Reference no: EM132513573

ATMC ACC106 - The Business Model and Assignment Instructions

Hattie's Hen Houses - Business Model

Introduction
At 1st June 2019, H Hattie established a new proprietorship, Hattie's Hen Houses a GST-registered business that sells chicken coops to the general public. As well, the business provides delivery services to local customers. The business sources its stock from several suppliers.

The business currently sells two types of coop: Red Riding Run (sale price $495 each incl GST) and Bo Peep Premium (sale price $670 each incl GST):

Hattie, sole proprietor, is using Microsoft EXCEL software to maintain the accounting records of the business transactions during the month of June 2019, which is the last month of the Australian financial year ending 2019.

Accounting Policies

Hattie's Hen Houses uses accrual accounting for recording transactions and adjustments.
Hattie's Hen Houses uses a perpetual inventory system with FIFO.

Hattie's Hen Houses is a GST registered business and uses a GST Paid account for purchases and GST liability for sales and remits the net GST liability to the Australian Government in the month following the end of each quarter.

Hattie's Hen Houses has the following depreciation policies:
• Forklift: depreciated over 5 years using straight line method ($3500 residual value)
• Motor vehicles: depreciated using reducing balance method at the rate of 15.91% over 8 years ($12 000 residual value)

Hattie's Hen Houses records an allowance for doubtful debts that equates to 4% of net credit sales revenue for the period.

Hattie's Hen Houses records all prepaid expenses as assets (prepayments), and then expenses the portion used as end of year adjustments.

Adjustments for end of financial year 2019
The stocktake on 30 June revealed $1268 worth of office supplies on hand.

Calculate the amounts for depreciation expense for each of the two types of non-current Assets: forklift; vehicles (Estimate expense as though assets held for whole of month of June.)

Calculate and record the adjusting entry for internet for the end of the month given that June internet paid in advance has been used up.

Calculate and record the adjusting entry for rent for the end of the month given that June rent paid in advance has been used up.

Calculate Allowance for Doubtful Debts as 4% of net credit sales revenue for the period.

Accounting Requirements and Instructions

Spreadsheet software
The file on the course Blackboard site (ACC106 Task 2 Student Templates) contains a series of worksheets to complete the Task. Make changes as required including formulas and links.
Completing the Accounting Cycle
Record all the business transactions from section 3 above in the general journal using EXCEL formulas as required (eg for GST calculations). Use the account names as listed in the Chart of Accounts. Check the journal stays in balance.

All transactions involving inventory must be first entered into the Inventory Record and then the journal. Use the reconciliation table in the Inventory Record to check that the balance here matches the balance for the Inventory account in the General Ledger.

Post the journal entries to the relevant ledgers using EXCEL linking function. You will need to create additional accounts in the General Ledger. Use the accounts listed in the Chart of Accounts and create a ledger account for each account used in the business. In the ledgers, use formulas to create running totals. DO NOT POST ADJUSTMENTS yet.

Prepare an ‘Unadjusted' Trial Balance as at 30 June 2019 by linking totals in the ledger accounts to the Trial Balance. It is a ‘Live' Trial Balance but at this point it is unadjusted as the Adjustments have not yet been posted. When complete, check the Trial Balance debit and credit columns are equal. Then copy and special paste (as values only) the Trial Balance into the Worksheet columns ‘Unadj Trial Balance'. These should not change now as they are raw figures. (Tip: Use Paste Special to paste in as values.)

Record the end of year Adjustments, listed at section 4, in the Worksheet and complete the Worksheet by calculating balances in the Adjusted Trial Balance columns. Then complete the Income Statement and Balance Sheet columns in the Worksheet.

Record the Adjustments in the Journal and post these adjustments to the General Ledger using new accounts as necessary. (This will change the figures in your Trial Balance which should now match the Adjusted Trial Balance figures in the Worksheet.)

Prepare the closing entries in the General Journal, and post these to the General Ledger. (As with adjustments, this will change your Trial Balance figures if you have linked correctly. NOW, your Adjusted Trial Balance figures in the Worksheet will NOT match the Trial Balance figures for the Revenue and Expense accounts and totals.)

Remember: for closing, close revenue and expense accounts to the Income Summary Account, then close Income Summary and Drawings to the Capital account.

Finally, create Financial Statements for 30 June 2019 by copying or linking the figures. Refer to your textbook or course Learning Materials for guidance on the format of these Statements. For Balance Sheet, use the Classified Balance Sheet in report form as demonstrated on p.184 of the text; and Income Statement and Statement of Changes in Equity as demonstrated on p.240 of the text. (Note, for the Income Statement, there will be multiple revenue streams including contra accounts.)

Attachment:- Business Model and Assignment.rar