Questions

MCD2150 Accounting for Managers - Trimester 1 - 2025

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Question text A friend who owns a small bookstore business named "Amazing Read". The friend knows that you are studying accounting, and has asked if you would help prepare the entity’s classified balance sheet statement and an income statement. To perform this task, the friend has provided you with the following list of items generated from the transactions for the year. You are required to classify each item and select the report in which the item will be presented [table] Item | $ | Classification | Report Accumulated depreciation | 6600 | Answer 1 Question 1 Current AssetNon Current AssetCurrent LiabilityNon Current LiabilityOwners EquityRevenueExpense | Answer 2 Question 1 Income StatementBalance Sheet 5 year bank loan | 124000 | Answer 3 Question 1 Current AssetNon Current AssetCurrent LiabilityNon Current LiabilityOwners EquityRevenueExpense | Answer 4 Question 1 Income StatementBalance Sheet Amounts owing to employees | 5600 | Answer 5 Question 1 Current AssetNon Current AssetCurrent LiabilityNon Current LiabilityOwners EquityRevenueExpense | Answer 6 Question 1 Income StatementBalance Sheet Amounts owing to family | 46000 | Answer 7 Question 1 Current AssetNon Current AssetCurrent LiabilityNon Current LiabilityOwners EquityRevenueExpense | Answer 8 Question 1 Income StatementBalance Sheet Bank | 28900 | Answer 9 Question 1 Current AssetNon Current AssetCurrent LiabilityNon Current LiabilityOwners EquityRevenueExpense | Answer 10 Question 1 Income StatementBalance Sheet Book inventory | 68000 | Answer 11 Question 1 Current AssetNon Current AssetCurrent LiabilityNon Current LiabilityOwners EquityRevenueExpense | Answer 12 Question 1 Income StatementBalance Sheet Capital | 32380 | Answer 13 Question 1 Current AssetNon Current AssetCurrent LiabilityNon Current LiabilityOwners EquityRevenueExpense | Answer 14 Question 1 Income StatementBalance Sheet Cash sales | 145800 | Answer 15 Question 1 Current AssetNon Current AssetCurrent LiabilityNon Current LiabilityOwners EquityRevenueExpense | Answer 16 Question 1 Income StatementBalance Sheet Cash withdrawn by owner | 18000 | Answer 17 Question 1 Current AssetNon Current AssetCurrent LiabilityNon Current LiabilityOwners EquityRevenueExpense | Answer 18 Question 1 Income StatementBalance Sheet Cost of books sold | 89020 | Answer 19 Question 1 Current AssetNon Current AssetCurrent LiabilityNon Current LiabilityOwners EquityRevenueExpense | Answer 20 Question 1 Income StatementBalance Sheet Cost of catalogues used | 4500 | Answer 21 Question 1 Current AssetNon Current AssetCurrent LiabilityNon Current LiabilityOwners EquityRevenueExpense | Answer 22 Question 1 Income StatementBalance Sheet Depreciation | 6800 | Answer 23 Question 1 Current AssetNon Current AssetCurrent LiabilityNon Current LiabilityOwners EquityRevenueExpense | Answer 24 Question 1 Income StatementBalance Sheet Insurance premium prepaid | 14700 | Answer 25 Question 1 Current AssetNon Current AssetCurrent LiabilityNon Current LiabilityOwners EquityRevenueExpense | Answer 26 Question 1 Income StatementBalance Sheet Maintenance of website | 5400 | Answer 27 Question 1 Current AssetNon Current AssetCurrent LiabilityNon Current LiabilityOwners EquityRevenueExpense | Answer 28 Question 1 Income StatementBalance Sheet Marketing costs | 12500 | Answer 29 Question 1 Current AssetNon Current AssetCurrent LiabilityNon Current LiabilityOwners EquityRevenueExpense | Answer 30 Question 1 Income StatementBalance Sheet Sales of book related products | 38000 | Answer 31 Question 1 Current AssetNon Current AssetCurrent LiabilityNon Current LiabilityOwners EquityRevenueExpense | Answer 32 Question 1 Income StatementBalance Sheet Shelving and display cabinets | 23000 | Answer 33 Question 1 Current AssetNon Current AssetCurrent LiabilityNon Current LiabilityOwners EquityRevenueExpense | Answer 34 Question 1 Income StatementBalance Sheet Shop rental | 24000 | Answer 35 Question 1 Current AssetNon Current AssetCurrent LiabilityNon Current LiabilityOwners EquityRevenueExpense | Answer 36 Question 1 Income StatementBalance Sheet Wages paid | 26000 | Answer 37 Question 1 Current AssetNon Current AssetCurrent LiabilityNon Current LiabilityOwners EquityRevenueExpense | Answer 38 Question 1 Income StatementBalance Sheet [/table]Please answer all parts of the question.

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We are given a list of items from Amazing Read’s year-end transactions and asked to classify each item as a financial statement item (Current Asset, Non Current Asset, Current Liability, Non Current Liability, Owners Equity) and indicate the report (Balance Sheet or Income Statement) on which the item would appear. For clarity, I will go item by item, noting the type of account and where it typically appears, and then comment on the provided classifications/reports when appropriate. Throughout, I’ll also call out common misclassifications and why they’re incorrect. 1) Accumulated depreciation – 6600 - Typical classification: This is a contra-asset account that reduces a non-current asset (such as property, plant, and equipment) on the balance sheet. It is not a standalone asset. - Correct report: Balance Sheet (as a deduction from the related long-term asset, not on the income statement). - Why the given option (Non Current Asset / Balance Sheet) is partly correct in report, but misleading in classification: It should be under Non Current Asset as a contra-asset? Conventionally it's shown as a separate contra-asset line under Property, Plant and Equipment on the Balance Sheet. So the item is conceptually linked to Non Current Asset, but the exact presentation is as a contra-asset reducing the asset, not an asset itself. 2) 5 year bank loan – 124000 - Classification: This is a liability (a loan payable) and, since it is due over more than one year, it is a Non Current Liability. - Report: Balance Sheet. - The provided option (Non Current Liability / Balance Sheet) aligns with standard practice. 3) Amounts owing to employees – 5600 - Classification: This is typically a liability arising from unpaid wages/salaries; if they are due within the next year, it’s a Current Liability. If it’s long-term, it would be Non Current. Based on usual payroll timing, it is a Current Liability. - Report: Balance Sheet. - The given entry (Current Liability / Balance Sheet) matches standard treatment. 4) Amounts owing to family – 46000 - Classification: This would be a liability if the firm owes money to related parties; typically treated as a current liability if pay......Login to view full explanation

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