Assignment Details:
As at the 1stMay, Katy Perry establishes a new business Katie's Bridal Services as a sole trader. The business will hire out bridal gowns and other accessories as well as provide professional services to the general public. She registers the new business and opens a new bank account with the local branch of Eastside Bank. Note the business is also registered for GST.
Adjustments
-Calculate the outstanding payroll liability (2 days for each employee)
-Calculate and record the insurance expense for the two months
-Calculate and record the Telephone expense for the two months
-Calculate and record the prepaid rent (5 Days)
-Calculate and record the depreciation expense for the 2 Months
-A stock take of the Accessories revealed that there were:
- 19 Bouquets
- 7 Buttonhole Sprays
- 4 Headpieces
-Any discrepancy with the calculated FIFO inventory is to be written off to account 6065 Stock write off expense
-Only 10 days of the 30 days advertising has been used.
Note all adjustments rounded up to nearest full dollar amount.
Write a brief report to Julie and Katy commenting on the financial performance of the business:
-Calculate the following financial ratios and provide comments -
Current ratio
- Industry average is 5:1
- Accounting Norm is 3:1
Quick ratio
- Industry average is 4 : 1
- Accounting Norm is 1:1
-Calculate and provide a cash flow statement for the first month of trading.
-List and briefly explain the registrations and legal requirements that Katy would have undertaken to establish the business name as a sole trader.
-Katy is contemplating for Alex Perry a partnership or a company. What extra General Ledger accounts would have to be created for
Instructions
These instructions should help you set up the linking required for your assignment.
The first step is to link the balances (even the zero ones) of all the general ledgers to the Live Trial Balance (LTB). Open the LTB worksheet and also a New Window (Go to view and New window May). Drag one LTB to the left and the other to the right. Change the Right one to General Ledgers worksheet.
a. Now go to cell C6 of the LTB and type = (equals) then click on cell G19 of the General Ledger and enter. The Balance of the debit Cash at bank Ledger should now be linked to the LTB.
b. Keep linking into the debit column down to and including Store Hire Gowns (cell G150 of GL to cell C16 of LTB.
c. Now we have a Credit account (contra Accum Dep Gowns so go to cell D17 of the LTB and link it to cell G163 of the General Ledgers
d. Continue down so that the balances of Debit ledgers and Credit ledgers are linked to the appropriate side of the LTB
2. Recording Opening balances. This would usually be done using a big General journal entry but we will do it by simply by linking the values from the Chart.
a. Change the left screen from LTB to Chart. In Cash at Bank G/L put in the Date...Opening Balance....OB as shown in Figure 1. Link from cell E11 to Chart D13 and the balance should come across. Note that the LTB has gone out of balance and will stay out until the last opening balances is done.
3. Now we link the Values of our Special Journals to the Ledgers. On the Left hand window go to the Purchases Journal (PJ) worksheet. The Row 22 has the sums of all the columns F to J. To test this type in 55 in cell F9 and then 55 in cell J9. You can see that they go down to Row 22 see Figure 2 that has had rows 11-18 hidden for this demonstration.
Those cells in row 22 (Yellow) have to be linked to the general ledgers listed in row 23 (Blue) to complete the Journal to ledger linking.
a. Checking row 23 you will see that Gowns Inventory is the lowest numerically G/l 1030 The next being office equipment 1520 so it is best if you link in that order and continue right through to the highest. It is not that important but it will really help.
b. You will see that in the PJ I have set up the details for posting in cells G3 to I3. You can copy and paste this label into cell B102 of the ledger Then in cell E102 type = and then go to cell G22 of the PJ and enter the link. Change the Blue colour to Pink to remind you it is posted Test that it goes from PJ to LTB by typing 66 in cell G9 of the PJ. Complete the PJ. Take out the test figures you used.
4. Go through each of the journals posting the Yellow to the ledgers changing the Blue to pink as you go.
Attachment:- Assignment.rar