FNSORG505: Preparation of Financial Reports to Meet Statutory Requirements - Finance Assessment Answer

TASK

QUESTION 1: The Corporations Act 2001 requires that a company keep certain types of statutory records. What are they?

QUESTION 2: Explain the nature of accounting standards and their workings and benefits.

QUESTION 3: What is a Prospectus? What is its function?

QUESTION 4: Why would a company establish a reserve? What types of reserves may be established and where do the funds come from?

QUESTION 5: Distinguish between a reserve and provision.

QUESTION 6: Fanta Ltd has paid the following PAYG tax installments for the year ended 30 June:

September quarter $11,000
December quarter $11,000
March quarter $11,000
June quarter $11,000
Total $44,000
Taxable income for the year ended 30 June, was $168,000. Company tax rate is 30%.
Required: Prepare general journal entries to record the company’s income tax instalments and final payment.

QUESTION 7: Grotto Ltd has already sent $19,600 to the ATO in respect to PAYG, and this figure shown as a debit in the Income Tax Expense account.
The Profit and Loss account is then prepared and the Net Profit (before tax) is found to be $75,000. The current company tax rate is 30%.
Required: Prepare general journal entries for the following
a) Correct the Income Tax Expense account
b) Close the Income Tax Expense account
c) Transfer Net Profit (after tax) to Retained Earnings

QUESTION 8: Using the following information for the year ended 30 June, prepare the Retained Earnings Account for Kramer Ltd.

Retained earnings as at 1 July $450,000
Transfer from Dividend Equalisation Reserve $200,000
Operating Profit (before income tax expenses $270,000) $900,000
Create a provision for dividend of 15 cents per share. There are 7,500,000 shares issued.

QUESTION 9: What do consolidated financial statements represent?

QUESTION 10: Bonoo Limited acquired 100% of the issued capital of Wonoo Limited on 1 July 2011 for $85,000. At that date the shareholders the shareholders’ equity of Wonoo Limited was
Share capital $60,000
Reserves      $15,000
Retained Earnings $10,000

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