BFA104 Accounting Context and Method
Semester 2, 2019
This assignment involves completing the accounting records for a small sole trader business for one month and completing the year-end procedures. It is worth 15% of your final grade. It is due by 3 pm on Thursday, 3 October 2019. No rubric will be provided as the assignment is completely practical in nature (there is no written component) and as such the answers will be either correct or incorrect. However a marking scheme showing the marks to be allocated to each part of the assignment is shown below. To begin the assignment you should open the Excel spreadsheet that was sent to you via email. Save it immediately with your name as part of the filename.
This is an individual assignment. Under no circumstances should you share your workings or any part of your assignment with other students. This constitutes academic misconduct and actions will be taken. All similarity reports on Turnitin will be thoroughly checked for matching with other assignments. In the past, several students have been reported to the Head of School for academic misconduct in BFA104 with regard the assignment so please do your own work.
NOTE: You must use the spreadsheet that was individually emailed to you.
You must complete ALL the assignment using the Excel spreadsheet document and this is the file you will submit on MyLO. Basic proformas have been created for you. Across the bottom of the Excel file you will see different worksheets for each journal, ledger, trial balance, etc. Where possible, you should attempt to use some basic formula such as the SUM function when totalling journals. If you are having issues with the use of Excel you should, in the first instance, try to use the Help function or Google and watch Youtube videos. You may ask some questions about issues with Excel on MyLO discussion boards. You should not discuss how to do the actual accounting in the assignment on MyLO.
You are required to:
1. Record accurately all transactions for the month of June and the end of the accounting period in the correct journals. You will need to complete the Inventory Subsidiary Ledger cards for the two items of inventory as you go so that you can calculate the Cost of Goods Sold for each lot of sales. (Topic 5 and Topic 7)
2. Complete adjusting entries at the end of the period, but not closing entries at this stage. (Topic 3 and 9 for depreciation methods.)
3. Complete a bank reconciliation process before totalling the cash journals. (Topic 8 – there was a “how to do a bank reconciliation” handout.)
4. Post the journals to the general ledger at the end of the month (and post to the subsidiary ledger daily). The ledger accounts have been created for you but you will firstly need to enter the opening balances in each account on 1st June. NOTE: the income and expense accounts will have an opening balance at this point as they are only closed off using closing entries at the end of the financial year. You should get these from the Trial Balance and Schedules. (Topic 5 – there was a “how to post” special journals handout.)
5. Complete Schedules of Accounts Receivable, Accounts Payable and Inventory and reconcile these with the relevant control accounts. (Topic 5 and 7)
6. Complete the adjusted Trial Balance (do this BEFORE completing and posting closing entries).
7. Complete closing entries necessary at the end of the accounting period and post them to the Ledger. Balance the Balance Sheet accounts. (Topic 4)
8. Complete an internal Income Statement and Balance Sheet. You should put aggregated amounts and a “Note” for the following items:
• Sales and Sales Returns
• Cost of Sales
• Depreciation Expense (add the two together)
• Accounts Receivable and Allowance for Doubtful Debts
• Fixed assets and their respective accumulated depreciation
• Q Smith, Capital (incorporate drawings and profit in the note)
(See Topic 4 and Topic 7 for examples. Topic 7 is particularly relevant as this is a wholesale business selling inventory.)
Submission of Assignment:
Upload your completed spreadsheet file to the MYLO drop box. There will be no paper submission. The date stamp on the electronic submission will determine if your assignment has been submitted on time. Late work WILL be penalised unless you have been granted an extension by the unit coordinator. Remember, you MUST use the individual spreadsheet that was emailed to you directly.
Assignment Marking Allocation:
Section Possible Mark
General Journal 20
Sales Journal 3
Purchases Journal 3
Cash Receipts Journal 6
Cash Payments Journal 6
Accounts Receivable Ledger 5
Accounts Payable Ledger 5
Inventory Ledger 10
General Ledger 15
Bank Reconciliation 4
Schedules of Subsidiary Ledgers 3
Trial Balance 5
Financial Statements 15
Information Concerning the Business:
Queeny Smith is a sole trader who operates Queeny’s Quilts, a wholesale business selling old fashioned patchwork quilts to retail bedding and linen shops in Tasmania, and on the internet. Queeny operates her business from a small, rented warehouse in Oatlands. She employs a casual worker for four days a week. Queeny’s bookkeeper has just retired and she asks you if you can help her to record the transactions for June. As you are studying accounting, she also asks you to finish off the books for the year and prepare some financial statements for her. She is thinking of expanding and needs the statements to apply for a bank loan. The bookkeeper has been keeping the records manually but Queeny is keen for you to use Excel to complete the various records each month. Ignore GST.
