Accounting Fundamentals

ASSESSMENT BRIEF
Subject Code and Name	ACCT6002 Accounting Fundamentals
Assessment	Assessment 2 – Case Study
Individual/Group	Individual
Length	(1,500 words +/- 10%)
Learning Outcomes	Explain the accounting cycle and apply double entry accounting principles to process transactions.   Differentiate between periodic and perpetual inventory systems and apply appropriate accounting procedures.   e) Prepare an accounting worksheet, Income Statement, Statement of Changes in Equity and Balance Sheet for sole proprietors and partnerships.   g) Interpret, understand and analyse financial statements for decision making, and communicate their significance to accounting and non-accounting professionals.
Submission	By 11:55pm AEST/AEDT Sunday of Module 5.1 (week 9)
Weighting	30%
Total Marks	100 marks

Context:

The purpose of this assessment is to apply the conceptual and technical aspects of accounting and prepare relevant business financial statements. Students are expected to contenxtualise and evaluate accounting information presented in statements for decision making purposes. Each question uses realistic data and the professional practices similar to that found in workplaces.

ACCT6002_Assessment Brief 2_Individual Case Study

Submission Instruction

Please aim to complete this assignment a few days prior to the due date to allow for any unforeseen circumstances such as illness, holidays, family issues, work commitments etc. You may submit the assignment early if you have other commitments around the due date.

All times listed are local (Sydney) times. Please ensure you factor in any time difference between Sydney and your location when submitting your assignment, to avoid incurring any late submission penalties.

Please note the following important instructions relating to the assignment format and submission:

• Note that this is an individual piece of assessment. You will need to work individually to prepare a response to ALL of the questions listed in the assessment.
• You must submit your assessment in one Excel file. Any submissions in any other file formats will not be accepted.
• Each question (including all sub-questions) should be presented in a single worksheet. As there are 5 questions in this assessment, your Excel file should contain 5 worksheets in total.
• You cannot scan handwritten responses and submit. All answers must be typed in Excel.
• Your assessment needs to be submitted though the submission link available on the Blackboard. Assignments submitted via e-mail (or any other method) will NOT be accepted.
• Make sure that you upload the correct file. If you discover (after the due date) that you have uploaded a draft version or the wrong file completely, you will not be allowed to submit a second file.

Question 1: Preparation of Adjusted Trial Balance

Josh Clarendon operates a small retail store. The unadjusted trial balance of Josh’s Retail Store isshown below.

Josh’s Retail Store Unadjusted Trial Balance As at 30th June 2021
Account	Debit ($)	Credit ($)
Cash at Bank	35,000
Accounts Receivable	5,000
Inventory	14,600
Office Supplies	2,400
Motor Vehicle	15,000
Accumulated Depreciation – Motor Vehicle		4,000
Accounts Payable		3,000
Josh Clarendon, Capital		44,000
Josh Clarendon, Drawings	2,000
Sales Revenue		57,000
Sales Returns and Allowances	2,000
Purchases	15,000
Purchases Returns and Allowances		4,000
Salaries Expenses	11,000
Rent expense	10,000
Total	112,000	112,000

The following additional information was not considered while preparing unadjusted trial balance:

1. The Sales Revenue account includes $5,000 for the services to be provided in August 2021.
   1. The rent expense account includes an amount of $1,000 paid in advance for July 2021.
   1. The unused office supplies on hand totalled $1,500.
   1. Estimated depreciation on the motor vehicle is $2,000.

Note: In addition to those accounts listed in unadjusted trial balance, the chart of accounts of Josh’s Retail Store contains the following accounts: Prepaid rent, Unearned Revenue, Office Supplies Expense and Depreciation Expense.

Required

Prepare adjusted trial balance using the template provided over the page.

Josh’s Retail Store Worksheet as at 30 June 2021
	Unadjusted Trial Balance	Adjustments	Adjusted Trial Balance
Account Name	Dr	Cr	Dr	Cr	Dr	Cr
Cash at Bank	35,000
Accounts Receivable	5,000
Inventory	14,600
Office Supplies	2,400
Motor Vehicle	15,000
Accumulated Depreciation – Motor Vehicle		4,000
Accounts Payable		3,000
Josh Clarendon, Capital		44,000
Josh Clarendon, Drawings	2,000
Sales Revenue		57,000
Sales Returns and Allowances	2,000
Purchases	15,000
Purchases Returns and Allowances		4,000
Salaries Expenses	11,000
Rent expense	10,000
Total	112,000	112,000

Gym Bicycles is a retail business that purchases racing bicycles from suppliers and sells them to customers at a higher price. The business is registered for GST and uses perpetual inventory system. The following transactions occurred during March 2021.

