ACC201 - PRINCIPLES OF ACCOUNTING

TRIMESTER 1 2023

GROUP ASSIGNMENT
 ACC201 – Principles of Accounting
Group Assignment T1.2023

DATE April 2nd 2023

DURATION 3 hours
SECTION

• PART A 30 marks

• PART B 30 marks

• PART C 30 marks

• Presentation
• Calculation process 10 marks
• Assignment cover sheet

Important:
• Groups that found copying each other will receive zero for both groups.
• Late submissions will receive minus -20.

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 ACC201 – Principles of Accounting
Group Assignment T1.2023

PART A

At the end of the fiscal year December 31st 2022, Time2Clean Services prepared their financial reports
and discovered the following information:
1. Time2Clean’s Supplies account at December 31 are $210. During the year, $1,500 of Supplies
were purchased. On January 1st 2022, the account had a balance of $340.
2. 6 months rent period of $4,200 ending on March 1st, 2023 is due to be paid in April 2023.
3. Purchased $3,980 of new equipment in late December but debited to Utilities Expense instead.
4. Time2Clean paid for one-year fire insurance on September 30th, 2022 at $960. Previously, the
business also purchased a 2 years insurance policy for $2,400 on June 1st.
5. The Accumulated Depreciation on Machinery at December 31st, 2021 showed the balance of
$13,200. In 2022, the annual depreciation is estimated to be $4,400.
6. The business has five employees who earned $250 per day. Wages and salaries are paid every
two weeks on Friday for five days work week. The lastest payment was made on December
20th.
7. The Unearned Service Revenue account had $25,750 credit balance on January 1st, 2022. This
balance included $13,460 for the service expiring in June and $12,290 for the service expiring
in October.
On July 31st, the business received $4,800 from The Star for the services to be provided within
10 months. By the end of the year, only 40% of the work had not been performed.
On November 1st, the business received $1,260 from White Palace for the services lasting 3
months.
8. Time2Clean signed a note $21,000 on August 15th. The note is dued in 6 months with 8%
interest rate.

Instructions:

(a) Preparing necessary adjusting entries by the year ended December 31,2022.
(b) Post to T-accounts all related transactions above.

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 ACC201 – Principles of Accounting
Group Assignment T1.2023

PART B

Agler Company is considering buying a new truck for their delivery service in town. The cost of the
truck is estimated at $36,500. Agler Company prefers all their trucks have their company logo painted
on the side, so they agree to spend an additional $2,500 for this. In addition, to enable the organisation
of delivery packages, the company hires a mechanic to install shelving units, which is estimated at
$1,500. Agler Company expects the truck to last about 5 years, and to drive it for 200,000 miles. The
annual cost of vehicle insurance will be $2,400. Agler Company estimates that at the end of the 5-year
useful life the truck can be sold for $7,500. Assume that the truck is bought on August 1, 2022, and it
will be ready for use on September 1, 2022.

Agler Company is concerned about the impact of the truck’s cost on their income statement and
balance sheet. She has come to you for advice on calculating the truck’s depreciation.

Instructions

(a) Determine the cost of the truck.

(b) Prepare three depreciation tables for the next 3 years - 2022, 2023 and 2024: one for straight-
line depreciation, one for double-declining balance depreciation, and one for units-of-activity
depreciation. For units-of-activity, Agler Company estimates she will drive the truck as
follows: 15,000 miles in 2022; 45,000 miles in 2023; 50,000 miles in 2024; 50,000 miles in
2020; and 40,000 miles in 2021. Recall that Agler Companys has a December 31 year-end.
(c) What impact will the three methods of depreciation have on Agler Company’s balance sheet at
December 31, 2022? What impact will the three methods have on Agler Company’s income
statement in 2022?
(d) What impact will the three methods of depreciation have on Agler Company’s income
statement over the truck’s total 5-year useful life?
(e) What method of depreciation would you recommend Agler Company use?

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 ACC201 – Principles of Accounting
Group Assignment T1.2023

PART C

Financial statements of WSU Ltd. are presented below. Prepare a statement of cash flows for WSU Ltd
for 2022 using indirect method.

WSU Ltd.
Income Statement
For the year ended 31 December 2022
$’000 $’000
Revenue 272
Cost of sales
Opening inventory 16
+ Inventory purchase 147
-Closing inventory (20) 143
Gross profit 129
Expense
Wages and salaries (16)
Interest expense (7)
Depreciation expense (8)
Other expense (9) (40)
Interest received 1
Net income before tax 90
Tax (26)
Net income after tax 64

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 ACC201 – Principles of Accounting
Group Assignment T1.2023

WSU Ltd.
Comparative Balance Sheet
2022 2021
$’000 $’000
Current assets
Cash 11 2
Accounts Receivable 50 56
Inventory 20 16
Prepaid expenses 9 11
90 85
Non-current assets
Land and buildings 129 97
Plant and machinery at cost 216 203
Less: Accumulated depreciation 51 43
165 160
294 257
Total assets 384 342
Current Liabilities
Accounts Payable 36 62
Income Tax Payable 26 18
Accrued expenses 10 8
72 88
Non-current Liabilities
Loan 125 118
Equity
Paid-up ordinary capital 133 123
Retained earnings 54 13
187 136
Total Liabilities and equity 384 342

The notes from the financial statements reveal that:

- There were no disposals of land, plant or machinery.
- There was a new share offer of $10 000.
- A new long-term loan of $15 000 was taken out,
- Existing long-term loan of $10 000 was paid.
- A dividend of $21 000 was proposed.

THE END

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