EDWARD’S ELECTRICAL GOODS PTY LTD ESSAY
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EDWARD’S ELECTRICAL GOODS PTY LTD ESSAY
– ACCOUNTING PRACTICE SET
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Table of Contents
INTRODUCTION 5 CompanyBackground 5 AccountingSystemInformation 5 UNADJUSTED TRIAL BALANCE AND CHARTOFACCOUNTS 6 As at 31May2017 6 SUBSIDIARYLEDGERS 7 Schedule ofAccountsReceivable 7 As at 31May2017 7 Schedule ofAccountsPayable 7 As at 31May2017 7 TRANSACTIONS 8 ForJune2017 8 Instructions 9 ADJUSTINGENTRIES 10 CashReceiptsJournal 18 CashPaymentsJournal 19 SalesJournal 20 PurchasesJournal 21 LEDGERS 22 Accounts ReceivableSubsidiaryLedger 23 Accounts PayableSubsidiaryLedger 24 GeneralLedger 25 WORKSHEET 34 FINANCIAL STATEMENTS 36 Schedules ofSubsidiaryLedgers 36 IncomeStatement 37 Statement of ChangesinEquity 38 BalanceSheet 39 Post-closingTrialBalance 40 WRITTENCOMPONENT 41 STUDENT DECLARATION FOR COMPLETIONOFWORK 46
TheobjectiveofthisAccountingpracticesetistoprovidestudentswithaninsightintotheprocessof recordingtransactions,completingadjustingandclosingentries,andpreparingfinancialstatements foraretailbusiness.
Edward’s Electrical Goods has been in business in Sydney since July, 2011. The company was started by Edward Wright and operates a shop which sells electrical equipment on a retail basis to other businesses on credit and the public on cash terms. The company’s share capital consists of 126,000 ordinary shares, issued at $1 each, that are owned by various members of the Wright family. The company employs a combination of sales and administration staff to operate the business.
Accounting System Information & Procedures
The company has a financial year end of 30 June and prepares adjusting entries at the end of the financial year. To ensure efficiency of its accounting procedures, the company uses the following Special Journals to maintain its accounting records:
- Sales Journal (SJ): to record all sales of inventory oncredit
- PurchasesJournal(PJ):torecordallpurchasesofinventoryoncredit
- Cash Receipts Journal (CRJ): to record all cashreceipts
- Cash Payments Journal (CPJ): to record all cashpayments
- GeneralJournal(GJ):torecordalltransactionsotherthantheabove.
Business transactions are recorded for Edward’s Electrical Goods on a daily basis in one of these five journals in the accounts.
Additionally, the company maintains a general ledger to record postings from the journals. Subsidiary Ledgers are used to record the separate details of Accounts Receivable and Accounts Payable. Transactions are posted immediately to the relevant ledger account if they are entered into the general journal, the “other” column of the Cash Receipts Journal or Cash Payments Journal, or if they affect any of the Accounts Receivable or Accounts Payable subsidiary ledger accounts. Apart from these transactions, totals of the special journals are taken at the end of the month and then posted to the appropriate accounts. The company uses a periodic inventorysystem.
In practice, the company would be required to collect and pay Goods and Services Tax (GST) on its sales and purchases. However, for the purposes of this exercise, GST has been excluded.
Please Note: All amounts in this practice set should be rounded to the nearest dollar.