Date	Details
Mar-03	Purchased 500 bicycles on credit for $385 each (plus GST) from Redline Central, terms 5/15, n/30.
Mar-05	Sold 275 bicycles on credit to Sun Bicycles for $572 (including GST); terms 3/10, n/30.
Mar-09	Received credit for the 8 damaged bicycles returned to Redline Central.
Mar-11	Paid Redline Central for the purchase of bicycles on 3rd March.
Mar-13	Sun Bicycles returned 6 bicycles as they were defective. Credit was granted for returned products.
Mar-14	Received payment from Sun Bicycles for the sales on 5th March.

Note: Gym Bicycles’s chart of accounts contained the following accounts: Cash at Bank, Inventory, Accounts Receivable, GST Receivable, Accounts Payable, GST Payable, Sales, Sales Return and Allowances, Discount Received, Discount Allowed, Cost of Sales.

Required

Prepare journal entries for the above transactions for the month of March 2021 for Gym Bicycles.

Question 3: Preparation of Financial Statements

Financial statements for Mandy’s Retail Shop are prepared annually. The adjusted trial balance amounts at June 30 are shown below.

Mandy’s Retail Shop Worksheet as at 30 June 2021 Adjusted Trial Balance
Account Name	Dr	Cr
Cash at Bank	39,000
Accounts Receivable	10,000
Inventory (1st July 2020)	19,600
Office Supplies	1,280
Motor Vehicle	20,000
Accumulated Depreciation – Motor Vehicle		8,000
Accounts Payable		1,050
Mortgage payable		45,000
Mandy, Capital		29,500
Mandy, Drawings	6,000
Sales Revenue		59,650
Sales Returns	2,900
Purchases	24,500
Purchase Returns		2,500
Salaries Expense	12,000
Rent Expense	6,000
Interest Expense	2,700
Unearned Revenue		1,300
Interest Payable		900
Office Supplies Expense	1,920
Depreciation Expense	2,000
Total	147,900	147,900

The end-of-period stocktake shows an inventory balance of $11,320 on 30 June.

Required

Prepare the following:

1. Income Statement
2. the closing entries on 30th June 2021.
3. Statement of Changes in Equity
4. Balance Sheet in narrative format

Question 4: Special Journals

Justin opened a corner store on 1 July 2021. He balances his books at the end of each month and uses special journals and the periodic inventory system. Transactions for July 2021 were as follows:

Date	Details
5-Jul	Purchased inventory from Orion Ltd. on account for $6,500 plus GST. The credit term is 2/15, n/30.
14-Jul	Sold $2000 inventory plus GST to Metro Ltd, the credit term is 3/10, n/30.
18-Jul	Paid Orion Ltd. for 5th July purchase. Cheque No.103.
27-Jul	Received cash payment from Metro Ltd.
31-Jul	Recorded depreciation expense for furniture, $300.

The chart of account for Justin’s Corner Store is shown below:

Cash at Bank	100	Accounts Payable Control	200
Accounts Receivable Control	110	GST Payable	210
Office Supplies	120	Justin, Capital	300
GST Receivable	140	Sales	400
Furniture	150	Discount Received	401
Accumulated depreciation – Furniture	151
Purchase	501
Purchase Return and Allowances	502
Discount Allowed	510
Salary Expense	520
Depreciation Expense	530

Required

Prepare the journal entries for the transactions above in the relevant journal books. Use Cash Receipts Journal, Cash Payments Journal, Purchases Journal, Sales Journal and General Journals where applicable. For each transaction, you need to do only one journal entry.

You may use the templates provided over the page.

Cash Receipts Journal

p. 1.

Date	Account	Post Ref.	Debits	Credits
Cash at Bank	Disc. Allowed	GST Payable	Sales	GST Payable	Acc. Recei.	Other

Cash Payments Journal

p. 1.

Date	Account	Ch. No.	Post Ref.	Debits	Credits
Other	Acc. Payable	Purchase	GST Rec.	Cash at Bank	Disc. Received	GST Rec.

Purchases Journal

p. 1.

Date	Account	Terms	Post Ref.	Purchases	GST Receivable	Accounts Payable

Sales Journal

p. 1.

Date	Account	Terms	Post Ref.	Sales	GST Payable	Accounts Receivable

General Journal

p. 1.

