ACC500Business Decision Makings
Subject Title Business Decision Makings Subject Code ACC500 Assessment Individual Assignment using XERO Assessment total 20% Date and time due Sunday, 11.55 pm, End of Week 6 Instructions Students must submit seven (7) reports generated from Xero in pdf format through the Assignment Submission Box. A list of these reports is set out below. All in pdf format Student Name Student Number Report Your mark Question 1 (6 marks) Trial Balance – for the period 1 to 30 December 2021 Question 2 (2 marks) Aged payables as at 31 December 2021 [Summary] Question 3 (2 marks) Aged Receivables as at 31 December 2021 [Summary] Question 4 (2 marks) General ledger [Detail] 1 – 31 December 2021 Question 5 (3 marks) Profit & loss statement for the period 30 November 2021 to 31 December 2021 Question 6 (3 marks) Balance sheet – As at 31 December 2021 Question 7 (2 marks) General Journals – 1 – 31 December 2021
BUSINESS DECISION MAKING ACC500
Individual Assignment – Date due: End of Week 6 Using Accounting Software
This case study is designed to introduce you to using double entry computer accounting software for a small business. It covers many of the common business transactions including those which have covered in class. This assignment will also include Goods and Services Tax (GST) calculations as this is embedded in the accounting software, but is not examined.
This assignment is not meant to be a data entry exercise, but you are required to carefully record each transaction, understand how the software records these transactions in both the general and subsidiary ledgers and create reports and then analyse and understand these reports.
Accountants were one of the first professions to use accounting software. XERO is a relatively new and now widely used software as it has a number of innovative features, such as: –
- The software application is in the ‘cloud’ so it can be accessed anywhere in the world on any connected device and there is no software to load onto computers;
- The software is updated regularly by Xero, so no updating required by users;
- The software links to other applications easily such as bank accounts – bank transactions are uploaded automatically when the user logs into the application;
- Written in user friendly language rather than being for ‘accountants.
The Bronte Surf Shop Pty Limited
The Bronte Surf Shop (BSS PL) is a retail store located in Bronte, overlooking Bronte Beach. BSS PL focuses on the surfing market, providing surfing lessons as well as equipment and clothing and other merchandise sales.
Equipment is sold to the general public as well as in bulk to sporting clubs and schools. Surfing lessons are usually held in groups.
The store is owned by two people – Harmanpreet Raj and Bishan Dev. They have been operating the store for 2 years after initially investing $150,000 each of their own money into the business. They are joint Chief Executive Officers (CEO’s) and equal shareholders.
Surfing lessons are conducted seven (7) days per week subject to the weather. These lessons are mainly catered to tourists and / or local residents wanting to learn surfing. Equipment is included in the cost of surfing lessons.
BSS PL earns most of its revenue from clothing and equipment sales. The shop is open 7 days per week and as well, BSS PL sells directly to surfing clubs and schools.
The store has operated the business using a manual accounting system since it started on 1 July 2017. Accounting is getting too complicated and time consuming for Harmanpreet and Bishan and they have appointed you as their new Accountant. They have heard about Xero as an easy to use accounting system and they would like you to set up their accounts
on this system and also manage the accounting from now on.
You gather the following information that will help you set up the company in XERO:
Company name: The Bronte Surf Shop Pty Limited ABN (Australian Business Number) – 54 174 259 919 Current Financial Year: 2022
Financial Reporting period: 1 July 2021 to 30 June 2022
Conversion Month: December 2021 Accounting Periods: Twelve
This list below can be used to create an accounts list with the account opening balances.
|Trial balance as at 30 November 2021|
|Cash at bank||231,889.00|
|Accumulated Depreciation – Leasehold Improvements||36,432.00|
|Accumulated depreciation – MV||19,250.00|
|Accumulated depreciation – Office Equip’||33,132.00|
|Accruals – Holiday Pay||17,075.00|
|Bank Loan – due in 2026||200,000.00|
|Sales Revenue – Clothing and merchandise||525,400.00|
|Revenue – Surf Lessons||98,000.00|
|Cost of Goods Sold||394,050.00|
|Sales and marketing expenses||123,400.00|
|Telephone and internet||2,550.00|
|Wages and salaries||176,250.00|
|Motor Vehicle expenses||39,950.00|
Goods and Services Tax (GST): Sales and Purchases
GST of 10% is charged on all revenue and is charged at 10% on all purchases of inventory. For all business expenses other than bank charges, wages and superannuation, the business pays GST of 10%.
