Page 1 of 16ACC1AIS Individual Assignment2020This assignment requires you to create a new business, input transactions, and generatefinancial statements and reports using Xero. This assignment question sheet should be usedin conjunction with the weekly Xero help-sheets which explain in more detail the stepsrequired to complete the exercises below.Task OverviewThe company for which you will be working in this assignment distributes, sell and repairs toysfor kids. You will be recording transactions for the month of May 2020.The assignment contains five separate sections, one for each week of May. You should workthough these sections sequentially. Once you have completed all the exercises you shouldprepare the requirements listed on page 12. Finally, you are required to submit yourassignment files and reports via the assignment submission box on LMS. You are required tosubmit your assignment by Sunday (24 May 2020), 11.59 pm.Set up CompanyYour first task is to set up a new business in Xero you must use your Student ID Number andFULL Name as the Business name. Refer to the Workshop 5 Help-sheet if you need detailedhelp to set up a new company in Xero.You are the accountant and owner of a business which is registered for GST purposes. Youpreviously used to use another software as your main accounting system. However, as a resultof changes in technology, you have decided to move onto a cloud-based accounting softwareplatform, XERO. To transfer from your previous accounting package to XERO you are requiredto transfer balances in your previous system onto XERO. The conversion date (date when youstop using your previous system and start using XERO) is 1 May 2020, and the Trial Balance asat 30 April 2020 is as below:Page 2 of 16 Trial Balanceas at 30 April 2020AccountDebitCreditCash at bank$114,608.24Accounts receivable$91,531Prepaid Fire insurance$20,000Inventory$110,421.1Store Building$540,000Accumulated Depreciation Store Building$272,250Delivery Van$69,300Accumulated Depreciation Delivery Van$35,805Accounts payable$56,981.30Loan payable Building Head Office$275,812.4Unearned delivery revenue$18,700Capital$286,500Sales revenue$83,210Interest expense 8% annually$1,838.75Fire Insurance expense$2,000Salaries expense$25,080Warehouse rent expense$2,100telecommunication expense$550GST$64,311.11Allowance for Doubtful Debts 10%$8,321Provision for warranty 5%$4,160.5$1,041,740.2$1,041,740.2All figures included within the Trial Balance are GST exclusive except for accounts receivable andaccounts payable. Accounts receivable: 100 items of SKU02770, 150 items of SKU02771, 80 items of SKU02772,70 items of SKU02773, 100 items of SKU02774, 110 items of SKU02775, 110 items ofSKU02776 are sold on 15 April 2020 on credit to Kay Bee Toys. Due date is 18 May 2020. Items sold on 15 April 2020Sales price (incl. GST)Total receivable (incl. GST)SKU02770 100 items$152.95$15,295SKU02771 150 items$155.45$23,317.5SKU02772 80 items$133.00$10,640SKU02773 70 items$84.45$5,911.5SKU02774 100 items$117.49$11,749SKU02775 110 items$88.85$9,773.5SKU02776 110 items$134.9514,844.5Total incl. GST91,531.00 Page 3 of 16Accounts payable: 150 items of SKU02770, 160 items of SKU02771, 110 items of SKU02772,100 items of SKU02773, 100 items of SKU02774, 140 items of SKU02775, 140 items ofSKU02776 are purchased on 20 April 2020 on credit from Wonder Workshop. Due date is 20May 2020. Items purchased on 20 April2020Purchase price (incl. GST)Total payable (incl. GST)SKU02770 150 items$76.47$11,470.5SKU02771 160 items$77.72$12,435.2SKU02772 110 items$66.50$7,315SKU02773 100 items$42.22$4,222SKU02774 100 items$58.74$5,874SKU02775 140 items$44.42$6,218.8SKU02776 140 items$67.47$9,445.8Total incl. GST$56,981.30 Inventories on hand at 30 April 2020: 450 items of SKU02770, 210 items of SKU02771, 330items of SKU02772, 130 items of SKU02773, 200 items of SKU02774, 280 items of SKU02775,150 items of SKU02776, and 140 items of SKU02777. Items on hand 30 April 2020Purchase price (excl. GST)Total excl. GSTSKU02770 450 items$69.52$31,283.2SKU02771 210 items$70.65$14,837.46SKU02772 330 items$60.45$19,950SKU02773 130 items$38.38$4,989.63SKU02774 