• Queeny sells two products, the Country Garden Quilt and the Crazy Patchwork Quilt.
• She uses a perpetual inventory system and the First-in, First-out method to assign costs to Cost of Goods Sold.
• Prepayments (prepaid expenses or unearned revenue) are treated as an Asset or Liability when paid.
• Assume transactions are on credit unless it is stated otherwise.
• All transactions are recorded on the day they occur.
• For convenience, round all figures to the nearest dollar (you can get Excel to do this for you by showing no cents).
Below you will find the schedules of balances from the subsidiary ledgers, the Bank Reconciliation Statement and the Trial Balance from the end of May 2019. These are followed by the transactions for the month of June, which you are to record, and the June Bank Statement received by Queeny from her bank.
Schedule of Accounts Receivable at 31 May 2019
Acc No Account Amount
101 B Button 7 250
102 T Thread 4 277
103 B Bobbin 2 055
Schedule of Accounts Payable at 31 May 2019
Acc No Account Amount
201 L Linen 5 618
202 C Cotton 4 557
203 S Silk 5 360
Inventory Subsidiary Ledger at 31 May 2019
Item No Product Name Units Unit Cost Amount
5001 Country Garden Quilt 42 245 10 290
5002 Crazy Patchwork Quilt 39 112 4 368
The May Bank Reconciliation Statement is as follows:
Queeny’s Wilderness Quilts
Bank Reconciliation Statement
As at 31 May 2019
Balance as per Bank Statement 76 645 Cr
Add Outstanding Deposit 2 940
Less Unpresented cheques
No 491 3 125
No 500 480
No 502 1 450 5 055
Balance as per Cash at Bank Account 74 530 Dr
The Trial Balance as at 31 May 2019 prepared by the old bookkeeper is as follows:
Account Name Acc No Debit Credit
Cash at Bank 1-1100 74 530
Accounts Receivable Control 1-1104 13 582
Allowance for Doubtful Debts 1-1105 565
Inventory Control 1-1115 14 658
Packaging Materials 1-2121 2 480
Prepaid Insurance 1-2125 1 890
Warehouse Fixtures and Fittings 1-3175 42 000
Accum Depn – Warehouse Fixtures and Fittings 1-3176 15 000
Delivery Truck 1-3180 65 000
Accum Depn – Delivery Truck 1-3181 47 000
Accounts Payable Control 2-1200 15 535
Accrued Expense Payable 2-1215
Q Smith, Capital 3-1300 120 600
Q Smith, Drawings 3-1310 48 205
Profit and Loss Summary 3-9000
Sales 4-1000 176 244
Sales Returns and Other Allowances 4-1005 410
Interest Revenue 4-8410 75
Discount Received 4-8420 74
Cost of Goods Sold 5-1000 89 540
Salaries and Wages Expense 6-2540 18 350
Telephone and Internet Expense 6-2545 2 145
Electricity Expense 6-2547 2 035
Insurance Expense 6-2550
Packaging Materials Expense 6-2556
Depn Expense – Warehouse Fixtures and Fittings 6-2563
Depn Expense – Delivery Truck 6-2564
Bank Fee Expense 6-3580 150
Bad Debts Expense 6-3590
Discount Allowed 6-3595 118
$375 093 $375 093
Transactions for the month of June are as follows:
June 1 Received $2 000 from B Bobbin for full payment of her debt as at 31 May, Receipt No 103 (hint, we may have given her a discount).
1 Paid the annual insurance premium of $2 356, Cheque 503.
1 Traded in the delivery truck for $8 000 in part payment for a new delivery truck costing $84 000. The remaining $76 000 was paid in cash, Cheque 504 (see depreciation information below). NOTE: You will need to wait until we have learnt Topic 9 to do the general journal part of this entry but you can enter the amount of cash in the appropriate cash journal before then.