All in-store sales (either EFTPOS, Credit Card or Cash) are effectively cash sales. Cash is banked every day as there is an express Bank facility located next door to the store, which is operated 24 hours per day, 7 days per week. This policy of banking all takings each day is implemented for security reasons so as no money is left in the store overnight. This means that all income received from in-store sales can be entered into Xero’s bank account immediately after each transaction.
Class price List as at 1 July 2021
|Per person per session||Price charged per hour including GST||Session running time|
|Surf lessons||Adults $90, Children $50||1 hour|
Ensure that these items are set up as inventory items.
The above prices include GST. All classes revenue is strictly cash based, where customers pay before the service is performed.
|Name||Address||Supplier Terms||Account Balance|
|Surf Warehouse||5/11 Park Street, Manly NSW 2095 ABN: 45 544 555 888||Net 30||Nil|
|Checkout Chicks Ltd||78 Pacific Avenue, Pymble NSW 2073 (ABN 45 655 766 877)||Net 30||Nil|
|Cool Clothing Company||180 Beach Road, Noosa Heads, QLD 4567 (ABN 66 327 876 521)||Net 30||Nil|
There were no amounts owing as at 30 November 2021.
The following is a list of inventories on hand and the suppliers as at 30 November 2021.
|Item Code||Description||Qty on hand||Cost price $||Total Inventory $||Sale Price $||Supplier|
|1101||Short Boards||26||550||14,300||1,250||Keyo Surfboards|
|1102||Long Boards||25||750||18,750||1,900||Keyo Surfboards|
|1103||Women’s T-shirts||120||10||1,200||50||Surf Warehouse|
|1104||Women’s Leisure Wear||105||35||3,675||125||Surf Warehouse|
|1105||Women’s’ Swimwear||105||40||4,200||100||Quicksilver Wholesale|
|1106||Men’s T-shirts||120||10||1,200||50||Surf Warehouse|
|1107||Men’s Board shorts and other shorts||100||35||3,500||110||Surf Warehouse|
|1108||Men’s’ Swimwear||120||25||3,000||75||Quicksilver Wholesale|
Each of the above items of inventory are quoted excluding GST. On each item, an additional 10% GST is charged on the sales price and 10% GST paid on the cost price.
A delivery truck was purchased on 1 July 2018 for $45,000 (excluding GST). It has a useful life of 5 years and a residual value of $12,000.
Leasehold improvements were completed on 31 December 2018 at a cost of $110,000 (excluding GST). These have a useful life of 10 years and a residual value of $15,000.
Office equipment was purchased on 1 October 2017 for $45,200 (excluding GST). It has a useful life of 5 years and a residual value of $Nil.
Depreciation expenses have been charged to 30 June 2021. Round calculations to the nearest dollar.
The business has an interest only loan with its Bank. The interest rate is 5.0% pa, and no principal payments are due until 30 June 2026. Interest is payable monthly, and no interest has been accounted for this financial year.
