50.1K

Verified Solution

Link Copied!

The accountant for Hobart Future Group Ltd prepared an aged analysis of accounts receivable balances at $30$ June $2023.$ The percentages of each age group are based on historical analysis and are presented in the table below. Ignore GST$.$

It is company policy to use the allowance method to account for bad debts.

Age Estimated uncollectable $(\%)$ Balance

Current $0\mathrm{.}5$ $$900900$

$30-60$ days overdue $2$ $$257400$

$61-120$ days overdue $10$ $$64350$

$121$ days to $6$ months overdue $20$ $$77220$

Over $6$ months overdue $40$ $$51480$

a$.$ Calculate the estimated amount for the allowance for doubtful debts as at $30$ June $2023.$

b$.$ Tasmanian Printers and Bookbinders Pty Ltd commenced business on $1$ July $2023.$ On $5$ July $2023$ it spent $$150000$ on industrial printing and binding machinery, payable in two equal instalments on $1$ August and $1$ November $2023.$ They incurred $$4500$ in transport costs to deliver the machinery to the business premises and a further $$5000$ in electrical wiring and installation before the machinery could be used for production. These expenses were paid in cash. The supplier informed management the machinery has a productive capacity of $600000$ hours. It is estimated the residual value would be $$10000$ in scrap metal at the end of the machinery$$s useful life.

On $30$ August $2023,$ the business purchased a second$-$hand truck for $$35000$ for deliveries. Stamp duty amounted to $$1050.$ Four new tyres were fitted at a cost of $$1200$ to meet roadworthy conditions. The truck was expected to have a useful life of $5$ years and a residual value of $$5000.$

The company has adopted the units of production method of depreciation for the printing and binding machinery and the diminishing balance method for the truck. The end of its reporting period is $30$ June. Ignore GST$.$

Required

I. Calculate the depreciation expense for the financial years $202324$ and $2024-25$ for printing and binding machinery using:

$$ units of production $($assuming the production totalled $74000$ hours in $2023-24$ financial year and $70000$ hours in $2024-25$ financial year$).$

$[4$ marks$]$

II$.$ Calculate the depreciation expense for the financial years $202324$ and $2024-25$ for truck using:

$$ diminishing or reducing balance $($assuming diminishing balance rate to be $33\%)$

c$.$ The personal training business owned by Joe Cheng made the following cash transactions during the reporting period.

$$ purchased equipment, $$13200$

$$ cash received for services, $$26400$

$$ paid wages, $$5280$

$$ paid rent, $$8000$

$$ cash received for services, $$39600.$

Required

Prepare a statement of cash flows using the direct method for the business for the period.

Answer & Explanation Solved by verified expert

See Answer