CPPDSM4006A Establish and manage agency trust accounts. Assignment 2

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1 CPPDSM4006A Establish and manage agency trust accounts Assignment 2 This unit of competency specifies the outcomes required to establish and manage trust accounts in an agency context. It includes reviewing agency accounts for compliance with trust account requirements, establishing and managing trust accounts, maintaining records of trust transactions, and monitoring and reviewing trust accounts. You must complete all 4 tasks. Task 1 - Knowledge exercise 1. Using the Accounting Equation, find the missing figure where indicated: Office Furniture 35,000 Motor Vehicles 15,000 Cash at Bank 10,000 Inventory 2,000 Petty Cash 500 Accounts Payable 10,600 GST Input Tax Credit Control 2,000 Capital Using the Accounting Equation, find the missing figure where indicated: Computers 21,000 Inventory 9,000 Cash at Bank Petty Cash 300 GST Payable Control 2,600 GST Input Tax Credit Control 2,300 Capital 55, If Assets increase by $72,000 and Liabilities increase $24,000, then Proprietorship will: Decrease/Increase Increase by Accounts Receive would be shown on which financial report: Statement of Financial Position LA Assignment 2 Question sheet, CPPDSM4006A Ed 2 1

2 5. If Net Profit is $45,000 and the expenses are $3,000, the revenue is: Cash at Bank appears in the Statement of Financial Position under the heading of: Current Assets 7. When a business pays wages to its employees, the two accounts affected are: Wagest expenses and Cash 8. Calculate the total amount payable by a vendor if the sales commission is $19,200 and GST is 10% What is an asset? A resource from which future economic benefits are expected to flow 10. A limitation of the Trial Balance is that it does not prove that: all transactions that should be recorded have been recorded. If any transaction would be ommited, it will not reflect in trial balance. Tasks 2 4 Practical exercise You are to complete the appropriate books of account based on the following scenario. Scenario Students to note the following: The Trust Cash Book, Trust Ledger and Trust Trial Balance are to be completed so as to comply with the Property, Stock and Business Agents Act The 2003 Regulation and the Amendment Regulation 2005 under the Act. The next Trust Receipt Number to be issued is number 101 and the next Trust Cheque number is 710. All trust receipts are banked on the day of receipt. All receipts and payments are by cheque unless otherwise stated. All transactions are GST free unless stated. The accounts in the Trust Ledger had the following balances as at 30 th April, LA Assignment 2 Question sheet, CPPDSM4006A Ed 2

3 700 Trust Bank Ledger $20,080 Debit 710 Davis to Kendal 9,700 Credit 720 Sproule to Hill 5,000 Credit 730 R Weaver (owner) 2,000 Credit 740 R Richardson (owner) 1,000 Credit 750 R Wales (owner) 900 Credit 760 Rental Bond Suspense 1,480 Credit May nd Received a deposit $74,000 from Olsen for a development property owned by McKenzie. The cheque was payable to the agent who made special arrangements for its clearance to facilitate investment in an interest bearing account at Countrywide Bank with the proceeds being distributed equally in accordance with a special agreement. 3 rd Received rent from the tenant A Jones for the owner R Wales $900 5 th Obtained a new tenant A Ward for R Wales who paid a bond (cheque made payable to Rental Bond Board) as well as 2 weeks rent in advance as a second cheque. Details were: Bond $880 Rent $440 7 th Paid Darkside Plumbing on behalf of R Wales $160 Paid outstanding amount due to the Rental Bond Board. 10 th Obtained a new tenant L Willis for R Wales who paid a bond (cheque payable to the agent) as well as 2 weeks rent in advance. Details were: Bond $2400 Rent $1, th Settlement occurred between McKenzie and Olsen. The initial deposit plus $226 interest was rebanked into the Trust Account. Sales commission was $12,500 with the appropriate balance of funds being sent to the two parties involved. 17 th Paid outstanding amount due to Rental Bond Board. 18 th The sale regarding Sproule to Hill was settled and the vendor s solicitors requested the deposit be released after commission had been deducted. The commission amounted to $1, st Settled with R Weaver. Property management fees GST inclusive $ nd Received a preliminary deposit from P Unsworth on a property owned by C Beer, $500. Funds held on behalf of R Richardson were for advertising. Paid Evansdale Newspapers form this amount, the sum of $940. LA Assignment 2 Question sheet, CPPDSM4006A Ed 2 3

4 25 th Settled the outstanding balance to date with the owner R Wales. The commission will be as shown, however, you must deduct any amounts paid on behalf of the owner to date. The commission was $ th The balance of a 10% deposit was received from P Unsworth on a property with a sale price of $195,000. Received part deposit from R Langfield for the purchase of a house owned by G Robson $7, th Received balance of deposit from R Langfield $8, st Received two new tenants for R Weaver each of whom paid 2 weeks rent and a bond (cheques payable to agent). Details were: E Calnan Rent 1,040 Bond 2,080 B Brooke Rent 850 Bond 1,700 Your tasks Using the information provided by the licensee of Evansdale Realty above you are to complete the following: The blank forms required for this exercise can be found on a separate document called CPPDSM4006A_Assmt2_Answer_sheet.xls. Click on tabs at the bottom of the window (i.e. - receipt side of cash book, payment side of cash book, ledgers & trial balance & bank reconciliation) to access the relevant worksheet for each task. Task 2 - Correctly complete the Trust Cash Book Task 3 - Correctly complete the Trust Ledger and Trust Trial Balance as at 30 May, 2010 Task 4 - Using the Trust Cash Book and ledger records of Evansdale Realty that you completed in Tasks 2 & 3, prepare a Trust Bank Reconciliation so it complies with the Regulations. You are entitled to assume that the bank statement is correct. Countrywide Bank Evansdale Realty Trust Account Date Details Debit Credit Balance Bal b/f $ 20, cr 3/05/2010 Deposit $ 74, $ 94, cr 3/05/ $ 74, $ 20, cr 4/05/2010 Deposit $ $ 20, cr 6/05/2010 Deposit $ $ 21, cr 4 LA Assignment 2 Question sheet, CPPDSM4006A Ed 2

5 10/05/ $ 1, $ 19, cr 11/05/2010 Deposit $ 3, $ 23, cr 18/05/2010 Deposit $ 74, $ 97, cr 713 $ 12, $ 85, cr 714 $ $ 85, cr 715 $ 61, $ 23, cr 20/05/ $ 1, $ 21, cr 718 $ 3, $ 18, cr 23/05/2010 Deposit $ $ 19, cr 719 $ $ 18, cr 716 $ 2, $ 16, cr 27/05/ $ $ 16, cr 28/05/2010 Deposit $ 26, $ 42, cr 31/05/2010 Deposit $ 8, $ 51, cr LA Assignment 2 Question sheet, CPPDSM4006A Ed 2 5