Assessment Task: Financial Accounting Trimester: T1 2018

Company Name: Abcde Pty Ltd

The company began operations as a retailer on 1 July in the current financial year. 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: $24,075.00

Accounts receivable: $3,504.00

Allowance for doubtful debt: $326.00

Inventory: $11,220.00

Motor vehicle: $22,653.00

Accumulated depreciation motor vehicle: $2,247.00

Accounts payable: $4,094.00

Bank loan owing (due in 20 months): $11,243.00

Telephone payable: $165.00

Office furniture: $11,330.00

Accumulated depreciation office furniture: $1,372.00

Office supplies: $549.00

Share capital: $32,734.00

Retained earnings: balance amount $21,150.00

2. Transactions for the month (all dollar amounts include GST where applicable):

2 July Sales on credit 78 units

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05 July Sales on credit 74 units

11 July Sales on credit 67 units

18 July Sales on credit 79 units

22 July Sales on credit 66 units

29 July Sales on credit 71 units

06 July Customer returned 1 unit(s) in excellent condition for a full refund from the sale on 05 July

15 July Paid wages (ignore PAYG tax) $1,853.00

29 July Paid wages (ignore PAYG tax) $2,068.00

19 July Paid rent for the current month $2,727.00

25 July Paid insurance $2,660.00

17 July Received advertising invoice (due in 30 days) $500.00

02 July Purchased computer on credit $2,432.00

07 July Purchased inventory on credit 20 units at the cost per unit of $25.00

14 July Purchased inventory on credit 29 units at the cost per unit of $27.00

20 July Purchased inventory on credit 26 units at the cost per unit of $24.00

24 July Purchased inventory on credit 23 units at the cost per unit of $25.00

30 July Purchased inventory on credit 29 units at the cost per unit of $28.00

25 July Abcde returned 1 unit(s) to their supplier for a full refund from the purchase on 24 July

01 July Received payment from accounts receivable $807.00

27 July Received payment from accounts receivable $678.00

30 July Received payment from accounts receivable $713.00

18 July Purchased office supplies on credit $512.00

21 July Paid motor vehicle expenses $100.00

04 July Paid accounts payable $1,359.00

14 July Paid accounts payable $1,432.00

25 July Paid accounts payable $1,446.00

23 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 9 months in total.

All asset purchases and expenses except wages include GST.

Cost of opening inventory items per unit $20.00

Depreciation rate for the motor vehicle is 20%

Residual value of the motor vehicle: $2,527.00

Depreciation rate for the office furniture is 20%

Residual value of the office furniture: $636.00

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 8 units were missing and these must be removed from inventory.

Office supplies on hand at end of the month were $267.00

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

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.