200 items$53.40$10,680SKU02775 280 items$40.38$11,306.90SKU02776 150 items$61.34$9,200.45SKU02777 140 items$58.38$8,173.46Total excl. GST110,421.10 Page 4 of 16Further Information Salaries expense$25,080 per monthWarehouse rent expense$2,310 per month incl. GSTTelecommunication expense$605 per month incl. GSTAllowance for doubtful debts10% of the Accounts ReceivableProvision for warranty5% of the sales revenueInterest expense on loan (Building Head Office)Calculated at 8% per annumDelivery VanPurchased on 1 March 2015 at$76,230 incl. GST, with a useful life of10 years, and no residual value. It isdepreciated using the straight-linemethod.Store BuildingPurchased on 1 April 2010, at $594,000incl. GST, with a useful life of 20 years,no residual value. It is depreciated usingthe straight-line method.Fire insuranceOn 1 March 2020, you paid $26,400 incl.GST for a twelve-month fire insurancepolicy to Berkshire Group. Page 5 of 16ItemsRefer to the Workshop 2 Help-sheet if you need detailed help to create new items. Item codeItem nameBuy price(Incl. GST)Sell price(Incl. GST)SKU02770Man TGA low loader truck with JCB backhoeloader$76.47$152.95SKU02771Scania R-Series Liebherr Crane With LightSound$77.72$155.45SKU02772CAT Mini Excavator Vehicle$66.50$133.00SKU02773Snowplow$42.22$84.45SKU02774MACK Granite Halfpipe Dump Truck$58.74$117.49SKU02775JCB 5CX Eco Backhoe Loader$44.42$88.85SKU02776Truck Vehicle Mack Granite Truck PowerFuel$67.47$134.95SKU02777Mack Granite Garbage Truck Green$64.22$128.45 Page 6 of 16Week 1: 1 May to 5 May, 2020 DateDetails1 MayYou borrowed $40,000 from the Northern Bank on a short-term loan. Themoney is to be used to purchase plastic welding machinery. The principle,plus 8% annual interest, will be paid in 4 months.1 MayYou purchased 20 items of SKU02770, 10 SKU02771, 15 SKU02772, and12 SKU02773 from BTC Distribution. You received all the stocks orderedand paid 20% of the purchase price together with the freight of $209 incl.GST. You agreed to pay BTC Distribution the balance on 3 June.1 MayYou paid $5,500 incl. GST for a three-month product liability insurancepolicy to CoverWallet.1 MayYou received $16,280 incl. GST cash in advance from clients for a 6-monthsubscription to your company featured magazine, Humpty Dumpty.1 MayYou received $13,200 incl. GST in advance from ThinkFun for repair oftoys.2 MayYou spent $748 incl. GST on miscellaneous office supplies at Officeworks.You paid for these from your bank account. Consider purchase of suppliesas a prepaid asset account.2 MayYou spent $41,800 incl. GST on a plastic welding machinery and paid forit by using your bank account. You estimate that the machinery will havea useful life of 5 years, during which you are planning to produce 16,500units of new toys. The residual value of the machinery is $5,000. Actualnumber of units of toys that will be produced over the next 12 monthswill be 1,200 units. Note that the trial Company in Xero does not allow youto add an asset to the register or create asset types as we did in DemoCompany in Week 6 so youll need to just record this transaction as anasset purchase.3 MayYou sold 20 SKU02770 and 10 SKU02772 to Toy Fanatics. Toy Fanatics paidyou the full amount into your bank account. Details of transactions for Week 1: 1 to 5 May 2020Page 7 of 16Week 2: 6 May to 12 May, 2020 DateDetails6 MayYou spent $3,113 incl. GST on a computer at Digi-Com and paid for it fromyour bank account. You estimate it will have a useful life of 3 years and beworth $354 at the end of the 3 years. Computer is depreciated using thediminishing balance method and the rate of depreciation is 50%. Recordthe purchase of the computer on this date.6 MayYou transferred surplus cash out of the bank account to an investmentaccount. You realised that you dont need all your capital sitting in the lowinterest working bank account so have transferred $50,000 into a higherinterest-bearing account. Record this movement in a journal entry.This account will pay you 2.5% interest per annum, credited monthly onthe 6th of each month into your account.7 MayYou sold 20 SKU02772 and 30 SKU02773 to FAO Schwarz on account, term2/8, n/30.8 