictions for the coming year for its new product:

Required (show your calculations):

i. Calculate the breakeven point in units.

ii. Calculate the expected profit from the estimated sales.

iii. Calculate the expected sales dollars needed to make a profit of $506,000

iv. Fixed costs have increased by $28,000 and variable costs have increased by $4 per unit. Management has decided to maintain the selling price at its current value. By how many units will sales volume have to increase from the current estimated sales projection to achieve the same profit of $506,000?

b. CVP analysis appears to be a great tool. It is, however based on several assumptions. Identify and briefly explain two assumptions.

Question 6. 

Food for Healthy Eating Ltd has three divisions, Cereal, Dried Fruit, and Health Snacks. The current level of investments and operating profits by each division are as follows:

Required:

i. Compute the Return on Investment (ROI) for each division.

ii. Compute the Residual Income (RI) for each division. Food for Health Eating Ltd requires a minimum rate of return of 8%.

iii. Under what type of situation would return on investment (ROI) be a better performance measure than residual income and vice versa?

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