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Assessment 2

Accounting for Business Decisions HI5001 Note: This assignment carries 30% weightage. Students not to worry about the marks

shown in each section as the marks shown in each section are to help the lecturers mark.

Due Date: Week 10 before 5.00 pm.

Group Assignment is divided into 2 Sections: Section A and Section B.

Each with 15% marks with a total of 30%. Students are advised to use

Microsoft Excel wherever necessary.

Section A.

Requires a group to undertake some research, the assignment aims to develop understanding of

financial statements and their use in decision-making.

The task is to analyse and compare 2 publicly listed companies specifically in the same industry,

(use ASXs website to select a company) and be able to understand the structure of financial

statements.

1) The group needs to give a general overview of the company regarding its Mission Statement, Vision Statement and business structure. (9 marks)

2) Review (Compare) the Last 2 years balance sheet (pref: 2011 and 2010) of the 2 companies and indicate the following: (3 marks)

The amount of total current assets The amount of The amount of total current liabilities The amount of The amount of total stockholders equity

3) Review the most recent years(pref: 2011 and 2010) income statement and indicate the following: (3 marks)

total (operating) revenues

cost of goods sold (if listed)

total expenses (before income taxes)

any non-operating (or extraordinary) gains and losses; and

Earnings per common share.

4) Review the statement of cash flows for the most recent year (pref: 2011 and 2010) and indicate the following: (3 marks)

net cash inflow (outflow) from operating activities;

net cash inflow (outflow) from financing activities;

net cash inflow (outflow) from investing activities; and

net increase (decrease) in cash during the year.

5) With the information collected from Balance Sheet, Profit and Loss Statement, and cash flow Statement. Conduct a Horizontal Analysis (within) of each company. Identify the Variance

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and write a variance report for each of them (Balance Sheet, Profit and Loss Statement, and

cash flow Statement). (20 marks)

6) With the information collected from Balance Sheet, Profit and Loss Statement. Conduct a Vertical analysis of the last year 2011 of each company and compare and report on items

mentioned in both the reports. (12 marks).

Section B: Q1

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The following transactions occurred in Canberra limited in 2011.

1. Issue share capital for $200,000 cash.

2. Purchased $35,000 of inventory on credit

3. Paid $28,000 to Accounts Payable

4. Sold Inventory costing $60,000 for @270,000. All sales are on Credit.

5. Collected $52,000 from Customers

6. Prepaid $12,000 rent for the year commencing 1 January 2011.

7. Depreciated property and equipment for the year using the straight line method (20 per

cent per annum).

8. Dividends declared and paid totalled $30,000

9. Borrowed $100,000 on 1 st

July 2010. The loan is due on 30 June 2012 and carries a 10%

interest rate. Paid $4,000 interest on this Loan during 2011.

10. On 1 st

of November paid $24,000 for an insurance policy covering 1 st

November 2010 to 31 st

October 2011.

11. Paid wages of $90,000; wages of $20,000 had been earned but not paid.

12. Received interest of $5000 in cash from the bank.

On 31 st

December 2011:

1. The unearned revenue account had a balance of $5000

2. Accrued interest revenue had a balance of $2000.

REQUIRED:

1. Prepare journal entries for the above transactions. (10 marks)

2. Prepare Ledgers (10 marks)

3. Prepare closing Entries (10 marks)

4. Prepare a 10 Column worksheet. (10 marks)

5. Prepare an Income Statement and balance sheet for Canberra Limited for the year ending

31 st

December 2012. (10 marks)

General Rules and Requirements:

For Section A the report should be prepared by a small group (with a maximum of three to four

members) with the contribution of each member specified on the reports title page. Reports must

be confined to 3,000 words (+/- 5%). A title page, table of contents page (based on your report

headings), introduction, conclusion and list of the references actually cited should accompany your

report. Font type should be Arial (size 11), paragraph spacing should be equal to 1.5.

Note: any additional material from external sources that you paste into your report is NOT

included in the word limit. Also, ensure it is appropriately referenced.

Dont forget to upload onto Safe assign, one copy per group (do not upload

more than one copy). Also, one hard copy to be handed to the lecturer before

the schedule time as mentioned above.

Due Date: Week 10 before 5.00 pm.