UNADJUSTED TRIAL BALANCE AND CHART OF ACCOUNTS
Acc. No. Account Debit ($) Credit ($) 100 Cash at Bank 68,292 101 Accounts Receivable Control 26,460 102 Store Supplies 16,779 103 Inventory 86,800 104 Prepaid Store Rent (paid 1 March 2017) 82,180 105 Prepaid Insurance (paid 1 Nov. 2016) 1,260 150 Store Shelving & Fittings 56,700 151 Accum. Depreciation – Shelving & Fittings 160 Equipment 19,250 161 Accumulated Depreciation – Equipment 9,450 200 Accounts Payable Control 17,066 201 Interest Payable 202 Utilities Payable 203 Wages Payable 204 Salaries Payable 205 Tax Payable 206 Dividend Payable 250 Bank Loan (due 1 June 2022) 67,438 300 Share Capital 126,000 301 Retained Profits (1 July 2016) 107,058 302 Dividends Declared 303 Profit and Loss Summary 400 Sales Revenue 449,526 401 Sales Discounts (Discount Allowed) 3,451 402 Sales Returns and Allowances 973 500 Purchases 214,095 501 Purchase Discounts (Discount Received) 2,688 502 Purchase Returns and Allowances 1,127 600 Freight-Out 322 601 Wages Expense – Sales Staff 107,569 602 Depreciation Expense- Shelving & Fittings 603 Depreciation Expense – Equipment 604 Supplies Expense 605 Rent Expense 606 Insurance Expense 607 Advertising Expense 4,872 608 Interest Expense 609 Utilities expense 6,496 610 Tax Expense 611 Sundry Expense 336 612 Salaries Expense– Office Staff 84,518 613 Bad Debts Expense 780,353 780,353 Schedule of Accounts Receivable
Note: Edward’s Electrical Shop offers all customers Credit Terms 2/10, n/30, unless otherwise stated
Acc. No. Account Invoice date Amount ($) 101-1 Bellevue Hill Electrics 26 May 10,584 101-2 Glebe Lighting 15 May 5,348 101-3 Longueville Electrics 22 April 7,238 101-4 Vaucluse Lighting 10 May 3,290 $26,460
Acc. No. Account Invoice date Credit terms Amount ($) 200-1 Parramatta Electrical Engineering 28 May 2/10, n/60 4,830 200-2 Wentworth Lights Manufacturer 21 May 1/10, n/45 12,236 $17,066
Date Transaction WEEK 1 June 1 Bellevue Hill Electrics paid the entire balance of its account that was still outstanding. Delivered goods to Glebe Lighting for $7,588 and issued invoice #401. Issued cheque #127 to pay $840 for delivery costs of inventory to their premises.
June 2 Paid the amount owing to Parramatta Electrical Engineering. Cheque #128 was sent. June 3 Total Cash Sales for the week were $2142. WEEK 2 June 6 Longueville Electrics paid $3038 toward the amount it owes us. June 7 Made a purchase from Wentworth Light Manufacturers for $6510 for boutique lighting: Terms are 1/10, n/45 and date of invoice was 7 June. The firm issued cheque #129 for the purchase of store supplies amounting to $616. June 8 Bellevue Hill Electrics purchased inventory of $7,644. Invoice #402 was issued. June 9 Some of the boutique light fittings purchased on 7 June from Wentworth Light Manufacturers were the wrong design. Returned inventory in exchange for a Credit Note of $2,100. June 10 Total Cash Sales for the week were $2,926. WEEK 3 June 13 Purchased inventory from Parramatta Electrical Engineering for $10,710. The invoice was dated 13 June. Credit terms are 2/10, n/30. June 14 Sold inventory to Longueville Electrics for $13,818 on invoice #403. Issued cheque #130 to pay for delivery costs of $1,050. June 15 Paid office staff salaries of $8,162. Cheque #131 was issued for payment. Cheque #132 was issued to pay sales staff wages, $6,930. June 16 The company issued cheque #133 to pay the amount still owing to Wentworth Light Manufacturers. June 17 Total Cash Sales for the week were $2,779.
WEEK 4 June 20 Longueville Electrics returned $2,618 of inventory purchased on 14 June. Issued a Credit Note for the transaction. June 21 Issued cheque #134 for $1,400 to pay for the annual gift the company donates to the Royal Children’s Hospital Appeal. The gift is to be recorded as a sundry expense in the accounts. June 22 Purchased inventory from Wentworth Light Manufacturers, worth $10,430. The terms were 1/10, n/45. Date of the invoice was 21 June. June 23 Received the total amount owing from Longueville Electrics. June 24 Total Cash Sales for the week were $4,368. WEEK 5 June 27 Glebe Lighting paid the entre balance of its account that was still outstanding June 28 Paid $8,400 of the amount owing to Wentworth Light Manufacturers and Cheque #135 was issued. June 29 A dividend of $19,600 was declared to the company shareholders. However, the dividend will not be paid until November 9, 2017. Paid sales staff wages, $6,930 and Cheque #136 was issued to meet the payment. June 30 Issued additional shares to the owners of the Company for cash, and $14,000 was received and banked. Total Cash Sales for the week were $2,604. INSTRUCTIONS
1) Enter the transactions on pages 8-9 into the appropriate Journal for the month of June 2017, Remember to post Journal transactions to the ledger accounts as specified in the “Account System Information” section of theintroduction.
2) TotalallSpecialJournalcolumnsandposttotheappropriateledgeraccountattheendof themonth.
3) PreparetheunadjustedTrialBalanceasat30Juneontheworksheetprovided.
