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Prepare Financial Reports

V2017 USER GUIDE

BSBFIA304 BSBFIA401

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All Rights Reserved

© Copyright 2018 OfficeLink Learning Version 18.4 2017

This user guide is based on the previous version 17.6 19.11

No part of the contents of this book may be reproduced or transmitted in any form or by any

means without the written permission of OfficeLink Learning. All registered trademarks, or

service marks of their respective owners.

While care has been taken in the preparation of this Training Tool, OfficeLink Learning, the

developer does not accept any liability for any damage or loss (including indirect and

consequential loss) incurred by any person as a result of relying on the information contained in

this material. This tool should not be regarded as professional advice and it should not be relied

upon in any important matter without obtaining appropriate advice relevant to your situation.

It is the Registered Training Organisation’s responsibility to validate the mapping of this tool to

the performance criteria.

Trademarks and Acknowledgements

All terms or products mentioned in this manual that are known to be trademarks have been

acknowledged. OfficeLink Learning cannot attest to the accuracy of this information. Use of a

term in this manual should not be regarded as affecting the validity of any trademark.

Marian Brown’s content has contributed to this text.

Software Description

This course has been designed for users of the MYOB product AccountRight Plus AU (Education)

2017.1.1.

Mac users will need to install and use ‘Parallels’ or similar software, i.e. an emulator installed to

allow the Mac to run PC programs.

The case study in this material uses fictional information.

Accredited MYOB Publisher

OfficeLink Learning has been accredited by MYOB as a Publishing Associate. We have met the

selection criteria to hold this status.

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Elements of Competency and Performance Criteria

© Copyright 2018 OfficeLink Learning 211

Appendix A

Elements of Competency and

Performance Criteria

BSBFIA401 Prepare Financial Reports

Element Performance Criteria Demonstrated

1 Maintain asset register

1.1 Prepare a register of property, plant and equipment from fixed asset transactions in accordance with organisational policy and procedures.

Unit 3

Unit 9

1.2 Determine method of calculating depreciation in accordance with organisational requirements.

Unit 3

Unit 9

1.3 Maintain asset register and associated depreciation schedule in accordance with organisational policy and procedures and accounting requirements.

Unit 3

2 Record general journal entries for balance day adjustments

2.1 Record depreciation of non-current assets and disposal of fixed assets in accordance with organisational policy, procedures and accounting requirements.

Unit 3

Unit 4

Unit 9

2.2 Adjust expense accounts and revenue accounts for prepayments and accruals.

Unit 4

Unit 9

2.3 Record bad and doubtful debts in accordance with organisational policy, procedures and accounting requirements.

Unit 8

Unit 9

2.4 Adjust ledger accounts for inventories, if required, and transfer to final accounts.

Unit 4

Unit 9

3 Prepare final general ledger accounts

3.1 Enter general journal entries for balance day adjustments in general ledger system in accordance with organisational policy, procedures and accounting requirements.

Unit 5

Unit 9

3.2 Post revenue and expense account balances to final general ledger accounts system.

Unit 5

Unit 9

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Elements of Competency and Performance Criteria

212 © Copyright 2018 OfficeLink Learning


3.3 Prepare final general ledger accounts to reflect gross and net profits for reporting period.

Unit 6

Unit 9

4 Prepare end-of-period financial reports

4.1 Prepare revenue statement in accordance with organisational requirements to reflect operating profit for reporting period.

Unit 7

Unit 9

4.2 Prepare balance sheet to reflect financial position of business at end of reporting period.

Unit 7

Unit 9

4.3 Identify and correct errors or refer errors for resolution in accordance with organisational policy and procedures.

All Units

BSBFIA304 Maintain a General Ledger


1 Process journal entries

1.1 Prepare general journal entries from source journals in accordance with accounting requirements, organisational policy, procedures and accounting standards.

Unit 4

Unit 5

1.2 Post journal entries into general ledger system in accordance with organisational policy, procedures and accounting standards.

Unit 4

Unit 5

1.3 Reconcile accounts payable and accounts receivable subsidiary ledger systems with general ledger.

Unit 4

Unit 5

1.4 Ensure processing maintains the accounting equation and is completed within designated time lines

Unit 4

Unit 5

2 Prepare a trial balance

2.1 Prepare trial balance of general ledger system in accordance with organisational requirements and accounting standards, and ensure it is checked for accuracy.

Unit 4

Unit 5

2.2 Identify and rectify irregularities or refer them for resolution when trial balance does not balance, in accordance with organisational policy and procedures.

Unit 4

Unit 5

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Contents

© Copyright 2018 OfficeLink Learning iii

Contents Unit 1 Introduction .................................................................. 1 Purpose of this workbook ........................................................................ 1 Prerequisites ....................................................................................... 1 Organisation of this workbook .................................................................. 2 Relationship to Competency Standards ....................................................... 2 What you will need ............................................................................... 3 Conventions used in this User Guide ........................................................... 4 Symbols used in this User Guide ................................................................ 5 Checking your working environment ........................................................... 6 Installing AccountRight Plus 2017.1 on a Windows PC ...................................... 7 Unit 2 Bookkeeping to Trial Balance ........................................... 13 Learning outcomes ............................................................................. 13 Information - Smiths Tyreworld .............................................................. 14 Extract from Accounting Policies and Procedures ......................................... 16 Revision – Maintaining Financial Records.................................................... 19 Cash Receipts Journal – Smiths Tyreworld .................................................. 25 Cash Payments Journal – Smiths Tyreworld................................................. 28 Bank Reconciliation ............................................................................ 29 General Ledger of Smiths Tyreworld ........................................................ 30 Preparation of a Trial Balance ................................................................ 34 Trade Debtors (Accounts Receivable) Ledger .............................................. 35 Trade Creditors (Accounts Payable) Ledger ................................................ 37 The Accounting Cycle .......................................................................... 38 Skills checklist ................................................................................... 39 Unit 3 Maintaining an Asset Register ........................................... 41 Learning outcomes ............................................................................. 41 What is an Asset Register? ..................................................................... 42 Asset Legislation ................................................................................ 42 What is depreciation? .......................................................................... 44 Estimating Effective Life ...................................................................... 44 Methods of Depreciation ....................................................................... 45 Units of Production Method ............................................................. 45 Straight-Line Method ..................................................................... 46 Diminishing Value ......................................................................... 47 Establishing an Assets Register ............................................................... 49 Calculating Depreciation on 30 June 2018 – Canon photocopier ........................ 55 Calculating Depreciation on 30 June 2018 – Toyota Ute .................................. 56 Example using Residual Cost .................................................................. 57 Calculating Depreciation on 30 June 2018 – Computer ................................... 58 Calculating Depreciation on 30 June 2018 – Toyota Kluger .............................. 59 Calculating Depreciation on 30 June 2018 – Brother Printer ............................. 60

