MAA261 - Financial Accounting - prepare financial

Company Name: Abcde Pty Ltd

The company began operations as a retailer on 1 July 2016. It buys and sells one inventory item, derrings, from a leased warehouse in the outer suburbs of Melbourne.

The company is registered for GST, which it pays quarterly. Assume GST was last paid on 30 June. It uses the Moving Weighted Average method and the perpetual inventory recording method.

The company uses the straight line depreciation method for office furniture and computers and the reducing balance method for motor vehicles.

The company employs two people who are rostered over a seven day working week. The employees are paid fortnightly up to and including the day of payment. There are no penalty wages.

The company has one debtor (Debtor1) and one creditor (Creditor1). Terms for all credit sales and purchases are 30 days.

Relevant information

1. The company has the following opening balances as at the 1st of July in the current financial year:
Cash at Bank: $20,097.00
Accounts receivable: $3,977.00 Allowance for doubtful debt: $344.00 Inventory: $10,300.00
Motor vehicle: $23,105.00
Accumulated depreciation motor vehicle: $2,179.00
Accounts payable: $5,379.00
Bank loan owing (due in 20 months): $12,142.00
Telephone payable: $193.00
Office furniture: $13,601.00
Accumulated depreciation office furniture: $1,645.00
Office supplies: $519.00
Share capital: $39,433.00
Retained earnings: balance amount $10,284.00

2. Transactions for the month (all dollar amounts include GST where applicable):
02 July Sales on credit 56 units

05 July Sales on credit 54 units 11 July Sales on credit 52 units 18 July Sales on credit 71 units 22 July Sales on credit 63 units 29 July Sales on credit 50 units
06 July Customer returned 3 unit(s) in excellent condition for a full refund from the sale on 05 July 15 July Paid wages (ignore PAYG tax) $1,674.00
29 July Paid wages (ignore PAYG tax) $1,548.00 06 July Paid rent for the current month $2,620.00 03 July Paid insurance $1,919.00
18 July Received advertising invoice (due in 30 days) $745.00
08 July Purchased computer on credit $2,348.00
07 July Purchased inventory on credit 21 units at the cost per unit of $24.00 14 July Purchased inventory on credit 26 units at the cost per unit of $26.00 20 July Purchased inventory on credit 26 units at the cost per unit of $26.00 24 July Purchased inventory on credit 30 units at the cost per unit of $27.00 30 July Purchased inventory on credit 28 units at the cost per unit of $26.00
25 July Abcde returned 5 unit(s) to their supplier for a full refund from the purchase on 24 July 04 July Received payment from accounts receivable $868.00
08 July Received payment from accounts receivable $570.00 29 July Received payment from accounts receivable $667.00 15 July Purchased office supplies on credit $515.00
11 July Paid motor vehicle expenses $112.00
08 July Paid accounts payable $832.00 15 July Paid accounts payable $1,375.00 28 July Paid accounts payable $1,150.00
26 July Paid outstanding telephone bill in full

3. Additional information:

Selling Price per unit (GST inclusive) $55.00
Insurance commences from the first of the month in which it is paid, and covers 7 months in total.

All asset purchases and expenses except wages include GST. In addition the cost per unit for inventory purchases includes GST.

Cost of opening inventory items per unit $20.00 Depreciation rate for the motor vehicle is 20% Residual value of the motor vehicle: $2,482.00 Depreciation rate for the office furniture is 20% Residual value of the office furniture: $566.00

Regardless of purchase date, company policy is to depreciate new assets for 15 days in the month of purchase. Depreciation rate for the computer is 35%

No residual value is expected for computers.

The company counted inventory at the end of the month. They discovered that 5 units were missing and these must be removed from inventory.

Office supplies on hand at end of the month were $251.00

At the end of the month the company records potential bad debts expense using the percentage of sales method. The business uses 1% of net sales to determine estimated bad debts.

Interest owing on the bank loan at the end of the month is $60.00

Learning Outcome (ULO)

ULO 1: Comprehend accounting as a language of business
ULO 2: Understand the nature of the accounting information systems; record transactions in journals and ledgers; incorporate end of the year adjustments; and prepare financial statements of small and medium scale business
organisations.
ULO 3: Record business transactions and prepare financial
statements using an accounting software (XERO), in small and medium scale business organisations.Part A: Manual Preparation of Financial Records

Use the MAA261 Pro Forma Journals and Ledgers file to complete Part A of the assignment. This file contains the journals, ledgers, Adjusted Trial Balance, Statement of Financial Performance and Statement of Financial Position. Note that this file is supplied in "word" format so that you can adjust the columns or add ledgers if you wish to do so.

