Australian

School of Business
ACCT1501 Accounting and Financial Management 1A
Session 1 2013

TUTORIAL WEEK 3 Solutions to Preparation Questions

Preparation Questions:
v DQ 2.1, 2.2; P2.3; Case 2A

DQ2.1 If you had trouble with any of the terms, the glossary will help you.
DQ2.2
Assets are usually separated into shorter-term ones (current assets) and longer-term ones
(noncurrent assets). Current assets are those that are expected to be used, sold, or collected within
the next year, and noncurrent assets therefore are expected to have benefits for more than a year
into the future.

Problem 2.3
Tin Ltd
Balance Sheet as at 30 June 2012
Current assets
Cash and cash equivalent
Accounts receivable
Inventory
Prepayments
Noncurrent assets
Long-term investments
Property, plant and
equipment
Less accumulated
depreciation
Patents and trademarks

$
43,000
68,000
81,000
10,000
202,000
110,000

550,000
190,000

360,000
55,000
525,000
727,000

Current liabilities
Accounts payable
Notes payable
Income taxes payable
Current portion of long-term
debt
Noncurrent liabilities
Long-term debt
Provision for employee
entitlements
Total liabilities
Shareholders equity
Share capital
Retained profits

$
61,000
30,000
32,000
25,000
148,000
200,000
34,000
234,000
382,000
161,000
184,000
345,000
727,000

Case 2A
1 Point of time at which the balance sheet is drawn up 26 June 2011.
2 Currency in which accounts in the balance sheet are measured Australian dollars.
3 The 2011 balance sheet of Woolworths Limited balances as follows:
Assets (21,094.5) = Liabilities (13,248.7) + Shareholders Equity (7,845.8)
4 The assets of 21,094.5 were financed by current liabilities 8,288.3, noncurrent liabilities
4,960.4 and shareholders equity 7,845.8 (including issued capital 3,988.6 and retained
profits 3,897.5).
5 The net assets figure of 7,845.8 is determined by deducting liabilities, 13,248.7 from assets
21,094.5.
$ million
6 Balances at 26 June 2011

current assets
6,593.0

current liabilities
8,288.3

noncurrent assets
14,501.5

noncurrent liabilities 4,960.4

7 Balance of Working Capital at 26 June 2011= current assets current liabilities
= 6,593.0 8,288.3 = 1,695.3.
8 Dividends paid $1,260.0 m as per statement of cash flows, plus $13.2 million to minority
interests
9 Amount of share capital issued is $3,988.6
10 Companies included in the consolidated figures
Macs Liquor Stores, Dick Smith Electronics, Australian Safeway Stores, etc.
11 In 2011 the cost of goods sold amounted to $ 40,186.3 million.
12 As you would expect the two figures are different. Net profit after income tax is $2,140.3
million, whereas the cash balance has increased from $713.4 million to $1,519.6 million.
Note that this figure includes the net change in cash from operations and all investing and
financing activities. As you will discover in chapter 14, companies are required to reconcile
the cash flow from operating activities to net profit after tax.
13 $2,124.0 million.
14 $54,279.5 million.
15 $3,736.5 million.
16 Cash increased by $806.2 (from $713.4 in 2010 to $1,519.6).