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Contents

iv © Copyright 2018 OfficeLink Learning

Summary of Assets using a Depreciation Schedule ........................................ 61 Disposal of Assets ............................................................................... 63 Asset card solutions ............................................................................ 65 Skills checklist .................................................................................. 71 Unit 4 Processing journal entries ............................................... 73 Learning outcomes ............................................................................. 73 Analysing and interpreting reports .......................................................... 74 Creating Journals for Depreciation .......................................................... 77 Creating Journals for Disposal of Asset ..................................................... 78 Creating Journals for Balance Day Adjustments ........................................... 82 Task 1: Prepaid Expenses ................................................................ 82 Task 2: Prepaid Income .................................................................. 83 Task 3: Accrued Expenses (Accrued means owing) .................................. 84 Task 4: Accrued Income ................................................................. 85 Creating Journals to account for Doubtful Debts .......................................... 86 Creating Journals for stock adjustments ................................................... 88 Creating Journals for Income Tax and Superannuation ................................... 89 Creating Journals to correct errors .......................................................... 90 Reviewing your General Journal entries on 30 June 2018 ............................... 92 Entering Journal Entries in AccountRight Plus ............................................. 94 Correcting Errors - Policies and Procedures ............................................... 104 Correcting errors in AccountRight .......................................................... 104 Skills checklist ................................................................................. 106 Unit 5 Updating the General Ledger .......................................... 107 Learning outcomes ............................................................................ 107 Updating the General Ledger ................................................................ 108 General Ledger of Smiths Tyreworld ....................................................... 111 Preparation of the Adjusted Trial Balance ................................................ 120 Updating General Ledger in AccountRight and printing a Bank Reconciliation

and Trial Balance ........................................................................ 122 Industry Codes of Practice ................................................................... 126 Writing procedures ............................................................................ 127 Skills checklist ................................................................................. 128 Unit 6 Closing the Ledger ....................................................... 129 Learning outcomes ............................................................................ 129 Closing the General Ledger (manual) ...................................................... 130 Transferring the trade accounts to the Trading Account ............................... 131 Transferring the other income and overhead expense accounts to the Profit

and Loss Account ........................................................................ 134 Transferring the Net Profit to the Capital Account ...................................... 137 Transferring Drawings to the Capital Account ............................................ 138 Closing the General Ledger for 2018 in AccountRight ................................... 139 Closing a financial year in AccountRight Plus ............................................. 141 Skills checklist ................................................................................. 143

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Contents

© Copyright 2018 OfficeLink Learning v

Unit 7 Preparing Financial Reports ........................................... 147 Learning outcomes ............................................................................ 147 Purpose of financial reports .................................................................. 148 Knowledge of relevant legislation ........................................................... 148 Preparing a Profit and Loss Statement ..................................................... 151 Preparing a Balance Sheet ................................................................... 154 Printing a Profit & Loss Statement in AccountRight ...................................... 157 Printing a Balance Sheet in AccountRight .................................................. 158 Skills checklist .................................................................................. 159 Unit 8 Handling bad debts and balance day adjustments ................ 161 Learning outcomes ............................................................................ 161 Balance Day Adjustments ..................................................................... 162 Reversing Balance Day Adjustments ........................................................ 164 Reversing entries in AccountRight .......................................................... 168 Accounting for Bad and Doubtful Debts .................................................... 170 Accounting for Bad and Doubtful Debts in AccountRight ................................ 174 Skills checklist .................................................................................. 176 Unit 9 Additional exercises ..................................................... 177 Unit 9.1 Activity: Asset Register Card (after Unit 3) ..................................... 178 Unit 9.2 Activity: Asset Register Card (after Unit 3) ..................................... 179 Unit 9.3 Activity: Journal Entries (after Unit 4) .......................................... 180 Unit 9.4 Activity: Asset Register card, journals and ledger (after Unit 6) ............ 181 Unit 9.5 Activity: Journal Entries, Updating Ledger and prepare an adjusted

Trial Balance (after Unit 6) ............................................................. 186 Unit 9.6 Activity: Closing Ledger (after Unit 6) ........................................... 200 Unit 9.7 Activity: Prepare Financial Reports (after Unit 7) ............................. 201 Unit 9.8 Activity: Prepare Financial Reports (after Unit 7) ............................. 204 Unit 9.9 Activity: Bad and Doubtful Debts exercise (after Unit 8) ..................... 207 Unit 9.10 Activity: Bad and Doubtful Debts exercise (after Unit 8) ................... 209

Appendix A Elements of Competency and Performance Criteria ........ 211

Appendix B Solutions to exercises .............................................. 213 sample

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Processing journal entries


Unit 4


Learning outcomes

In this unit you will continue to process journal entries manually and use

AccountRight for the following:

depreciation

disposal of an asset

prepaid income

prepaid expenses

accrued income

accrued expenses

stock adjustments

bad and doubtful debts

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Smiths Tyreworld Policies and Procedures

1. Read the Policies and Procedures of Smiths Tyreworld in Unit 2.

2. What procedures must be followed when entering journal entries?

..........................................................................................

..........................................................................................

..........................................................................................

..........................................................................................

Analysing and interpreting reports

In Unit 3 you created a Depreciation Schedule for 2018. You will now use this document, approved by Angus, to process journal entries in the books of Smiths Tyreworld.

You may need to refer to your double-entry accounting rules in your ‘Maintain Financial Records’ text.

1. What is the annual amount of Office Equipment depreciation to be

written off? ...............................................................

