Essay on Final Exam

Monash University
Semester One Examination 2013
Faculty of Business and Economics
Department of Accounting and Finance

EXAM CODES: AFX9500
TITLE OF PAPER: INTRODUCTORY ACCOUNTING
EXAM DURATION: 3 hours
READING TIME: 10 minutes

THIS PAPER IS FOR STUDENTS STUDYING AT: (office use only - tick where applicable)

 Berwick  Clayton  Peninsula  Distance Education  Other (specify)
 Caulfield  Gippsland  Sunway  Open Learning

During an exam, you must not have in your possession, a book, notes, paper, calculator, pencil case, mobile phone or any other material/item which has not been authorised for the exam or specifically permitted as noted below. Any material or item on your desk, chair or person will be deemed to be in your possession. You are reminded that possession of unauthorised materials in an exam is a disciplinable offence under Monash Statute 4.1.

AUTHORISED MATERIALS

CALCULATORS  YES  NO
(If YES, only calculators with an 'approved for use' Faculty label are permitted)

OPEN BOOK  YES  NO

SPECIFICALLY PERMITTED ITEMS  YES  NO if yes, items permitted are:

This paper consists of Part A and Part B printed on a total of 18 pages.
Part A consists of twenty (20) multiple-choice questions worth a total of 20 marks. Multiple choice questions must be answered on the answer sheet provided on Page 17. Part B consists of seven (7) questions worth a total of 80 marks.
Students must attempt to answer ALL questions.

STUDENT ID: …………………………... DESK NUMBER: …………………….

PLEASE CHECK THE PAPER BEFORE COMMENCING. THIS IS A FINAL PAPER. THIS EXAMINATION PAPER MUST BE INSERTED INTO THE ANSWER BOOK AT THE COMPLETION OF THE PAPER. NO EXAMINATION PAPERS SHOULD BE REMOVED FROM THE EXAMINATION ROOM
Part A – Multiple-Choice Questions

NOT AVAILABLE

(Total = 20 marks)

Part B – Extended Questions

Question 1

In January 2013, one of the worst floods Australia has ever seen hit communities in Queensland. Great devastation was caused by the floods, with loss of life and property. In response, the people of Australia donated several million dollars to the Queensland floods appeal for those families who suffered from the floods. One donation is of particular interest. Miller Peterson Ltd, which is the largest retailer of electrical appliances in Queensland, donated appliances valued at $1 million. The appliances will be installed in the newly built houses of those families whose properties were destroyed by the floods. The Managing Director of Miller Peterson Ltd, Tom Peterson, said at the time of the donation: “We make this contribution to help families, many of whom are loyal customers of Miller Peterson Ltd, rebuild their lives after the floods.” At the Board of Directors meeting, Tom Peterson was heard to comment: “Not only is this donation to help people in need, but will also attract new customers to our stores because of our generosity.” Based on this, the Chief Accountant, Alan Serry, has decided to recognise the donation as an asset.

Required:

Applying the definition and recognition criteria in The Framework for the Preparation and Presentation of Financial Statements (as outlined on page 16), should the donation be recognised as an asset? If not, how should Miller Peterson Ltd account for the $1 million donation? (10 marks)

Question 2

Zac Weng is the proprietor of the Sunway Bling Franchise. On 1 November 2012 the business paid $400,000 for five television commercials costing $80,000 each to increase Christmas sales. Three commercials are to be shown during November 2012 and the other two during December 2012.

Sunway BIing's financial year ends on 30 November 2012.

Required:
(a) If the payment of $400,000 was recorded as an expense, prepare the general journal entries (narrations are not required) to record:
(i) The necessary adjustments on 30 November 2012.
(ii) The closing entry on 30 November 2012.

(b)

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