MayYou purchased 25 SKU02774, 15 SKU02775, and 15 SKU02777 on creditfrom Ambassador Toys.9 MayYou sold 18 SKU02774and 14 SKU02770 to Kidstuff Toys. Kidstuff paid youa deposit of 40% of the total sale into your bank account and agreed to paythe remaining 60% on 16 June.10 MayYou sold 15 SKU02771 and 24 SKU02775 to Tiny Tiny Toys. Tiny Tiny paidyou a deposit of 35% of the total sale into your bank account and agreed topay the remaining 65% on 10 June.10 MayYou received $474.76 credit (incl. GST) for damaged items including 4SKU02770 and 4 SKU02773 returned to BTC Distribution.10 MayYou sold 20 SKU02773 and 24 SKU02777 to Emond Toys. Emond Toys paidyou a deposit of 30% of the total sale into your bank account and agreed topay the remaining 70% on 27 May.10 MayYou opened an account with Texaco Petrol to use the businesses debit cardto pay for fuel for the delivery van. Details of transactions for Week 2: 6 to 12 May 2020Page 8 of 16Week 3: 13 May to 19 May, 2020 DateDetails13 MayYou sold 30 SKU02772, 30 SKU02775 and 15 SKU02777 to Sandy Toys.Sandy Toys paid you a deposit of 50% of the total sale into your bankaccount and agreed to pay the remaining 50% on 25 May.14 MayYou received the full payment less discount from FAO Schwarz for theirpurchase on 7 May.15 MayYou paid WPP Group $9735 incl. GST for online advertisements. Theseads will run over the next 3 months, with an end date of 15 August2020.16 MayYou sold 15 SKU02775 and 15 SKU02777 to Ideal Toy Company. IdealToy Company paid you the full amount into your bank account.17 MayYou sold 10 SKU02771 and 12 SKU02775 to Irwin Toys. Irwin Toys paidyou a deposit of 70% of the total sale into your bank account andagreed to pay the remaining 30% on 22 May.17 MayYou paid an invoice for a weeks fuel bill of $484 incl. GST from TexacoPetrol plus 1% transaction fee. Transaction fee includes GST.17 MayPaid Ambassador Toys in full for the purchase on 8 May. Details of transactions for Week 3: 13 to 19 May 2020Page 9 of 16Week 4: 20 May to 26 May, 2020 DateDetails20 MayYou sold 45 SKU02775 and 53 SKU02774 Diggi Toys on account, term3/10, n/30.21 MayYou sold 40 SKU02772 and 36 SKU02777 to Supercell Toys onaccount, term 2/10, n/30.22 MayYou granted Supercell Toys $770.70 credit (incl. GST) for 6 SKU02777returned.23 MayYou sold 10 SKU02772 and 20 SKU02773 to Kid Brands. Kid Brandspaid you the full amount into your bank account.24 MayYou sold 11 SKU02771 and 14 SKU02775 to Plan B Toys. Plan B Toyspaid you a deposit of 60% of the total sale into your bank accountand agreed to pay the remaining 40% on 16 June.24 MayYou paid an invoice for a weeks fuel bill of $484 incl. GST fromTexaco Petrol plus 1% transaction fee. Transaction fee includes GST. Details of transactions for Week 4: 20 to 26 May 2020Page 10 of 16Week 5: 27 May to 29 May, 2020 DateDetails27 MayYou sold 15 SKU02772 and 20 SKU02775 to Funko Toys on account,term 3/6, n/30.27 MayYou received the full payment less discount from Diggi Toys for theirpurchase on 20 May.28 MayYou granted Funko Toys $444.25 credit Incl. GST for 5 SKU02775returned.28 MayYou sold 16 SKU02777 and 8 SKU02773 to Child World. Child Worldpaid you the full amount into your bank account.28 MayYou paid $1,408 cash to satisfy warranty claims on faulty toys.29 MayYou sold 20 SKU02777 to Creative Playthings. Creative Playthings paidyou the full amount into your bank account.29 MayYou sold 12 SKU02774 and 14 SKU02775to Bruder Toys. Bruder Toyspaid you a deposit of 70% of the total sale into your bank account andagreed to pay the remaining 30% on 8 June.29 MayYou received the full payment from Supercell Toys for the sales on 21May, less discount.29 MayYou received the full payment from Funko Toys for the sales on 27May, less discount. Details of transactions for Week 5: 27 to 29 May 2020Page 11 of 16Adjusting Journal Entries31 May 2020This is the final day of the calendar month, and your main task is to prepare the month endaccounting entries. For any adjustments required you will need to prepare a general journalentry.The adjusting journals that you will need to enter are as follows round to TWO decimalplaces:1. Interest