2. What is the annual amount of Motor Vehicle depreciation to be written off? ...............................................................

3. What is the annual amount of Low-Value Pool depreciation to be written off? ...............................................................

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Revision: Recording the purchase of Assets (manual journal entries)

In the previous unit the manual purchases of the assets on 01/06/2018 were recorded on asset register cards.

Item Amount GST Value

Elite Computer $3,000.00 $300.00

Toyota Kluger $40,000.00 $3,920.00

Brother Laser Printer $900.00 $90.00

$43,900.00 $4,310.00

Total amount to be allocated to the Bank Loans is to be $48,210.00.

Now prepare the manual journal entries. 1-2110 MOTOR VEHICLES AT COST

Date Particulars Ref Debit Credit Balance Dr/Cr

July 1 Balance GJ 35,000.00 35,000.00 Dr

June 1 Toyota Kluger GJ

1-2210 OFFICE EQUIPMENT AT COST


July 31 Balance GJ 8,400.00 8,400.00 Dr

June 1 Elite Computer GJ

1-2510 LOW-VALUE POOL AT COST


June 1 Brother Printer GJ

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2-1220 GST PAID


July 31 Accounts Payable

[Purchases] PJ 1,400.00 1,400.00 Dr

Accounts Payable

[Purchases Returns] PRJ 53.00 1,347.00 Dr

Cash Payments CPJ 204.00 1,551.00 Dr

June 1 Purchase of equipment

and car GJ

2-2100 BANK LOAN


July 1 Balance GJ 40,000.00 40,000.00 Cr

June 1 Purchase of equipment

and car GJ

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Creating Journals for Depreciation

Task 1: Account for depreciation on Office Equipment – $3,298.63

Your journal entry will look like this. (Explanation is in italics.)

GENERAL JOURNAL Date Particulars Ref Debit Credit

June 30 Depreciation (Increase in Expenses)

3,298.63

Accumulated Depreciation – Office

Equipment (Decrease in Assets)

3,298.63

(Annual depreciation on office equipment using diminishing value method)

Note: It is customary to record the debit first and indent the credit.

Task 2: Account for depreciation on Motor Vehicles – refer to Schedule

1. Enter the above transaction in the journal below using the example above as a guide.

2. You may need to refer to the Chart of Accounts on pages 14-15.


June 30 ?

?

?

?

?

Solutions can be found on page 92.

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Task 3: Account for depreciation on Low-Value Pool - refer to Schedule

1. Enter the above transaction in the journal below using the example above as a guide.

2. You may need to refer to the Chart of Accounts on pages 14-15.


June 30 ?

?

?

?

?

Solution can be found on page 92.

Creating Journals for Disposal of Asset

The completed Toyota Ute Asset Card (after disposal) looked like this.

ASSET: TOYOTA UTE

Asset No.: M010 Purchase date: 30/6/17

Class/Category: Motor Vehicles Purchased from: Black Toyota

Deprec. Cost: $35,000.00 New/second-hand: NEW

Location: N/A Effective life: 8

Rego Number 00 OEQ Depreciation method: Straight-Line

Date Details Cost

Depreciation Accumulated

Depreciation

Written-down

Value GST

30/6/17 Purchase $35,000 $3,500 $0 $0 $35,000.00

30/6/18 Depreciation $4,375.00 $4,375.00 $30,625.00

Date of disposal: 30/6/18 Disposal price: $25,000.00

Authorised by: Angus Smith Gain/Loss on disposal: Loss $5,625.00

You will record the above disposal as shown in the following journal entries. (Explanation is in italics.)

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You are required to complete the journal by completing the ? fields.

30 June 2018 – Sold Toyota Ute for $27,500.00 including GST to T White.

Paid by bank transfer.


June 30 Bank

(Amount actually received and banked.) 27,500.00

Accumulated Depreciation –

Motor Vehicles (Depreciation amount already written off)

?

Loss on Sale (Amount calculated in Unit 3)

?

Motor Vehicle (at Cost) (The cost price of the car which is now

being disposed of.)

35,000.00

GST Collected (Amount of GST= 1/11th of $27,500.)

2,500.00

(Sale of Toyota Ute 00 0EQ to T White)

Totals to check the double-entry is accurate: ? ?


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Creating Journals for Disposal of Asset

The completed Canon Photocopier Asset Card (after disposal) looked like this.

ASSET: CANON PHOTOCOPIER

Asset No.: P312 Purchase date: 30/6/17

Class/Category: Office Equipment Purchased from: Printer

Deprec. Cost: $8,000.00 New/second-hand: NEW

Location: Print Room Effective life: 5

Serial Number DNRX547892 Depreciation Diminishing

Date Details Cost

DepreciationAccumulated

Depreciation

Written-

down GST

30/6/17 Purchase $8,000.00 $800 $0 $0 $8,000.00

30/6/18 Depreciation $3,200.00 $3,200.00 $4,800.00

Date of disposal: 30/6/18 Disposal price: $5,000.00

Authorised by: Angus Smith Gain/Loss on disposal: Gain $200.00

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Record the disposal of the photocopier in the General Journal below. Remember to refer to the Chart of Accounts on pages 14-15 for appropriate accounts.

30 June 2018 – Sold Canon Photocopier for $5,500.00 inc GST to Local School. Paid by

bank transfer.



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Creating Journals for Balance Day Adjustments

The Trial Balance of Smiths Tyreworld on 31 July 2017 is shown on page 34.

Our exercise has now jumped forward to the end of financial year. Please note that there are no transactions processed for the intervening months however we are going to assume that several transactions did happen which require adjustments to be to be accounted for in order to report an accurate picture of the business for the 2018 financial year.

Task 1: Prepaid Expenses

Advertising costs ($495.00 inc GST, i.e. $450.00 ex GST) were paid for 12 months – August to July. The business needs to account for 1/12th of the amount ($37.50) which was paid for the next financial year to report the correct amount for the 2018 financial year.

The Advertising Account looks like this in the General Ledger.

6-1200 ADVERTISING


31/7/17 Cash Payments CPJ 450.00 450.00 Dr

However, $37.50 needs to the deducted so that the account is amended to look like this.