4) Prepare the adjusting entries shown on page 10 in the General Journal and post to the relevantledgeraccounts.Theentertheadjustmentsintherelevantworksheetcolumnsand prepare an adjusted TrialBalance.
5) Astocktakeon30June2017indicatesthatthebalanceofclosinginventoryis$157,388.Use this information to complete the remaining columns of theworksheet.
6) Use the worksheet to prepare the Income Statement and BalanceSheet.
7) CompletetheScheduleofAccountsReceivableandScheduleofAccountsPayable.Ensure the balances agree with the totals in the controlaccounts.
8) Prepareclosingentriesandposttotherelevantgeneralledgeraccounts.
9) Complete the post-closing Trial Balance as at June2017.
- a) The computer equipment has a useful life of 10 years and estimated salvage value of$350.
- b) The new Store Shelving & Fittings were installed on 1 July, 2015. They have a useful life of 9 years and no salvage value.
- c) Twelve months of store rent was prepaid on 1 March,2017.
- d) Acountofstoresuppliesindicatesthat$9,485remainonhandatyearend.
- e) Aone-yearinsurancepolicywaspurchasedon1November2016for$1,260.
- f) InterestontheANZBankLoanischargedat7%perannumandispaidannuallyon1August (theinterestexpenseshouldberoundedofftothenearestdollar).
- g) ThecompanyhasbeeninformedthatVaucluseLightinghasbeendeclaredbankruptand Edward’sElectricalGoodshasagreedtowriteoftheamountowingasabaddebt.The companyusesthedirectwrite-ofmethodtoaccountforanybaddebtsinthebooks.
- h) Atelephonebillfor$714forJunewasreceivedon4July.Theamounthasnotyetbeen recorded. The company records them as a utilitiesexpense.
- i) Office Staff are paid once permonth,$8,162. The Office Staff were last paid on the 15June, 2017.
- j) Sales staff are paid fortnightly and work 7 days per week. The sales staff were last paid on the 29 June, 2017.
- k) The estimated Tax Payable for the year ended 30 June, 2017 is $19,600. This amount is to be paid on 30 September,2017.
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GENERAL JOURNAL Date Account Post. Ref. Debit Credit
GENERAL JOURNAL Date Account Post. Ref. Debit Credit
GENERAL JOURNAL Date Account Post. Ref. Debit Credit
GENERAL JOURNAL Date Account Post. Ref. Debit Credit
Date Account Post. Ref. Cash at Bank (100) DR
Sales Discounts (401) DR
Sales (400) CR
Accounts Receivable (101) CR
Other CR
TOTAL ( 19 )
Date Account Chq. No. Post Ref. Other DR Accounts Payable (200) DR
Purchases (500) DR
Cash at Bank (100) CR
Purchase Discounts (501) CR
TOTAL ( 20 )
Date Invoice No. Account Post Ref. Amount TOTAL ( 21 )
Date Invoice Date Account Terms Post Ref. Amount TOTAL Accounts Receivable Subsidiary Ledger
BELLEVUEHILLELECTRICS 101-1
Date Explanation Post.Ref. Debit Credit Balance 31-May Balance 10,584 Jun-01 Receipt GL1 10,584 – Jun-08 Sold goods GL9 7,644 7,644 GLEBELIGHTING 101-2
Date Explanation Post.Ref. Debit Credit Balance 31-May Balance 5,348 Jun-01 Delivered goods (Invoice # 401) GL2 7,588 12,936 Jun-27 Receipts GL23 12,936 – LONGUEVILLEELECTRICS 101-3
Date Explanation Post.Ref. Debit Credit Balance 31-May Balance 7,238 Jun-06 Receipts GL6 3,038 4,200 Jun-14 Sold goods GL13 13,818 18,018 Jun-20 Sales returns GL19 2,618 15,400 Jun-23 Receipts GL21 15,400 – VAUCLUSELIGHTING 101-4
Date Explanation Post.Ref. Debit Credit Balance 31-May Balance 3,290 Jun-30 Write off – Bad debt GL36 3,290 – Accounts Payable Subsidiary Ledger
PARRAMATTAELECTRICALENGINEERING 200-1
Date Explanation Post.Ref. Debit Credit Balance 31-May Balance 4,830 Jun-02 Payment GL4 4,830 – Jun-13 Purchases GL12 10,710 10,710 WENTWORTHLIGHTMANUFACTURERS 200-2