1. Sort all transactions in date order and record them in date order.
2. Using the information provided record the opening balances and then record all transactions for the month of July in the:

a. General Journal and then

b. General ledger

c. Prepare a stock card to determine cost of sales.

3. Please acquire a thorough understanding about the recording process before you enter transactions (please refer the relevant lecture and tutorial material and the text book for further information).

4. You are then required to record the end of month balance day adjustments in the general journal and post to the relevant general ledger accounts.

5. Prepare an adjusted trial balance as at 31st July, i.e. after posting all balance day adjustments. If the trial balance does not balance do not proceed until it does.

6. Prepare an Income Statement for the month ended 31st July, and a Statement of Financial Position as at 31st July.

Part B: Preparation of Financial Records Using Xero

In part B you process the same transactions using Xero. Xero is a cloud-based computerised accounting package. There are detailed video instructions on creating your Xero file and recording transactions in Xero available on CloudDeakin. It is highly recommended that you watch these before undertaking Part B.

Please note: you will have a free 30 day access to Xero. Do not create your Xero file until there is 30 days until the due date.

1. Using your internet browser

2. Complete the required information.

3. Xero will send you an email which allows you to activate your account.

4. Once you log onto Xero, Select Settings, General Setting, Organisation Setting

5. Complete the following information:

Display Name: ABCDE PTY LTD Your name (For example ABCDE PTY LTD Danny Burton)
Legal Trading Name: ABCDE PTY LTD Your name (For example ABCDE PTY LTD Danny Burton)
Line of business: Retail Organisation type: Sole Trader ABN: leave blank
The reminder of the form does not need to be completed for the purposes of the assignment.

6. Return to General Setting, click Chart of Accounts. Xero has suggested a range of accounts for your use. The account names may be slightly different to those in your manual set of accounts. This is okay, you do not need to standardise the names. Additional accounts will need to be added. To add new accounts, Click on new accounts and complete the necessary information.

7. Return to General Settings and select financial settings. Check that the financial year-end is 30 June 2018. The tax defaults for both sales and purchases should read "tax inclusive". Change these details if necessary.

8. Return to general settings.

9. Select Conversion Balances. Click on conversion date and change the month to July (this means you will enter the opening balances based on the 30 June 2017 closing balances). Save.

10. Click on Add Comparative Balances (if necessary click on "Show all accounts"). Enter the opening balances by account from the opening Statement of Financial Position in the appropriate debit/credit column. Xero operates with only one GST account - "GST Clearing", a current liability. There is no opening balance in the GST clearing account. Make sure the opening balances debits and credits are equal to each other. Save.

A new window will open that requires you to enter the opening balances for individual debtors and then creditors. ABCDE has only one debtor and one creditor. When you setup the debtor and the creditor, assume the date of the invoice was 1 June 2017.

11. Go to Accounts, Select inventory. Click on Add new item and create each inventory account. Then import opening inventory balances using the wizard available in Xero.

You are now ready to start entering the transaction data into Xero. You should record transactions in date order. This is critically important for any inventory transactions (sales and purchases) as Xero calculates the value of inventory using the moving weighted average method. It is easiest to enter sales, purchases and cash transactions through the dashboard.

What to submit for Part A and Part B

For Part A the following documents (in excel) must be submitted:
- Proforma with your completed solution (excel)
- A copy of your unique assignment (excel)

For Part B the following documents (in PDF form) must be submitted:
- Trial Balance for July 2017
- Financial Performance (Profit and Loss) for July 2017
- Financial Position (Balance Sheet) for July 2017

Instructions to find and print reports:

1. Go to Settings
2. Select User
3. Click on your name
4. Select "Advisor"
5. Save
6. Select Reports: all reports:
- Trial Balance for July 2017
- Financial Position (Balance Sheet) July 2017
- Financial Performance (Profit and Loss) 2017

Attachment:- Individual Assignment.rar


Captcha

Helping Students of Australia/New Zealand, GET Help with Classroom Assignments? Order Now