6-1200 ADVERTISING



30/6/18 Prepaid Expenses 37.50 412.20 Dr

Therefore, the following journal entry must be created. Complete the ? fields from the information above.


June 30 Prepaid Expenses (see Chart of Accounts) (increase an asset)

37.50

Advertising (decrease an expense)

?

(Account for advertising paid for July 2018)


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Task 2: Prepaid Income

$1,000 (ex GST) has been paid and recorded in Sales for work not yet done. The business wishes to report the exact sales amount.

The Sales Account looks like this in the General Ledger.

4-1000 SALES (tyres, accessories)


31/7/17 Accounts Receivable SJ 15,200.00 15,200.00 Cr

Cash Receipts CRJ 1,900.00 17,100.00 Cr

However, $1,000.00 needs to the deducted so that the account is amended to look like this. (There is no GST issue in this entry.)





30/6/18 Prepaid Income GJ 1,000.00 16,100.00 Cr

Therefore, the following journal entry must be created.

Complete the ? fields from the information above.


June 30 ?

(decrease income) ?

Prepaid Income (see Chart of

Accounts) (increase a liability)

1,000.00

?


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Task 3: Accrued Expenses (Accrued means owing)

The Lease of Premises is paid on the 1st of the following month, however, the lease payment for June of $1,100.00 inc GST (only the $1,000 is accounted for here) needs to be accounted for in June.

The Lease of Premises Account looks like this in the General Ledger.

6-1600 LEASE OF PREMISES


31/7/17 Cash Payments CPJ 1,000.00 1,000.00 Dr

However, $1,000.00 needs to the added to the amount so that the account is amended to look like this. (There is no GST issue in this entry – Tax Invoice not yet received.)




30/6/18 Accrued Expenses GJ 1,000.00 2,000.00 Dr


Complete the ? fields from the information above.


June 30 ?

(increase an expense) ?

Accrued Expenses (see Chart of

Accounts) (increase a liability)

1,000.00

?


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Task 4: Accrued Income

An Insurance Refund of $400 (no GST involved) is owing and not yet

received, however the payment has been made to repair the motor

vehicle.

The Insurance Refund Account looks like this in the General Ledger.

4-4000 INSURANCE REFUNDS


31/7/17 Cash Receipts CRJ 210.00 210.00 Cr

However, $400.00 needs to the added to the amount so that the account

looks like this. (There is no GST issue in this entry.)




30/6/18 Accrued Income GJ 400.00 610.00 Cr


Complete the ? fields from the information on the previous page.


June 30 Accrued Income

(increase in an asset) 400.00

? (increase in income)

?

?


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Creating Journals to account for Doubtful Debts

In the books of Smiths Tyreworld, the invoices listed as owing were as follows:

Schedule of Trade Debtors

Invoice Due Date Name Balance

N/A Pine Shire Council -$330.00

21/7/17 Seymore Logistics 935.00

20/7/17 Hugh Jackson 1,265.00

Reconciles with balance of Trade Debtors A/c in the General Ledger

$1,870.00

Smiths Tyreworld Policies and Procedures

1. Read the Policies and Procedures of Smiths Tyreworld in Unit 2.

2. What procedure is followed in relation to Bad and Doubtful Debts?

..........................................................................................

..........................................................................................

..........................................................................................

..........................................................................................

..........................................................................................

..........................................................................................

..........................................................................................

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On 30 June, a provision for doubtful debts (5% of Trade Debtors ex GST)

will be made.

Calculating the base amount:

= $935 + $1,265 (do not include the credit)

= $2,200 less 10% GST

= $2,000.00 × 5%

= $100.00

Therefore, the following General Journal will be made:


June 30 Bad and Doubtful Debts (see Chart of

Accounts) 100.00

Provision for Doubtful Debts (see Chart

of Accounts) 100.00

(A provision of 5% of Trade Debtors ex

GST made for doubtful debts.)

How to deal with debts written off is covered later in this workbook.

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Creating Journals for stock adjustments

The Trial Balance of Smiths Tyreworld on 31 July 2017 looked like this

(extract only):

Account Name Dr Balance Cr Balance

Bank 17,765.00

Trade Debtors 1,870.00

Stock on Hand 15,000.00

The Stock on Hand figure is actually the Stock on Hand at the end of June 2017.

A stocktake was carried out on 30 June 2018 and the amount of stock on hand (ex GST) was calculated to be $12,000.00.

The amount must now be entered in the books and the existing amount transferred to the Cost of Sales to calculate the Gross Profit from trading (covered in Unit 6).

The above Stock on Hand account looks like this in the General Ledger.

1-1320 STOCK ON HAND


1/7/17 Balance GJ 15,000.00 15,000.00 Dr

The following entries need to be entered in this account to report the correct amount on hand.



1/7/17 Balance GJ 15,000.00 15,000.00 Dr

30/6/18 Transfer to Cost of Sales 15,000.00 0.00 Dr

30/6/18 Stock take 30 June 2018 12,000.00 12,000.00 Dr

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Therefore, the following Journal entries will be made.


June 30 Opening Stock (see Chart of Accounts) 15,000.00

Stock on Hand 15,000.00

(Transfer opening stock to Cost of Sales.)

June 30 Stock on Hand 12,000.00

Closing Stock (see Chart of Accounts) 12,000.00

(Account for 30 June stocktake figure.)

Creating Journals for Income Tax and Superannuation

1. Account for Income Tax withheld from Wages - $220.00.

2. Account for Superannuation on Wages - $84.00

To account for the above transactions, the following journal entry is created. Complete the ? fields.


June 30 Wages ?

PAYG Withholding (see Chart of Accounts)

220.00

(Account for Income Tax withheld from wages)

30 Superannuation ?

Superannuation Payable (see Chart of Accounts)

84.00

(Account for superannuation payable on wages)


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Creating Journals to correct errors

Read the Policies and Procedures of Smiths Tyreworld. What procedures must be followed if an error has been identified in the manual set of books?

..........................................................................................

..........................................................................................

..........................................................................................

..........................................................................................

..........................................................................................

