ACC201e Financial Accounting
Assignment 2 – Group-based Assignment January 2012 Presentation

ACC201e

Assignment 2

Group-based Assignment This assignment is worth 30% of the final mark for ACC201e Financial Accounting. The cut-off date for this assignment is 23 February 2012, 2359 hrs. This is a group-based assignment. You should form a group of 3 members from your seminar group. Each group is required to upload a single report to MyUniSIM via your respective seminar group. Please elect a group leader. The responsibility of the group leader is to upload the report on behalf of the group. It is important for each group member to contribute substantially to the final submitted work. All group members are equally responsible for the entire submitted assignment. If you feel that the work distribution is inequitable to either yourself or your group mates, please highlight this to your instructor as soon as possible. Your instructor will then investigate and decide on any action that needs to be taken. It is not necessary for all group members to be awarded the same mark. ____________________________________________________________

_______________ Part A Classic Company produces wood cabinets. Lately, the company is experiencing financial difficulties. While demand for its cabinets over the past several years has been steady, customers are switching to cheaper and more eco-friendly recyclable cabinets. At the same time, the company has to cope with rising costs and lower margins. Faced with declining sales and increasing costs, David, the company CEO, is under severe pressure to report good accounting numbers as the company has a massive loan from CBA Bank obtained several years ago. As part of the loan agreement with CBA Bank, the company has to meet a number of loan covenants, failing which the bank has the right to liquidate the company’s assets to settle