Rick Brennan owns a clock repair business called Rick's Clock. He kept poor financial records previously but decided to improve his accounting starting July 1, 2012. The document provides transactions throughout July and asks the student to prepare a worksheet, income statement, and balance sheet for July 2012. It also asks whether property, plant, and equipment should be valued at fair value or cost, and from the perspective of a financial statement user, which method is preferred.

1. accounting basics
Accounting practiceWorksheet? Correct inclusion of all accounts required? Correct dates
and account names applied? Correct format of worksheet used? Correct calculationIncome
statement? Correct account and amount applied? Correct calculation of profit/loss? Correct
format usedBalance sheet? Correct account and amount applied? Correct balance of each
element? Correct format usedExplain advantages and limitations of different asset valuation
methods? Clear argument? Include supportive evidence or examples? Include reference(s)
to support the explanationAccounting BasicsRick Brennan has been conducting his own
business, Rick’ s Clock, selling clocks, as well as providingservices to fix them. Rick’ s
record keeping was rudimentary and he decided that, from 1 July 2012, he wouldconduct
transaction analysis and use worksheet to summarise transactions. He identified his
business’ s assetsand liabilities as at 1 July 2012 as follows:Cash $18 500Accounts
Receivable $21 000Inventory $10 000Office Supplies $2 500Office Furniture $10
000Equipment $93 000Accounts Payable $79 500Capital $75 500During the month of July,
Rick’ s Clock conducted the following transactions:1 JulyA premium of $1200 for 12
months’ insurance is paid in cash.2 July Purchased a new equipment for $30 000 on
credit.3 July Contributed $150 000 cash to the business account.4 July Invoiced customer
for service completed $7500.8 July Received $3500 payment from customers who have
previously been billed.9 July Paid supplier $750 for office supplies purchased last month.10
July Received a $700 bill from the local newspapers for advertising.12 July A personal
assistant was hired to commence work from 14 July at an annual salary of $26 000payable
fortnightly (assume 52 weeks a year).13 July Paid bills from the local newspaper for invoice
received on 10 July.14 July Purchased office supplies for $450 to be paid one week later.
Rick recorded office suppliesas asset.16 July Provided services to customers for $6500
cash.17 July Invoices were sent to clients for clock repairing work, $2020. The customers
were allowed 30days in which to pay their invoices.19 July Paid rent for $1750 cash.20 July
Withdrew $3000 cash from the business’ s bank account to meet personal expenses.21 July
Paid for the purchase of office supplies on 14 July.24 July Sold clocks for $5500 cash, cost of
clocks was $3800.25 July Purchased office furniture for $8000 on credit.26 July Provided
services to customers and received $500 cash payment and the balance of $5000 wouldbe
paid in 30 days.28 July Paid two weeks’ salary to the personal assistant.31 July Adjusted
the insurance prepaid.However, despite the growth of the business, due to health problem,
Rick was not able to continue hisbusiness in August. On 16 August, Tick Tock Ltd, a large
public company offered to acquire Rick’ s business.Rick was hesitated what he should do

2. and asked Fred Collier for advice. Fred is a retired accountant and oneof Rick’ s best friends
since high school. He suggested Rick to re-examine the value of Equipment
beforenegotiating a good selling price with Tick Tock Ltd. Rick used the Cost Model to value
and record hisProperty, Plant and Equipment (PPE). Fred suggested Rick to revaluate PPE
to its fair value. 1. Prepare a worksheet outlining the transactions of Rick’ s Clock in July
(worksheet should include theitems possessed at the beginning of July);2. Prepare an
income statement for July 2012;3. Prepare a classified balance sheet as at 31 July 2012;4. Do
you support Fred’ s suggestion to have items of PPE valued at fair value? Explain why.5. If
you are a user of financial statements, would you prefer items of PPE valued at cost or
fairvalue? Explain why.ignore income tax expense when preparing the income
statement; WE ARE A LEADING RESEARCH FIRM OFFERING AFFORDABLE RESEARCH
SERVICES TO STUDENTS ON ALL SUBJECTS. ORDER NOW AND GET YOUR PAPER IN AS
LITTLE AS 3 HOURS!!