Error 1:

On checking the original invoice, it has been discovered in June 2018 that the information on the cheque butt below is incorrect. The payment of $700 was actually for Advertising in the college magazine.

You are now required to make an appropriate journal entry to fix this mistake.

No: 614 6/7/17 To: Downs College For: School Fees for daughter

This cheque $700.00

This entry was allocated to the Drawings A/C and no GST.

This entry should have been allocated to Advertising with GST.

The cheque butt should have looked like this:

No: 614 6/7/17 To: Downs College For: Advertising (not drawings)

This cheque $700.00

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The original tax invoice has been photocopied and filed in the journals section of your information folder as evidence.

Try this journal by yourself and then check with the solution on page 93. There is a GST issue in this entry.

GENERAL JOURNAL

Date Particulars Ref Debit Credit

June 30

Error 2:

It has been identified that the stocktake figure for June 2018 was $13,000.00 not $12,000.00.

Make the necessary adjustment to the journal entry.

Later you will record the total amount of $13,000 in AccountRight (see page 101).

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Reviewing your General Journal entries on 30 June 2018


June 30 Depreciation 3,298.63

Accumulated Depreciation – Office Equipment 3,298.63

(Annual depreciation using diminishing value method)


Accumulated Depreciation – Motor Vehicles 4,785.96

(Annual depreciation using straight-line method)

June 30 Depreciation 168.75

Accumulated Depreciation - Low-Value Pool 168.75

(Annual depreciation on Low-Value pool written off)

June 30 Bank 27,500.00

Accumulated Depreciation – Motor Vehicles 4,375.00

Loss on Sale 5,625.00

Motor Vehicle (at Cost) 35,000.00

GST Collected 2,500.00

(Sale of Toyota Ute 00 0EQ to T White)

June 30 Bank 5,500.00

Accumulated Depreciation – Office Equipment 3,200.00

Gain on Sale 200.00

Office Equipment at Cost 8,000.00

GST Collected 500.00

(Sale of Canon photocopier)

June 30 Prepaid Expenses 37.50

Advertising 37.50

(Account for advertising paid for July)

June 30 Sales (tyres, accessories) 1,000.00

Prepaid Income 1,000.00

(Account for work not yet done)

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June 30 Lease of Premises 1,000.00

Accrued Expenses 1,000.00

(Account for Lease Payment on 1 July)

(General Journals are totalled to check Dr = Cr) c/f $56,490.84 $56,490.84

June 30 Accrued Income 400.00

Insurance Refunds 400.00

(Account for insurance refund not received) June 30 Bad and Doubtful Debts 100.00 Provision for Doubtful Debts 100.00

(A provision of 5% of Trade Debtors ex GST made for doubtful debts.)

June 30 Opening Stock 15,000.00 Stock on Hand 15,000.00

(Transfer opening stock to Cost of Sales.)

June 30 Stock on Hand 13,000.00

12,000.00

Closing Stock Approved by

Angus

13,000.00

12,000.00

(Account for 30 June stocktake figure.) June 30 Wages 220.00 PAYG Withholding 220.00

(Account for Income Tax withheld from wages)

Superannuation 84.00 Superannuation Payable 84.00

(Account for superannuation payable on wages)

June 30 Advertising 636.36 GST Paid 63.64 Drawings 700.00

Approved by

Angus Smith

(Cheque no 614 dated 6 July 17 was initially allocated to drawings, however, the cheque was written out to pay for advertising in the college magazine.)

$85,994.84 $85,994.84

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Entering Journal Entries in AccountRight Plus

You will now open an AccountRight Plus company file and enter the journal entries on the previous pages. (You need no prior MYOB knowledge to enter these journals, because the procedure is almost the same as you did manually.)

1. AccountRight Plus 2017.1 should be loaded on your computer (see page 7).

2. You should have downloaded the Smiths Tyreworld v2017 2018.myox file (see page 9).

Log on

1. Double-click on the MYOB icon on the desktop.

The following window is displayed:

2. Ignore the list of any recently opened files and click on the Open

a company file button.

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3. Locate the AccountRight Plus company file Smiths Tyreworld v2017 2018.myox found in This PC/Documents/MYOB/My AccountRight Files/BSBFIA401.

4. Select to Add a company file if you have saved the file in another location.

5. Click on Smiths Tyreworld v2017 2018.myox file and then Open

6. There are no passwords in a training environment; however, this is where you would normally type in your User ID and Password.

7. Click OK.

Finally, the Command Centre of AccountRight will appear.

Leave User ID as Administrator and the

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Exploring AccountRight

You will now explore the parts of AccountRight and compare with the information in Unit 2.

1. Click the Accounts Command Centre

2. Click on Accounts List in the flowchart.

3. Click the Asset tab to display just those accounts.

This window represents the Assets part of Chart of Accounts on pages 14-15 of this book.

4. You can click on the maximise button or double-click on the Accounts List title bar to maximise your window so that the information is easier to read.

5. Click Close to return to the Accounts Command Centre.

Accounts

Asset

Accounts List

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Revision task: Viewing the purchases of assets

Find and check the transactions for the purchase on 01/06/2018 of the asset cards in Unit 3. The total amount of new purchases allocated to the Bank Loan account is $48,210.



Toyota Kluger $40,000.00 $3,920.00


$43,900.00 $4,310.00

Entering Journal Entries

In the preceding sections you have processed a lot of journal entries manually. Now you are going to enter them into Account Right using the following instructions.

1. In the Accounts command centre, select Record Journal Entry.

The Record Journal Entry window is displayed.

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Follow the instructions below to enter the first journal entry:




Equipment 3,298.63

(Annual depreciation using diminishing value method)

2. Type 30/6/18 in the Date box. Press TAB.

3. Type in the reason for the entry (narration) in the Memo field: Annual depreciation using diminishing value method then press TAB.

Note: You can key in 255 characters if needed.

Your window should look like this so far:

4. With your cursor in the Acct No. column, press TAB again to display the Chart of Accounts.

5. Scroll up or down to find the appropriate account Depreciation, point to the account and double-click to select.

You window should look like this.