expense short-term loan (Northern Bank) (0.5 marks)2. Insurance expense product liability insurance policy (CoverWallet). (0.25 marks)3. First month of subscription revenue earned from the company featured magazine,Humpty Dumpty. (0.25 marks)4. You completed 30% of Toy repairs for ThinkFun Toys during May. (0.25 marks)5. Office supplies on hand at 30th May is $341 incl. GST. (0.5 marks)6. Depreciation expense plastic welding machinery, using the units of productionmethod. (0.5 marks)7. Depreciation expense computer, using the diminishing balance method. (0.5 marks)8. Interest earned at month end. (0.5 marks)9. You are required to pay for an invoice for a weeks (27 May to 29 May) fuel bill of $484incl. GST from Texaco Petrol. This is not yet paid yet. Record the relevant adjustingentry. (0.5 marks)10. Advertising expense amount for the month of May. (0.5 marks)11. Provision for warranties is equal to 5% of sales. (0.5 marks)12. Estimate of doubtful debts is 10% of Accounts Receivable as at 31 May. (0.5 marks)13. Salaries expense accrued for May. (0.25 marks)14. Warehouse rent expense accrued for May. (0.5 marks)15. Depreciation expense Delivery Van, using the straight-line method. (0.25marks)16. Depreciation expense Store Building, using the straight-line method. (0.25marks)17. Interest expense accrued on the loan for Building of the Head Office. (0.25marks)18. 40% of deliveries are performed during May. (0.25 marks)19. Telecommunication accrued for May. (0.25 marks)20. Insurance expense, Fire insurance. (0.25 marks)Note all month end adjusting journals must be dated 31 May 2020.Page 12 of 16Assignment requirements (Please ensure all reports have correctdates)1. A Trial Balance report dated 30 May 2020. This is your unadjusted TrialBalance. Use the older version of the Trial Balance. (4.5 marks)2. A Journal Report for 31 May 2020. An example from Demo Company is shown below.(7.5 marks)Please note that: you MUST change the date from 31 May 2020 to 31 May 2020 andclick onto Show Posted Manual Journals Only. Students who submit a Journalreport that includes all journals of the whole month of May 2020 may lose 50% of theirmark for this requirement.3. A Profit and Loss report for the period 1 May 2020 to 31 May 2020. Use the olderversion of the Profit and Loss. (0.5 marks)4. A Balance Sheet report as at 31 May 2020. Use the older version of the Balance Sheet.(0.5 marks)5. A professionally presented short written business report (maximum 1,000 words)designed for an internal user of the accounting information. Your written report isrequired to be classified as below.Page 13 of 16Written Report Financial performance factors (2 marks)Your report explains the financial results and performance of your company in May 2020. Youare required to provide four (4) discussion factors to analyse the financial performance of thecompany. These can be items taken from either balance sheet or profit and loss that you feelhad an impact on the financial performance of the company. To achieve full marks, you arerequired to provide an appropriate XERO report (other than the ones provided before),calculation and/or ratio to support your discussion of each factor you have chosen tohighlight.Written report Benchmarking (1 mark)You are required to compare the company results with that of at least one competitor. Yourequire to use the annual reports of the competitor as your source for benchmarking purposesand compare your company with the competitor using at least two (2) benchmarking ratios.You can find the Toy and Game Retailing industry characteristics and performance here:https://www.ato.gov.au/Business/Small-business-benchmarks/In-detail/Benchmarks-A-Z/R-Z/Toyand-game-retailing/http://clients1.ibisworld.com.au/reports/au/industry/default.aspx?entid=418You may also want to refer to other resources for the comparison/benchmarking purposes.Written report Recommendations (1 mark)you are required to provide two recommendations for the business moving forward andinclude supporting evidence through analysis to justify your recommendations. You arerequired to be creative and think about both financial