CASE STUDY: TOPIC 1 - SOLUTION
FINANCIAL ACCOUNTING 1
CREATED BY: SCOTT COPELAND
STUDY PERIOD 4, 2009
FA 1 – RITA CASE STUDY: TOPIC 1
CASE STUDY 1 – Establishing a new accounting system
Having successfully operated her business for 3 years using what she learned in the UniSA
division core course Accounting, Decisions and Accountability Rita has decided it is time to
develop a more productive accounting system. In order to do this Rita has been reviewing the
notes she took when studying Financial Accounting 1. In her first week of FA 1 Rita discovered
that it is important to establish an accounting system that is best suited to the needs of the
business. Rita recalls that it was important to consider a number of factors including the current
position of the business and where it may be headed in the future.
After some thorough investigation Rita has decided to establish a manual double entry
accounting system which will employ specialised journals and control accounts (these will be
discussed in detail in week 3). Rita’s record keeping has not always been the best and as a result
all Rita can provide you with is the unadjusted trial balance on the next page and the following
The following adjustments were due to be made on balance day
Additional information known at June 30:
(a) Expecting that she may need some extra cash, Rita arranged a business overdraft facility
with the bank manager on June 2.
(b) All depreciation is calculated by the straight-line method. The office equipment is expected
to have a useful life of 5 years with no residual. The office furniture is expected to be useful
for 10 years, after which it is expected to have a scrap value of $300. The printing
equipment should last 5 years and have a scrap value of $1000.
(c) $300 of the business’ debtors relates to money owed by Trustus Insurers who are in
liquidation after striking financial difficulty. It...