6. Key in the depreciation amount in the Debit column – 3298.63 then press Enter to go to the next line.

7. Press TAB (or Enter) to display the Chart of Accounts and now select 1-2220 Accumulated Dep – Office Equipment.

8. Press TAB to move to the Credit column. The amount should automatically be entered. Press TAB to update the totals at the bottom of the screen. The Journal has been entered.

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Your entry should look like this.

9. Click Record to record the entry in the AccountRight company file.

Now to enter more general journal entries.

10. Enter the details for the Motor Vehicle depreciation and Record.

11. Record the low-value pool depreciation in the same manner.

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Entries that involve GST must be entered in a slightly different manner to account for the GST on the Business Activity Statement accurately.

The fourth entry to record the Sale of the Ute must be entered as shown below to include the GST code. You can only choose the Sale option once you have entered the details into the first line of the Journal entry boxes and make sure the transaction is entered as tax exclusive.

12. Check the Date is entered and Type the in reason for the entry on the Memo

13. Enter the Debits as shown here

14. Click on the Sale option

15. Split the cost of the vehicle to $25,000 and $10,000 as GST was received only on $25,000. Check that GST appears in the Tax column and the Sale option is selected. The GST received is calculated and accounted for in the Tax box.

16. Click on Edit in the Menu bar and Recap Transaction – the result

is on the following page

In AccountRight, you rarely allocate an amount to the GST accounts. The GST Tax Code is used to automatically calculate the amount of GST (in Tax )

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17. Click on OK then Record.

18. Record the entry for the sale of the photocopier in the same manner.

19. Record the closing stock entry of $13,000 using the tax code N-T. This takes into account the stocktake error.

20. Record the remaining entries. (Watch tax codes – only use GST if GST is applicable.) You may need to change the GST code to N-T – just highlight GST and type over it.

Note: Your general journal numbers may be different to those shown in the book as they will depend on the order that the transactions are entered.

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Note: The entry to correct the allocation error will look like this:

19. Select Cancel to return to the Command Centre.

Revision task - Recording a journal entry for a sales transaction

A cash sale was made on 01/06/2018 for tyres of $22,000 (inc GST).

• Record a journal entry for this sale.

• Allocate money to the Bank Account.

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PRINTOUT 1a & 1b - Journal Entries To print a copy of the journal entries viewed and entered to check

for accuracy:

1. In the Command Centre, select Transaction Journal in the Accounts flowchart

2. In Date Range, type 01/06/18 to 01/06/18.

3. Click on the All tab.

4. Click on the Print button and the report opens in another window.

5. Select All again in the Source Journal drop down box and then

Run Report.

6. Print a copy of the journal listing.

7. Now change the date range to 30/06/18 to 30/06/18 and click Run Report. Print a copy of the journal listing.

8. Check the accuracy of your entries on this printout with the journals printed earlier in the unit. A solution for Printout 1b is included at the end of this unit. (See next page for instructions on how to correct errors.)

9. Your tutor should approve these journals. File them in your Journal section of your ring binder.

Solution to Printout 1a can be found in Appendix B.

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Correcting Errors - Policies and Procedures

Read the Policies and Procedures of Smiths Tyreworld. What procedures must be followed if an error has been identified in AccountRight after end of month reports have been printed?

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Correcting errors in AccountRight If you find you have made an error entering the journals, you will need to correct your error in the following manner.

1. Display the Transaction Journal and enter the relevant dates

2. Click on Zoom to the left of the entry in which the error has been made to display the transaction.

3. Fix the error in the journal window and select OK to record the correction.

4. In your Transaction Journal, check that the entry is now accurate.

5. Reprint your journal.

6. Return to the Command Centre.

Note: If errors are corrected in a business environment, screen images should be taken if end of month reports, Business Activity Statements, etc, have been printed and issued.

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Printout 1b Journal Entries

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Exit AccountRight

To Exit your company file:

1. Select File in the menu bar.

2. Select Exit.

In Unit 5 you will learn how to post these transactions to your General

Ledger (manually and in AccountRight).

Skills checklist

Tick the skills that you have learnt in this unit.

Skills

Depreciation

Disposal of an asset

Prepaid Income

Prepaid Expenses

Accrued Income

Accrued Expenses

Stock Adjustments

Bad and Doubtful Debts

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Updating the General Ledger


Unit 5


Learning outcomes

In this unit you will learn how to:

post the General Journal entries to the General Ledger

(manually)

post the General Journal entries to the General Ledger (in

AccountRight Enterprise)

prepare manual Adjusted Trial Balance

print General Ledger and Trial Balance reports in AccountRight

Enterprise.

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Revision task – View the General Ledger

A manual General Ledger is provided on pages 111-119.

1. View this ledger and locate the entries for the purchase of the

assets recorded on the asset cards in Unit 3. The total amount

allocated to the Bank Loan account is $48,210.



Toyota Kluger $40,000.00 $3,920.00


$43,900.00 $4,310.00

2. Also locate a cash sale of $22,000 made on 01/06/2018. The sale

is allocated to the Bank account.


You will now update the General Ledger you started with at the

beginning of this workbook by posting the General Journal entries

created in Unit 4 to this General Ledger.

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Posting the first entry


June 30 Depreciation 6-5100 3,298.63


Equipment 1-2220 3,298.63

(Annual depreciation using diminishing value

method)

The above entry gives the following instruction:

1. Go to the debit side of the Depreciation account and write

3,298.63 in the debit column (see below).

2. Write an explanation in the Particulars column.

3. Calculate the running balance and indicate if the balance is a Dr or

Cr (in the last column).

6-5100 DEPRECIATION


30/6/18 Accumulated Depreciation –

Office Equipment GJ 3,298.63 3,298.63 Dr

4. In the General Journal, indicate that the entry has been posted by

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Now go to the Accumulated Depreciation – Office Equipment account

and write 3,298.63 in the credit column and an explanation like this.

Record the account number in the ref column of the General Journal.

1-2220 ACCUMULATED DEPRECIATION – OFFICE EQUIPMENT


30/6/18 Depreciation GJ 3,298.63 3,298.63 Cr

5. You are now required to post the remaining journals to the General

Ledger in the same manner. (Use the General Journal on

pages 92-93 and the General Ledger on the following pages.)

