Reference no: EM132371878

Assignment

1. Business Model and Accounting System

Adjustments (to be completed at the end of the accounting cycle):

a. Calculate and record the depreciation expense for one month for: building using the reducing balance method and delivery truck using straightline method.

b. Physical stocktake of inventory reveals that there are 19 Top load washers. Record the missing inventory as cost of sales

c. Accrued internet expense for the month is $180

d. Calculate and record accrued insurance expense on the loan given an interest rate of 3.75% per month

e. Physical stocktake of office supplies revealed supplies on hand is $780

f. Calculate the Provision for Bad Debts at the rate of 2% of net credit sales for the period

g. Record adjustment for prepaid insurance given half has been used up

2.Completing the Accounting Cycle

(Use the Task 2 template. Make adjustments as required including using formulas and links as instructed.)

2.1 Prepare the General Journal entries for the Transactions that occurred during the month. Transactions are listed above at 1.3. Use the accounts listed in the Chart of Accounts at 1.4. For inventory, all sales and purchases must be entered into Inventory Record as they occur. Use EXCEL formulas for calculations (eg GST) and linking as required. Check the journal is in balance.

2.2 In the General Ledger, enter the starting balances for the permanent accounts. Find these balances in the Post-closing Trial Balance as at 1 July. Post the GJ entries, recorded above at 2.1, to the General Ledger. Enter names for the ledger accounts and add accounts to the template as necessary. Use linking function in EXCEL to link the transaction amounts from the GJ to the relevant GL account. Create final
balances for each ledger account using EXCEL formulas.

2.3 Prepare a Trial Balance as at 31 July by linking from the ledger accounts to the (Live) Trial Balance. Linking means it will perpetually update, but at this point it is Unadjusted Trial Balance as it does not include the Adjustments which will be recorded in step 2.5 below. Check it is in balance before moving on. (If it is not in balance, try using sort & filter function to find errors in posting. Ask your tutor if you
need assistance.)

2.4 Prepare the Worksheet by copying your Trial Balance figures into columns B and C. VERY IMPORTANT - copy these as VALUES (using Paste Special function in EXCEL).

2.5 Record the Adjustments in the General Journal. Adjustments are listed above at 1.8 (a. to g.). Enter these into both the Worksheet (in columns E and F) and the General Journal. Check the journal is in balance.

2.6 Post the adjustment journal entries (from the General Journal) to the General Ledger using new accounts as necessary. (This will change the figures in your Trial Balance but not your Unadjusted Trial Balance in your Worksheet. Check this.)

2.7 Finalise the Worksheet – return to the Worksheet to calculate balances in the Adjusted Trial Balance (columns H and I), using EXCEL functions for additions and subtractions. (Check the Adj Trial Balance figures in these columns match the account balances in the Trial Balance – they should be the same.)

2.8 Prepare the Financial Statements – still in the Worksheet, copy or link the appropriate figures to the Income Statement columns and to the Balance Sheet columns. Then take these figures across to the Financial Statements sheet and create Financial Statements according to a standard format (refer to the textbook page 240). Identify Assets and Liabilities as ‘current’ or ‘non-current’ for the Balance Sheet (this was to be done in the Chart of Accounts).

2.9 Prepare the closing entries in the General Journal. Closing:

• debit revenue accounts and credit P& L Closing Account;

• credit all expense accounts and debit P& L Closing Account;

• debit P & L Closing Account (if a profit) and credit Capital account;

• credit Drawings and debit Capital account

Post the closing entries to the General Ledger.

2.10 Prepare a Post closing Trial Balance – copy and paste as values the accounts and balances from the (Live) Trial Balance. The Post Closing Trial Balance should only contain the permanent accounts

2.11 EXCEL functions and Number formats – Basic EXCEL functions and formulas should be used as described in the instructions above. All amounts to be displayed to two decimal places but should not be rounded. Use $ only in Financial Statements.

2.12 Use the Inventory Reconciliation table to check that your inventory record matches the balance in your Inventory account in the general ledger.

3. Preparing the Business Report

Prepare a Business Report using the Report Structure provided below. It should be prepared in Word and is to have a maximum of 900 words. You MUST use references with a reference list and intext referencing created in Harvard style. Online sources such as Investopedia and Accounting coach are NOT quality sources and should not be used in academic writing. Consider using academic textbooks, journal articles and government websites.

The report is to summarise the financial performance and position of the business. You should identify the profit or loss that the business had, the overall position as identified in the Balance Sheet, and provide some recommendations for the business for the future.

Include the Post-closing Trial Balance in the main body of the report.

As well, in your report you should consider the accounting policies adopted by the business and provide recommendations. You should address TWO (2) of the following considerations:

• This business has recorded a Provision for Bad Debts. Explain why a business uses this account and not wait until they know that a debt won’t be paid. What other methods for Bad Debts are there?

• Accrual accounting provides opportunities for business owners to act unethically. Explain how and include an example that is relevant to this business.

• Businesses can choose different methods of depreciation for recording depreciation expense. Describe the methods used by this business and explain whether the methods are appropriate given the business owner’s objective of achieving high profits.

• This business is a retail industry business. How does that make the Income Statement presentation different to a service industry business?

• This business uses a perpetual inventory method. Explain some control mechanisms should they put in place for inventory to ensure accurate recording and safeguarding of assets?

Attachment:- Assignment Details.rar