The following transactions during the period 1 to 31 December 2021 have not yet been recorded and you must enter these transactions. Create invoices for all sales, including in store sales
|Date – December 2021||Transactions|
|1||In-store sales were for 6 men’s T-shirts, 10 Women’s Leisure wear, 2 short surfboards|
|2||10 adults and 20 children had surfing lessons and paid|
|3||Surf Warehouse had a promotion for Women’s clothing. Tina purchased 30 Women’s T-shirts. Surf Warehouse Invoice #322|
|4||15 children paid for surfing lessons.|
|5||Sold – 35 Women’s swimwear and 35 Men’s swimwear to a new customer, Yamba High School (ABN 23 454 654, Beach Road, Yamba) (terms n/7)|
|6||In-store sales were for 18 women’s T-shirts and Leisure Wear, each and 12 men’s T-shirts.|
|7||16 adults and 16 children paid for surfing lessons.|
|8||In-store sales were for 30 men’s T-shirts, 4 short surfboards and 6 long boards.|
|9||Paid BPay for electricity bill for December 2021 to Energy Australia of $526.40 (including GST)|
|10||Received payment from Yamba High School.|
|12||Purchased 40 women’s T-shirts and 40 men’s T-shirts, 50 Women’s swimsuits from Surf Warehouse. Terms 5/10, n/30. Invoice #888|
|13||Paid Surf Warehouse invoice # 322|
|13||Bronte Girls High purchased 55 swimsuits. (ABN 27 343 456 765, 209 Bronte Bay Road, Bronte). (Terms n/30)|
|15||In-store sales were for 16 men’s T-shirts, 40 Women’s Leisure wear, 5 short boards and 6 long boards|
|15||Tina purchased a new computerised cash register. Cost $5,400 + GST, useful life of 4 years, no residual value. It will arrive tomorrow. The supplier is Checkout Chicks Ltd, 78 Pacific Avenue, Pymble NSW 2075 (ABN 45 655 766 877) Invoice #549, Payable in 30 days.|
|16||20 adults and 30 children paid for surfing lessons.|
|16||Tina ordered 50 Leisure wear from a new supplier – Cool Clothing Company (180 Beach Road, Noosa Heads, QLD 4567 + Freight $110 (incl GST) Payable n/30, Invoice # 344.|
|17||In-store sales were for 40 women’s T-shirts, 25 men’s T-shirts. 5 short boards were sold for cash.|
|19||Paid for a marketing campaign from Aloha Marketing Pty Limited, 1080 Barrenjoey Rd, Palm Beach NSW 2108 (ABN 25 678 987 543) Invoice No. 23459. This will run during January to March 2022 at a cost of $45,000 + GST.|
|22||Paid Surf Warehouse invoice #888|
|22||Sold 25 Women’s and 25 men’s swimmers to Angourie High School at a 10%|
|discount, payable in 30 days. The shop donated 2 Long boards to the school for $nil.|
|24||Paid $810 (including GST) by Direct payment to North Coast Council for Council rates for 3 months – for the period 1 December to 30 November 2021|
|25||Received an invoice from Telstra for $770 (incl GST) for telephone and internet charges (Invoice No. 132457) Telstra for December 2021.|
|27||The owners did a stock take. There were 9 short boards and 11 Long boards counted.|
|30||Monthly bank statement received from the Bank showed the following transactions: – Bank Charges – $15, Direct Debit – Interest Income $175 (direct Credit)|
Balance day adjustments – 31 December 2021
Depreciation for all non-current assets is to be recorded for the period 1 July 2021 to 31 December 2021 as a General Journal entry.
You are required to adjust for prepayments and any other month end adjustments.
Once you have read through the assignment ,complete the following tasks in order and produce the following reports: –
- Look at the Video on Moodle
- Download a copy of the Setup Guide from Moodle
- Enter the business information including name, address, ABN and company preferences.
- Establish a chart of accounts based upon the trial balance and enter the opening balances correctly. Record the transactions for December 2021
- Calculate and record adjusting entries for the period ended 31 December 2021
- Check your reports
- Print the required – check for completeness – lodge all the reports as listed on Page 1 through the Individual Assignment Submission Box. All files must be saved using your student ID number
Here is a list of things you can do in order to attempt to gain high marks.
- Start the assignment early and finish early so that you have plenty of time to go back over your work and find any
- Remember your password
- Set regular times to complete the tasks and set deadlines that you can realistically achieve.
- Compare your work with as many other students as possible before you hand it in. If you find that you have recorded things differently, you both can’t be right, or you can both be wrong, so discuss it and make the necessary corrections.
Students have traditionally made the same predictable mistakes. Some common mistakes include (but are not limited to) the following:
- Incorrect amounts entered into the opening balances in the chart of accounts. Check to ensure that the amounts entered are positive except for the contra accounts.
- Wrong amounts recorded – eg Incorrect sales/purchases amounts
- Enter an order incorrectly as an invoice
- Transactions recorded twice
- Entering freight into the incorrect screen
- Entering expense payments into supplier purchases command centre
- GST missing or applied where it shouldn’t be.
- Missing end of month adjusting entries.
- Wrong amounts recorded – eg Incorrect sales/purchases amounts