Date	Account	Post Ref.	Debit	Credit

Question 5: Financial Statement Analysis

Sarah works at a public company called JPG Manufacturing Ltd. She has observed that the company is trying to expand its operation in the market over the past one year. The management has heavily invested in plant and equipment over this period. Considering the high growth potential of the business, Sarah is planning to invest in this company by purchasing shares. She consulted with her friend Linda regarding this plan. After reviewing JPG Manufacturing’s balance sheet for past two years, Linda commented, “While I understand that this company is focusing on growth, they have taken a risky approach to achieve the growth”. Do you agree with Linda’s comment? Why or why not? Justify your answer.

Note: You will not be penalized if you do not use financial statement analyses ratios to answer this question. You need to provide explanation of why you agree or not-agree with Linda’s comment.

JPG Manufacturing Ltd Comparative Balance Sheet As at 30th June 2020 and 2021
	2020	2021
ASSETS
Current Assets
Cash at Bank	35400	9,300
Accounts Receivable	62700	76,650
Inventory	48000	60,600
Other current Assets	9600	8,850
Total Current Assets	155700	155400
Non-current Assets
Land and Building	81000	81,000
Plant and Equipment	93000	285,000
Furniture	8700	7,950
Long-term investment	13800	13,500
Total Non-current Assets	196500	387450
Total Assets
352200	542850
LIABILITIES
Current liabilities
Accounts Payable	78600	78,150
Total current liabilities	78600	78150
Non-current liabilities
Long-term debt	123600	313,200
Total non-current liabilities	123600	313200
Total Liabilities
202200	391350
EQUITY
Share Capital	150000	151,500
Total Equity	150000	151,500
Total Liability and Equity	352200	542,850

Learning Rubric: Assessment 2

Assessment Criteria	Fail (Unacceptable) 0- 49%	Pass (Functional) 50-64%	Credit (Proficient) 65-74%	Distinction (Advanced) 75 -84%	High Distinction (Exceptional) 85- 100%
Understanding	Shows very little to no	Shows limited	Thorough knowledge or	Highly developed	A sophisticated
and ability to	understanding of how to	understanding of how to	understanding of the	understanding of the	understanding of the
analyse and/or	apply the accounting	apply the accounting	accounting system	accounting system	accounting system
critique	system technique to the	system technique to the	techniques relevant to	techniques relevant to the	techniques relevant to the
accounting	case study questions.	case study questions.	the case study.	case study.	case study.
techniques and
methods used in practice and financial information that	Key components of the assignment are not addressed.	Has answered some parts incorrectly.
are prepared.
	Demonstrates little to no
	capacity to explain and
	apply relevant concepts.
	Has answered most parts
	incorrectly.
10%

Knowledge and understanding of accounting concepts, techniques and processes       40%	Limited awareness of relevant accounting information required for business decisions     Difficulty and/or confusion in identifying correct accounting concepts, tools and processes required for case study questions	Understanding and being able to identify relevant accounting information for business decisions   Understanding a range of accounting techniques and processes available for generating and analysing information   Ability to use appropriate accounting techniques and	Understanding rationale for selecting specific accounting tools and processes   Understanding and being able to explain quantitative and qualitative characteristics of accounting information useful for business decisions	Thoroughly understanding the accounting concepts, techniques and processes   Being able to justify selection of specific accounting tools and processes	Thoroughly understanding accounting concepts, techniques and processes, and accounting information required for solving practical problems   Being able to critically justify selection of applicable accounting tools and processes
		processes
Discuss and apply	No or little use of	Applying correct steps in	Identify and explain	Analysing quantitative and	Correctly preparing and
accounting tools,	accounting information	preparing	quantitative and	qualitative characteristics of	interpreting different
concepts and	for decision making	accounting reports	qualitative	accounting information, and	accounting statements.
techniques to prepare			characteristics of	applying analysis to
accounting information that is useful for decision making,	Difficulty and/or confusion in preparing accounting reports	Applying appropriate accounting procedures	accounting information, which are useful for business decisions	solve practical problems   Correctly preparing and	Critically justifying business decisions using relevant accounting
				interpreting different	information
	Difficulty and/or confusion in identifying and applying correct accounting procedures			accounting statements.
40%

Effective communication	Difficulty in explaining rationale for selected accounting tools and processes	Mostly clear information presentation, with some minor errors       Evidence of attempts to make clear to audience, the rationale and application of selected accounting tools and processes	Mostly clear and understandable presentation of information	Clearly presented and adequately justified responses   Good references to quantitative and qualitative information where applicable	Clearly presented and adequately substantiated responses, which indicate full understanding and thorough application of relevant accounting tools and processes   Sufficiently substantiated discussion of quantitative and qualitative information
10%