HI5001: Urban Consulting, a building consulting firm has just started its business The owner of the firm engaged you to prepare yearly financial statements: Accounting for Business Decisions Assignment, HI, Australia

Question 1 

Urban Consulting, a building consulting firm has just started its business. The owner of the firm engaged you to prepare yearly financial statements for their first year ended 30 June 2020 on both the cash basis and the accrual basis. You have been provided with the following selected data for the year.

1. During the year, cash payments of $174,900 were made for salaries and other expenses incurred during the period.
2. Salaries owing to employees but not yet paid amount to $6,600.
3. Insurance of $9,900 that will cover the next financial year was prepaid on 30 June.
4. During the year, a total of $206,250 consulting fees was collected for services provided.
5. There were $13,200 in receivables on 30 June 2020 for services performed on credit.
6. On 20 June 2020, a client paid $4,950 in advance for services to be rendered during the next financial year.

Question 2  

Chris Ting owns a financial planning advisory business operating under the name High Wealth. The firm prepares financial statements every month. The unadjusted trial balance of High Wealth as of 30 April 2021 is shown below (ignore GST).

1. On 30 April, a physical count showed office supplies totaling $6,500 were still on hand.
2. Insurance that covers 1 year was purchased on 1 April 2021.
3. When the building was purchased, its useful life was estimated to be 25 years with a residual value of $2,000 at the end of its useful life. The estimation has not changed. The straight-line method is used.
4. The amount of the unearned service revenue represents pre-collected fees from clients for services to be performed. 20% of the services have been performed in April.
5. On 15th April, High Wealth signed an agreement to provide financial planning services to a client for a monthly fee of $1,200. It has been agreed that the fee is to be received on the 15^th day of the following month. The service for the month of April was performed before 30 April. No entry was recorded when the agreement was signed.
6. Interest for a 5-year bank loan is to be paid at the end of each financial year ending 30 June. Interest on bank loans is 8% per annum.