1. Accounting Fundamentals. Task 2 Part B
Task 2 Part B Requirements:
Stage 1: Use the spreadsheet template provided to complete the following requirements.
When using the spreadsheet you are required to provide the links from the General Ledger Accounts to the Live Trial Balance.
1. Link the balances of the General Ledgers to the Live Trial Balance
2. Enter the transactions into the appropriate Special Journals.
3. Important: After each transaction that particular journal should be in balance. If it is not, fix it before recording the next transaction.
4. Do the Bank Reconciliation and enter transactions as required.
5. Post (Link) the transactions from the Special Journals to the appropriate General Ledger Accounts the balances of which should flow to the Live Trial Balance.
6. Important: Posting should be done from the total of each column unless recorded in "Other Account" column.
7. Important: Post the entire journal and check that the Live Trial Balance is in balance before moving to the other journals. If it is not in balance, fix it before moving on.
8. Copy the Live Trial Balance and create a Fixed Trial Balance using Special Paste Values into your worksheet.
9. Do the adjustments into and complete the worksheet
- Note well: the worksheet is a separate document. No linking is permitted from the worksheet to any of the financial statements. It is used as a checking mechanism that ensures your financial statements prepared in step 13 match the worksheet.
10. Journalise the adjustments in the General Journal and post to the General Ledgers. Check that the Live Trial Balance is in Balance before moving to the next transaction. If it is not in balance, fix it before moving on.
11. After all adjustments have been posted the Live trial Balance should be the same as the adjusted trial balance of the worksheet.
12. Copy the Live Trial Balance worksheet and create a Fixed Trial Balance worksheet using Special Paste Values into the worksheet.
13. Use the Fixed Trial balance to help you complete a Profit & Loss statement, Statement of Partners Equity and a Balance Sheet for month of trading.
Stage 2: Write a brief report to Julie and Katy commenting on the financial performance of the business:
Calculate the following financial ratios and provide comments -
Current ratio
- Industry average is 5:1
- Accounting Norm is 3:1
Quick ratio
- Industry average is 4 : 1
- Accounting Norm is 1:1
Calculate and provide a cash flow statement for the first month of trading.
Using academic references (recorded using Harvard Referencing style) list and briefly explain the registrations and legal requirements that Julie and Katy would have undertaken to establish the business name and partnership.
2. Managerial Finance Assessment Task 2
Project Evaluation
Equator Ltd, an Australian manufacturer of laptop computers, is considering expanding its Australian operation into producing tablet computers. The Chief Financial Officer (CFO) of the company, Miss Mandy Morris, believes there will be significant opportunities for growth for the company in the tablet computer market and is therefore looking to construct a new manufacturing plant in North Sydney. Equator Ltd has not manufactured tablet computers before but they have extensively researched the market and believe they can compete successfully.
For this expansion Miss Morrishas two options. The first option, Plant A, is a highly automated process that involves significant capital outlays but has lower running costs. Plant B is a more labour intensive facility that has lower initial capital outlays but higher running costs. Plant A and Plant B are mutually exclusive projects. As Miss Morris's assistant you have been asked to prepare an analysis of the projects to enable her to make a recommendation to the board of directors. To assist your evaluation Miss Morrishas provided you with the following information:
i) Sales for Plant A tablet computers amount to 155,000 units per year, starting next year, with sales increasing in line with economic growth. Sales for Plant B tablet computers amount to 95,000units per year, starting next year, with sales increasing in line with economic growth.
ii) The Plant A tablet computer has a selling price of $320 next year, increasing in line with inflation. The Plant B tablet computer has a selling price of $440 next year, increasing in line with inflation.
iii) The nominal economic growth rate is projected to be 5.5% per year.
iv) Plant A is expected to remain in operation for 6years. Plant B is expected to remain in operation for 5. In the final year of each Plant, the machinery will be sold for 33% of its initial value. The land and buildings will be retained by the company.
v) Last year, Equator Ltd. paid MacBank $320,000 for a feasibility study that confirmed the manufacturing expansion was economically viable.
vi) The machinery is considered depreciable for tax purposes and will be depreciated using a straight line depreciation method down to its salvage value. The land, buildings and furnishings are not depreciable for tax purposes.
vii) Plant A will require a provision of $3,500,000 in working capital and Plant B will require a provision of $4,800,000 in working capital. These requirements will remain unchanged over the life of the plants.
viii) There will be additional Sales and Marketing expenses if the project goes ahead. Annually, Project A will incur $1,900,000 and Project B will incur $2,800,000. These annual costs will increase with inflation.
ix) Head Office expenses will not increase. However, a fixed allocation of $350,000 per year will be charged to whichever project goes ahead.
x) All operating expenses are expected to remain constant.
xi) Equator Ltd. is subject to a tax rate of 30%. Tax is paid in the same yearit is incurred. [Do not make any other assumptions about the company's tax liability.]
xii) Both proposals are considered not to be in line with the company's core business and are of different risk. Equator Ltd.'s nominal WACC is 13%. The realWACC used by the Computer Tablet industry is 13.35%.
xiii) Inflation is projected to be 3.5% per year for the period of each investment.