Remember to write the account number in the Ref column to

indicate that the entry has been posted.

Solution can be found in Appendix B.

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GENERAL LEDGER of Smiths Tyreworld

1-1110 BANK


1/7/17 Balance GJ 10,000.00 10,000.00 Dr

31/7/17 Cash Receipts CRJ 16,847.00 26,847.00 Dr

Cash Payments CPJ 9,082.00 17,765.00 Dr

1/6/18 Cash Sales CRJ 22,000.00 39,765.00 Dr

30/6/18 Sale of ute GJ 27,500.00 67,265.00 Dr

30/6/18 Sale of copier GJ 5,500.00 72,765.00 (balance in Trial Balance)

Dr

1-1310 TRADE DEBTORS


31/7/17 Sales and GST SJ 16,720.00 16,720.00 Dr

Sales Returns & Allowances and GST SRJ 385.00 16,335.00 Dr

Cash Receipts CRJ 14,465.00 1,870.00 Dr



1/7/17 Balance GJ 15,000.00 15,000.00 Dr

1-1340 PREPAID EXPENSES


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1-1350 ACCRUED INCOME


1-1360 PROVISION FOR DOUBTFUL DEBTS


1-2110 MOTOR VEHICLES AT COST


1/7/17 Balance GJ 35,000.00 35,000.00 Dr

1/6/18 Toyota Kluger GJ 40,000.00 75,000.00 Dr

1-2120 ACCUMULATED DEPRECIATION – MOTOR VEHICLES


1-2210 OFFICE EQUIPMENT AT COST


1/7/17 Balance GJ 8,000.00 8,000.00 Dr

31/7/17 Officeworks GJ 400.00 8,400.00 Dr

1/6/18 Elite Computer GJ 3,000.00 11,400.00 Dr

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1-2220 ACCUMULATED DEPRECIATION - OFFICE EQUIPMENT


1-2510 LOW-VALUE POOL AT COST


1/6/18 Brother Printer GJ 900.00 900.00 Dr

1-2520 ACCUMULATED DEPRECIATION – LOW VALUE POOL


2-1210 GST COLLECTED


31/7/17 Accounts Receivable (Sales) SJ 1,520.00 1,520.00 Cr

Accounts Receivable (Sales Returns) SRJ 35.00 1,485.00 Cr

Cash Receipts CRJ 190.00 1,675.00 Cr

1/6/18 Cash Sales CRJ 2,000.00 3,675.00 Cr

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2-1220 GST PAID


31/7/17 Accounts Payable (Purchases) PJ 1,400.00 1,400.00 Dr

Accounts Payable (Purchases Returns) PRJ 53.00 1,347.00 Dr

Cash Payments CPJ 204.00 1,551.00 Dr

1/6/18 Purchase of equipment and car GJ 4,310.00 5,861.00 Dr

2-1410 PAYG WITHHOLDING


2-1420 SUPERANNUATION PAYABLE


2-1510 TRADE CREDITORS


31/7/17 Purchases and GST PJ 15,400.00 15,400.00 Cr

Purchases Returns and GST PRJ 583.00 14,817.00 Cr

Cash Payments CPJ 5,400.00 9,417.00 Cr

2-1530 ACCRUED EXPENSES


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2-1540 PREPAID INCOME


2-2100 BANK LOAN


1/7/17 Balance GJ 40,000.00 40,000.00 Cr

1/6/18 Purchase of equipment and car GJ 48,210.00 88,210.00 Cr

3-1000 CAPITAL


1/7/17 Balance GJ 28,000.00 28,000.00 Cr

3-2000 DRAWINGS







1/6/18 Cash Sales CRJ 20,000.00 37,100.00 Cr

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4-2000 SALES RETURNS AND ALLOWANCES


31/7/17 Accounts Receivable SRJ 350.00 350.00 Dr

4-3000 INTEREST RECEIVED






5-1000 OPENING STOCK


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5-2000 PURCHASES (tyres, accessories)


31/7/17 Accounts Payable PJ 14,000.00 14,000.00 Dr

5-3000 PURCHASES RETURNS AND ALLOWANCES


31/7/17 Accounts Payable PRJ 530.00 530.00 Cr

5-4000 CLOSING STOCK


6-1200 ADVERTISING



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6-1300 BANK CHARGES



6-1500 BAD AND DOUBTFUL DEBTS





6-4160 WAGES



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6-4300 SUPERANNUATION


6-5100 DEPRECIATION


6-6100 MOTOR VEHICLE EXPENSES



8-2000 GAIN ON SALE


9-2000 LOSS ON SALE


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Preparation of the Adjusted Trial Balance

After all the adjustment journal transactions have been posted to the General Ledger, an adjusted Trial Balance will be drawn up to summarise the transactions in the General Ledger and check the accuracy. Your next task is to prepare the adjusted Trial Balance as at 30 June 2018. A 12-column worksheet can also be used. This topic is covered in ‘Preparing Financial Statements User Guide’.


Adjusted TRIAL BALANCE AS AT 30 JUNE 2018


Bank

Trade Debtors

Stock on Hand

Prepaid Expenses

Accrued Income

Provision for Doubtful Debts

Motor Vehicles at Cost

Accumulated Depreciation – Motor Vehicles

Office Equipment at Cost

Accumulated Depreciation – Office Equipment

Low-Value Pool at Cost

Accumulated Depreciation – Low-Value Pool

GST Collected

GST Paid

PAYG Withholding

Superannuation Payable

Trade Creditors

Accrued Expenses

Prepaid Income

Bank Loan

Capital

Drawings

Sales (tyres, accessories)

Sales Returns and Allowances

Interest Received

Insurance Refunds

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Opening Stock

Purchases

Purchases Returns and Allowances

Closing Stock

Advertising

Bank Charges

Bad and Doubtful Debts

Lease of Premises

Wages

Superannuation

Depreciation

Motor Vehicle Expenses

Gain on Sale

Loss on Sale

TOTALS

Checking the accuracy of your General Ledger

1. Does the Debit column equal the Credit column? If not, the

following errors could exist in your ledger.

