2020 SMSS 3N POA EOY P2 Q5
5 Sparkling Clean Pte Ltd provides laundry services for hotels. The service fee revenue account for the year ended 31 December 2019 is shown below.
Service fee revenue account
2019 | Dr ($) | Cr ($) | Bal ($) | |
Jan 1 | Service fee received in advance | 1 280 | 1 280 Cr | |
Mar 31 | Cash at bank | 25 000 | 26 280 Cr | |
Jun 20 | Cash at bank | 33 500 | 59 780 Cr | |
Oct 15 | Trade receivables | 12 900 | 72 680 Cr | |
Dec 31 | Service fee received in advance | 800 | 71 880 Cr |
REQUIRED
a. Interpret the entry on 1 January 2019.
[3]
b. Calculate the amount of service fee revenue collected for the year ended 31 December 2019.
[1]
c. State the accounts to be debited and credited for the adjustment on 31 December 2019.
[2]
d. State the total service fee revenue amount that should be transferred to the statement of financial performance for the year ended 31 December 2019.
[1]
e. Explain the transaction on October 15.
[2]
f. Interpret the entry on 31 December 2019.
[3]
g. Prepare an extract of the statement of financial position for the year ended 31 December 2019 to show the service fee received in advance.
[3]
[TOTAL 15]
It refers to $1 280 of service fee revenue that was collected last year (2018) but the laundry services are only being provided in the current year. Hence the amount of $1 280 service fee revenue received in advance that was adjusted on 31 December 2018 is reversed and added to this year’s service fee revenue on 1 January 2019.
Total service fee revenue to be transferred is $71 880.
On 15 October 2020, the business has provided the laundry services worth $12 900 but the customer has not paid yet.