Other information:
|
Plant A
|
Plant B
|
|
Initial Costs:
* Land
* Buildings
* Machinery
* Furnishings and fittings
|
$11,650,000
$82,000,000
$26,150,000
$3,200,000
|
Initial Costs:
* Land
* Buildings
* Machinery
* Furnishings and fittings
|
$11,650,000
$59,500,000
$10,150,000
$2,980,000
|
|
Operating expenses:
* Fixed costs
* Variable costs per unit
* Labour costs per unit
|
$600,000
$21.80
$14.20
|
Operating expenses:
* Fixed costs
* Variable costs per unit
* Labour costs per unit
|
$800,000
$35.80
$25.00
|
Required:
1. Calculate the NPV, Non-discounted Payback, and the IRR of Plant A and Plant B. Interpret your results. (If relevant, state any assumptions you have made.)
2. Describe and analyse 4 keys risks associated with the project you recommend (Project A or B).
3. Briefly define an 'efficient' capital market. To what extent is Equator's ability to borrow funds in the capital market dependent upon the capital market operating in an efficient manner? (Your answer should be between a minimum of 500 words and a maximum of 600 words.)
3. PRINCIPLES OF COMMERCIAL LAW ASSESSMENT TASK
Trevor is the sole owner and operator of "Honey Bee Nature Appreciation Tours" (HB). He operates walking tours of Bushland surrounding the Bunya Mountains. The bush tracks used are not particularly strenuous. Trevor takes a group of no more than six paying trekkers once per week on a six hour walk during day light hours to engage in bird watching and similar activities. Trevor insists that clients wear sensible shoes and clothing during the walks and that all walks are conducted during daylight. He explains that in the past he conducted night time trips but he cancelled them after several trip and fall injuries to clients. He also supplies water and sandwiches. Trevor is an environmental science graduate of USC.
Anna, a café owner, attends one of Trevor's walks. She is dressed in shorts and shirt and a new pair of running shoes. Anna also brings a bottle of wine because it is her birthday. During the midpoint break, produces the wine and offers it to other walkers, who refuse to imbibe. Anna drinks half of the bottle and feels a bit tipsy. Trevor left the walkers alone during the break to scout a new location. However, Trevor is lost in his work and takes much longer than he thought. The team returned after sunset when the forest was dark. On the return walk, Anna's feet become sore, so she changes out of her runners and into her high heel shoes that she brought with her as a backup. At this time, Trevor was observing the rare Marbled Frogmouth perched in a tree.
Later near to the end of the walk, Anna's heal catches on a tree root and she stumbles down a hill side injuring her knee. Anna is transported to hospital. While in hospital Trevor visits her and expresses his regret that the incident occurred. While Anna fully recovered in a month, she closed her café and decides to sue Trevor in Negligence and claim 12 months in lost income and punitive damages to punish him.
Advise Anna as to her case for Negligence against Trevor. Do not discuss any defences apart from Contributory Negligence.
CONTENT AND ANALYSIS -
Generally the content (or coverage of the topic) is assessed according to two main requirements. These are:
- Demonstration of a knowledge of the law, assessed according to accurate statement of legal principles
- Demonstration of an understanding of the law, assessed according to logical and coherent application of legal principles to the facts.
The following guidelines stem from the requirements stated above:
- It is not enough to discuss the facts in a general way without reference to legal principle/s.
- It is not enough to state relevant legal principles without explicitly applying those principles to the facts.
- Statements of legal requirements/ principles must be accurate. Use of your own words is encouraged but must convey the substance (meaning of) the legal principle/s.
- Merely reproducing the facts given in the problem will not attract marks. This problem commonly occurs in written introductions, where it would appear that the writer is not sure where to start.
- Answers should include an introduction, analysis and conclusion (but not include these headings as such).
- The introduction should contain statements of:
- The legal terms given to the relevant parties on the facts
- The nature of the action to be taken by the party advised
- The party who must prove the action (burden of proof)
- The relevant standard of proof
- The elements of the action requiring proof.
- The analysis should state:
- The elements requiring proof (from the legislation) and interpretation of those elements (from legislation and case authorities as appropriate)
- An application of the legal requirements (elements) and their interpretation to the facts in question
- A consideration of legal remedies available to the injured party should the action be proven.
- The conclusion should contain:
- A summary of previous discussion and conclusion as to the likelihood of proof of the action. No new material should be included in this part of an answer.
- Accurate and full reference to cases and legislation must be used.
Attachment:- Assignment.rar