• Incorrect calculation of the balance in the account

• Incorrect amount posted from the journal to the ledger

• Amount posted to the incorrect column in the ledger

• Incorrect balance written in the Trial Balance

• Balance written in the incorrect column in the Trial Balance

Tip: Calculate the difference between the debit and credit

column and look for an amount half or double this amount

– indicates amount on the wrong side.

2. Also view your accounts to make sure that the Ledger tells the

correct story about the business, e.g. you would not see Depreciation in the Bank Account.

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Updating General Ledger in AccountRight and printing a Bank Reconciliation and Trial Balance

When the journal entries were entered in AccountRight and you selected Record, the General Ledger and Trial Balance were automatically updated and prepared.

1. Start MYOB AccountRight and open the company file used in Unit 4, Smiths Tyreworld v2017 2018.myox.

PRINTOUT 2a – Bank Reconciliation

2. Select Banking in the Command Centre and then Reconcile Accounts.

3. Select Bank Account 1-1100 and enter the Bank Statement date of

30/06/2018.

4. Select the transactions and print a report before reconciling.


Banking

Reconcile Accounts

Account

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PRINTOUT 2b – General Ledger Report

1. Click on Reports in the menu and then Accounts tab

2. Select the General Ledger [Detail] report

3. Set the date range to 01/06/2018 – 30/06/2018 and click Display Report.

4. Click on the Insert/Modify tab and select Show Hide. Choose to

hide the Job No and Net Activity fields then click OK.

5. Select to NOT include accounts with no activity and then click Run Report.

6. Print a copy of the General Ledger - Printout 2b.


7. Click on Close to return to Reports.

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PRINTOUT 3 – Trial Balance – 30 June 2018

1. In Accounts reports, click on Trial Balance and set the As of

date field to June.

2. Click Display Report.

3. Print a copy of the Trial Balance.

4. Compare the Trial Balance with the manual Adjusted Trial Balance on page 120.

If you find an error, identify the account, call up the account and make the necessary adjustment. Reprint the Trial Balance.

The only error you can have in AccountRight is an error in entering the journals in Unit 4.

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Your Trial Balance should look like this:

File the above report in your ring binder in the appropriate section.

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Industry Codes of Practice

As the bookkeeper you could be directed to enter journals which are not

supported by appropriate evidence.

@ Institute of Certified Bookkeepers Code of Conduct

Go to the website of the Institute of Certified Bookkeepers www.icb.org.au and download the Code of Professional Conduct of members of the ICB. This is found within the membership section. Read through the code and apply it to the following case study.

Angus Smith actually purchased the Brother Printer for his daughter and will not be used by the business in any way. If you were a member of the ICB, what guidelines should you follow in the code when dealing with this situation?

(List one fundamental principle.)

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Writing procedures

As the bookkeeper working with AccountRight, you have been asked to rewrite the procedures (step by step) for entering journal entries in AccountRight only.

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1.Save a copy of these procedures, or even better, prepare a set of procedures in Microsoft Word and print.

2.File these procedures in your ring binder as evidence of your ability to write procedures.

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Skills checklist

Tick the skills that you have learnt in this unit.

Skills

Post the General Journal entries to the

General Ledger (manually)

Post the General Journal entries to the

General Ledger (in AccountRight Enterprise)

Prepare manual Adjusted Trial Balance

Print General Ledger and Trial Balance reports

in AccountRight Enterprise

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Solutions to exercises


Appendix B


UNIT 3

Page 43

IAS 16 requires that an item is initially measured at its cost. What

elements are included in the cost?

The purchase price, including all costs directly attributable to bringing

the asset to the location and condition necessary for its intended

operation.

Page 43

There are two classes of asset:

1. Assets costing less than $1000 ex GST. These assets will be pooled

in the low-value pool and depreciated at 18.75% in the first year

and 37.5% thereafter using the diminishing value method of

calculating depreciation.

2. Assets costing more than $1000.00 ex GST: These assets will not

be pooled and will be depreciated according to the recommended

effective life of the asset.

Page 48

1. What is the effective life of office equipment?

5 years

2. What is the effective life of motor vehicles?

8 years

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3. What method is used to depreciate office equipment?

Diminishing value method

4. What method is used to depreciate motor vehicles?

Straight-line method

Page 62

What procedure must be followed when disposing of an asset?

Quotes must be obtained from at least two dealers and the final decision

approved by Angus. The entry must be recorded in both the fixed asset

register and the general ledger as soon as possible after the disposal.

UNIT 4

Page 74

2. What procedures must be followed when entering journal entries?

All general journal entries (for example, depreciation) must have

some form of supporting documentation and be authorised by

Angus.

1. What is the annual amount of Office Equipment depreciation to

be written off?

$3,296.63

2. What is the annual amount of Motor Vehicle depreciation to be

written off?

$4,785.96

3. What is the annual amount of Low-Value Pool depreciation to be

written off?

$168.75

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Page 86

2. What procedure is followed in relation to Bad and Doubtful

Debts?

If accounts are more than 60 days overdue, a hold is placed on

their account until payment is up to date. A phone call is made to

the customer to ascertain if there is a problem and payment of

the amount owing is negotiated.

After 90 days, a demand letter of payment within 7 days is

delivered in person. If payment is not made, the account will be

placed with a debt collection agency.

On 30 June of each year, a 5% of Trade Debtors ex GST doubtful

debt provision is created.

Page 90

Read the Policies and Procedures of Smiths Tyreworld. What procedures

must be followed if an error has been identified in the manual set of

books?

It is essential that the financial accounts are accurate. If you identify an

incorrect journal entry in the manual set of books, e.g. coded to an

incorrect account or with an incorrect Tax Code, an appropriate journal

entry must be recorded to correct the error and authorised by Angus. If

the error is an incorrect amount in the current month, cross out neatly

and write correct amount above and have correction authorised by

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Page 103

PRINTOUT 1a - Journal Entries

Page 104

Read the Policies and Procedures of Smiths Tyreworld. What procedures

must be followed if an error has been identified in AccountRight after

end of month reports have been printed?

In AccountRight, if end of month reports have been printed, a screen

dump must be taken of the incorrect entry and printed. The correction

must contain an explanation and must be authorised by Angus.

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