2 Cash Sales, 12 Crazy Patchwork Quilts @ $180, Receipt No 104.
4 Paid S Silk the amount owing to them less 5% cash discount for early payment, Cheque 505.
6 Credit sales to T Thread of 20 Country Garden Quilts @ $340, Invoice No. 56.
6 Paid L Linen the amount owing at 31 May and received a 7.5% discount for early payment, Cheque 506.
7 Paid wages owing for the fortnight $420, Cheque 507.
8 Paid C Cotton the full amount owing as at 31 May, Cheque 508.
9 Received $7,170 from B Button as full payment of her debt as at 31 May, Receipt No 105.
14 Paid Electricity Account $570, Cheque 509.
15 Purchased 30 Country Garden Quilts @ $250 from C Cotton, Invoice 1290.
16 Purchased 25 Crazy Patchwork Quilts @ $115 from S Silk, Invoice 101.
18 Credit sales to B Bobbin of 33 Country Garden Quilts @ $348 each, Invoice No 57.
18 Cash sales, 15 Country Garden Quilts @ $350, Receipt No 106.
19 Credit sales to B Button 25 Crazy Patchwork Quilts @ $184 each, Invoice No. 58.
21 B Button returned 5 Crazy Patchwork Quilts as she decided she only wanted 20. Queeny issued Credit Note 19 and gave B Button a credit. As the Quilts were not damaged, they were returned to the inventory.
22 Paid wages owing for the fortnight $420, Cheque 510.
23 Received $5,100 from T Thread, Receipt No 107.
24 Credit sales to B Bobbin of 15 Crazy Patchwork Quilts @ $185, Invoice No. 59.
25 Purchased 40 Country Garden Quilts @ $252 each from L Linen, Invoice 277.
26 Cash Sales, 10 Country Garden Quilts @ $365 and 10 Crazy Patchwork Quilts @ $185, Receipt No 108.
28 Received $3 000 from B Button, Receipt No 109.
29 Paid S Silk amount owing less 5% discount for early payment, Cheque 511.
30 End of accounting period adjustments
• Insurance is paid once a year in advance on 1 June each year. No adjustment has been made during the year.
• Wages owing at 30 June $220.
• A stocktake in the office reveals that Packaging Materials on Hand are $640.
Warehouse Fixtures and Fittings depreciation is based on 12 years usage and the straight line method (residual value $6 000)
The old Delivery Truck sold on 30 June is depreciated at 18% using the diminishing balance method (residual $8 000).
The new Delivery Truck bought on 1 June is to be depreciated at 25% using the diminishing balance method (residual $10,000).
• The Telephone and Internet account for June for $320 has not been received or paid.
• Allowance for Doubtful Debts needs to be adjusted to equal 6% of Accounts Receivable Control at 30 June.
• A stocktake revealed the following closing balances:
Queeny Country Garden Quilt 34
Queeny Crazy Patchwork Quilt 7
Queeny received the following bank statement from her bank for the month of June.
Queeny’s Quilts National Park Bank A/c No 2350
Date Particulars Debits Credits Balance
2019 $ $ $
June 1 Balance forward 76 645 Cr
1 Cash and cheques 2 940 79 585 Cr
1 Cash and cheques 2 000 81 585 Cr
2 Cash and cheques 2 160 83 745 Cr
3 Cheque 505 5 092 78 653 Cr
9 Cash and cheques 7 170 85 823 Cr
11 Account Fee 55 85 768 Cr
12 Cheque 502 1 450 84 318 Cr
Cheque 503 2 356 81 962 Cr
16 Returned Cheque (B Bobbin) 2 000 79 962 Cr
18 Cash and cheques 5 250 85 212 Cr
19 Interest Earned 42 85 254 Cr
19 Cheque 509 570 84 684 Cr
20 Cheque 500 480 84 204 Cr
Cheque 504 76 000 8 204 Cr
23 Cash and cheques 5 100 13 304 Cr
26 Cash and cheques 5 500 18 804 Cr
29 Cheque 510 420 18 384 Cr
29 Cheque 507 420 17 964 Cr
30 Transaction Fees 37 17 927 Cr
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