and non-financial factors e.g., you candiscuss media reports, current global financial climates, international demand, expansions orcontractions of departments/product lines, internal factors, risk and liability etc.Written report Visualisation (2 marks)Provide four (4) graphs that visually illustrate the companys overall financial situation andperformance. Include a description for each graph that describes the results or trends. Youare required to provide meaningful, effective, easy to read, and well-formatted graphs for usein managerial decision making.Page 14 of 16Written report Format (0.5 marks)You are required to write your report according to the business report format. The followinglink, taken from Business School of Victoria University of Wellington, New Zealand, shouldassist you with writing a business report according to the business report format.https://www.victoria.ac.nz/vbs/teaching/resources/VBS-Report-Writing-Guide-2017.pdfReferencing (0.5 marks)All submissions will be reviewed by a program called Turnitin and this will identify instancesof plagiarism (copying). This is a very serious offence and can result in you receiving no marksfor the assessment task.Please ensure if you have copied information you use quotation marks and appropriatereferencing.If you reword someone elses work, you still need to refer to the authors in your sentence.For example, Hines (1991) discusses how. whilst this is not a quote you need to referencethe idea.This assignment requires you to analyse data. The purpose of the assignment is to developyour analytical skills which are not those of an investment advisor.Late Submission PenaltyThe standard penalty for late submission of assessment tasks is 5% of the marks for thattask for each delay in submission of a day or partial day up to a maximum of five (5) workingdays after the due date.Page 15 of 16Assignment InstructionsHere I provide you with further information on how to approach this assignment.1. Follow the below instructions to add the required accounts in your chart of accounts: In the Accounting menu, select Advanced, then click Chart of accounts. Click Add Account. Enter the components of each required account.2. Follow the below instructions to add the new inventory items: In the Business menu, select Products and services. Click New Item. Complete the Item Code and Item Name fields. Select the I purchase this item checkbox and complete each of the fields you want toset a default value for. Repeat this process with the I sell this item checkbox. Do NOT track inventory items at this stage.3. Follow the below instructions to enter your conversion (opening) balances manuallythrough the trial balance: Click on the Accounting Tab. Click on Conversion balances Click on Conversion Date. Conversion Date is May 2020. Return to Trial balance and entre all the required figures into your opening TrialBalance. When entering conversion balances in Xero, enter all balances as positive numbers,whether they are debits or credits. Click on Save. The balances for accounts receivable and accounts payable need to be backed upby the corresponding unpaid invoices and bills. Entre the unpaid invoices. Entre the unpaid bills.4. Follow the below instructions to entre the opening inventories on hand at 1st ofMay 2020. Click on products and services. Click on each inventory item. Click on Edit item. Tick the box for I track this item for each inventory item. Under products and services click on Import. Click on Opening Balances. Under Update opening balances choose 1 May 2020 as the date of youropening balances. Download existing opening balances.Page 16 of 16 Complete the Excel template and record the opening balances within the Exceltemplate. Upload the updated template. Click on Continue.5. Please make sure that you save your conversion (i.e. opening) balance beforeenteringMay transactions.6. You can now continue with the assignment and record the required transactions. If yourequire any further help, please refer to the XERO help-sheets provided on weeklybasis.
ACC1AIS Individual Assignment
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