| University | Massey University (MU) |
| Subject | 110109 Introductory Financial Accounting |
110109 Assessment 3 Brief
To enable your assessment to be marked, you must NOT alter the templates in any way that compromises the columns dedicated to marking and the formulas in these columns that add back to the mark sheet, which are coloured green.
You are advised to use formulas to pull data from one sheet to another, but this is not a requirement for this assessment, and using formulas will not attract any marks.
Assessment 3 contributes 15% towards your final grade. It consists of two (2) questions: Q1: Accounting Cycle, Q2: Cash Flow Statement.
Assessment 3 covers material from weeks 1 to week 8 inclusive and mainly relates to the following learning outcomes:
- Identify, measure, record and communicate economic transactions and events of commercial enterprises’ operations using fundamental accounting concepts, including the double entry accounting system.
- Apply basic measurement theory, principles and concepts of accounting, to the valuation of assets.
Before attempting this assessment, it is strongly recommended that you read both these instructions and the assessment details thoroughly. Please also reread the sections in the Course Guide covering Assessment 3 for information on submitting assessment 3 and such issues as extensions, marks, and feedback etc. You should also study the relevant material in the text and make sure you understand the concepts covered by practicing the weekly review and workshop questions.
Please feel free to keep in touch with the 110.109 team regarding this assessment, preferably through the assessment forum. That way all students benefit and often we have found that the best way of learning is through discussion with your peers as well as teaching staff. Please remember that all 110.109 assessments must be your own work and are at individual, not group level. Discussion on STREAM or in study groups is fine but comparing or suggesting answers as opposed to concepts may lead to marks being deducted to the extent of receiving zero marks if answers are too similar. Therefore, please do NOT discuss your answers or ask public queries with suggested answers. If you are unsure about this issue, you are welcome to use the confidential dialogue.
Although there are a large number of students with whom the teaching staff and myself are involved in Summer School, that does not mean that you are not each individually very important to us. We value each student and will try to provide appropriate guidance to the best of our ability.
Christelle Roos on behalf of 110.109 teaching team
Question 1: Accounting Cycle
Taylor Ltd began its operations on 1 August 2024. The trial balance at 31 July 2025 is as follows:
Taylor Ltd
Unadjusted Trial Balance as at 31 July 2025
|
Account Title |
Debit
$ |
Credit
$ |
| Cash at Bank | 69,000 | |
| Accounts Receivable | 105,000 | |
| Inventory | 24,000 | |
| Supplies (asset) | 7,500 | |
| Prepaid Insurance | 720 | |
| Equipment (cost) | 150,000 | |
| Vehicle (cost) | 210,000 | |
| Buildings | 420,000 | |
| Accounts Payable | 62,640 | |
| Bank Loan: ANZ (10% interest p.a.) | 151,200 | |
| Share Capital | 611,520 | |
| Sales | 549,300 | |
| Cost of Goods Sold | 246,000 | |
| Electricity Expense | 7,200 | |
| Insurance Expense | 7,920 | |
| Interest Expense | 11,220 | |
| Salaries Expense | 88,500 | |
| Telephone Expense | 6,300 | |
| Selling Expense | 21,300 | |
| 1,374,660 | 1,374,660 |
Additional data as at 31 July 2025:
(a) Supplies on hand at 31 July 2025 total $1,000.
(b) The annual insurance premium of $8,640 was paid on the 1 August 2024.
(c) A telephone bill for $540 for July was received from Vodafone and is payable on 10 August 2025. It has not been included in the accounts yet.
(d) Salaries of $15,000 are owed at 31 July 2025.
(e) No depreciation has been charged during the year. Depreciation is to be charged at the following rates:
- Equipment: The straight-line method at a rate of 10% is used for all the equipment. Note: $90,000 worth of equipment was bought on 1 August 2024; the other equipment was bought on 1 April 2025 at a cost of $60,000.
- Vehicle: The company vehicle was bought on 31 October 2024 with a useful life of 5 years. The estimated residual value is $66,000. The straight-line depreciation method is used for the vehicle.
(f) Interest is due on the loan for the month of July 2025 only. (Interest is calculated on a monthly basis but not compounded and is paid on the 10th of the following month.) Note: The loan was taken out on 1 August 2024 for five years. The principal of the loan will be paid at the end of the loan term.
(g) All profits will be retained at the end of the year.
Required:
For the purpose of this question, please ignore GST, Income Tax and PAYE. Show ALL your workings.
i. Journalise the adjusting entries on 31 July 2025. Narrations are required.
(28 marks)
ii. Complete the Worksheet for the year ended 31 July 2025.
(9 marks)
iii. Prepare an Unclassified Statement of Profit or Loss and Comprehensive Income for Taylor Ltd for the year ended 31 July 2025. Your answer should clearly identify Gross Profit.
(8 marks)
iv. Prepare a Statement of Changes in Equity, for Taylor Ltd for the year ended 31 July 2025.
(4 marks)
v. Prepare a Classified Statement of Financial Position for Taylor Ltd for the first financial year ended 31 July 2025.
(9 marks)
[Total 58 marks]
Question 2: Statement of Cash Flows
Hansen Ltd
Comparative Balance Sheets as at 31 December
| 2025 | 2024 | ||
| Assets | $ | $ | |
| Cash at bank | 216,000 | 105,000 | |
| Accounts receivable (net) | 255,000 | 159,000 | |
| Inventory | 360,000 | 396,000 | |
| Prepaid expenses | 57,000 | 75,000 | |
| Investments | 270,000 | 225,000 | |
| Plant and equipment | 930,000 | 750,000 | |
| Accumulated depreciation – plant and equipment | (195,000) | (180,000) | |
| Total Assets
|
1,893,000 | 1,530,000 | |
| Liabilities and Shareholders’ Equity | |||
| Accounts payable | 279,000 | 225,000 | |
| Expenses payable | 87,000 | 72,000 | |
| Income Tax Payable | 24,000 | 22,000 | |
| Interest Payable | 26,000 | 33,000 | |
| Notes Payable | 390,000 | 480,000 | |
| Share capital | 685,000 | 455,000 | |
| Retained earnings | 402,000 | 243,000 | |
| Total Liabilities and Shareholders’ Equity | 1,893,000 | 1,530,000 |
Hansen Ltd
Income Statement for the year ended 31 December 2025
| Description | Amount ($) |
|---|---|
| Sales | 1,440,000 |
| Cost of Sales | (870,000) |
| Gross Profit | 570,000 |
| Expenses: | |
| Operating Expense (excluding depreciation) | 180,000 |
| Depreciation | 51,000 |
| Interest Expense | 54,000 |
| Loss on Sale of Plant Assets | 9,000 |
| Total Expenses | 294,000 |
| Profit Before Tax | 276,000 |
| Income Tax Expense | (45,000) |
| Profit After Tax | 231,000 |
The following additional information was provided:
(a) All sales and purchases were on account.
(b) Accounts payable pertain to inventory creditors.
(c) A cash dividend was paid to shareholders during the year.
(d) Additional plant costing $255,000 were purchased for cash during the year. The old plant was sold for cash.
(e) Notes with a face value of $90,000 were converted into $90,000 of ordinary shares.
(f) Additional shares were also issued for cash during the year.
(g) Income tax and interest were settled in cash.
Required:
For the purpose of this question, please ignore GST. Show all your workings.
i. Prepare a cash flow statement for Hansen Ltd for the year ended 31 December 2025 using the direct method.
(29 marks)
ii. Prepare a reconciliation of net profit after tax to net cash provided from operating activities.
(13 marks)
[Total 42 marks]
Total Marks for Assessment 3 = 100 Marks
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