Date Explanation Post.Ref. Debit Credit Balance 31-May Balance 12,236 Jun-07 Inventory purchased GL7 6,510 18,746 Jun-09 Purchase return GL10 2,100 16,646 Jun-16 Payment GL17 16,646 – Jun-22 Inventory purchased GL20 10,430 10,430 Jun-28 Payment GL24 8,400 2,030 CashatBank 100
Date Explanation Post.Ref. Debit Credit Balance 31-May Balance 68,292 Jun-01 Received from Bellevue Hill Electrics GL1 10,372 78,664 Jun-01 Delivery costs – Glebe lighting GL3 840 77,824 Jun-02 Payment to Parramatta Electrical GL4 4,733 73,091 Jun-03 Cash sales GL5 2,142 75,233 Jun-06 Longueville Electrics GL6 3,038 78,271 Jun-07 Store supplies GL8 616 77,655 Jun-10 Cash sales GL11 2,926 80,581 Jun-14 Delivery costs – Longueville Electrics GL14 1,050 79,531 Jun-15 Office staff salaries GL15 8,162 71,369 Jun-15 Sales staff wages GL16 6,930 64,439 Jun-16 Wentworth Lights Manufacturer GL17 16,602 47,837 Jun-17 Cash sales GL18 2,779 50,616 Jun-21 Gift: Royal children hospital appeal GL19 1,400 49,216 Jun-23 Received from Longueville Electrics GL21 15,176 64,392 Jun-24 Cash sales GL22 4,368 68,760 Jun-27 Glebe Lighting GL23 12,936 81,696 Jun-28 Wentworth Lights Manufacturer GL24 8,316 73,380 Jun-29 Sales staff wages GL26 6,930 66,450 Jun-30 Share issue proceeds GL27 14,000 80,450 Jun-30 Cash sales GL28 2,604 83,054 Accounts Receivable
Control 101
Date Explanation Post.Ref. Debit Credit Balance Store
Supplies 102
Date Explanation Post.Ref. Debit Credit Balance Inventory 103
Date Explanation Post.Ref. Debit Credit Balance Prepaid Store
Rent 104
Date Explanation Post.Ref. Debit Credit Balance Prepaid
Insurance 105
Date Explanation Post.Ref. Debit Credit Balance Store Shelving&Fittings 150
Date Explanation Post.Ref. Debit Credit Balance Accumulated Depreciation –
Store Shelving&Fittings 151
Date Explanation Post.Ref. Debit Credit Balance Equipment 160
Date Explanation Post.Ref. Debit Credit Balance Accumulated Depreciation –
Equipment 161
Date Explanation Post.Ref. Debit Credit Balance AccountsPayable Control 200
Date Explanation Post.Ref. Debit Credit Balance InterestPayable 201
Date Explanation Post.Ref. Debit Credit Balance Utilities Payable 202
Date Explanation Post.Ref. Debit Credit Balance Wages Payable 203
Date Explanation Post.Ref. Debit Credit Balance SalariesPayable 204
Date Explanation Post.Ref. Debit Credit Balance TaxPayable 205
Date Explanation Post.Ref. Debit Credit Balance Dividend
Payable 206
Date Explanation Post.Ref. Debit Credit Balance BankLoan 250
Date Explanation Post.Ref. Debit Credit Balance ShareCapital 300
Date Explanation Post.Ref. Debit Credit Balance RetainedProfits 301
Date Explanation Post.Ref. Debit Credit Balance DividendsDeclared 302
Date Explanation Post.Ref. Debit Credit Balance Profit &LossSummary 303
Date Explanation Post.Ref. Debit Credit Balance Sales Revenue 400
Date Explanation Post.Ref. Debit Credit Balance Sales Discounts 401
Date Explanation Post.Ref. Debit Credit Balance Sales Returns&Allowances 402
Date Explanation Post.Ref. Debit Credit Balance Purchases 500
Date Explanation Post.Ref. Debit Credit Balance PurchaseDiscounts 501
Date Explanation Post.Ref. Debit Credit Balance Purchase Returns &
Allowances 502
Date Explanation Post.Ref. Debit Credit Balance Freight-Out 600
Date Explanation Post.Ref. Debit Credit Balance Wages Expense –SalesStaff 601
Date Explanation Post.Ref. Debit Credit Balance WORKSHEET – 30 JUNE 2017
Unadjusted Trial Bal. Adjustments Adjusted Trial Bal. Income Statement Balance Sheet Account Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit ( 41 )
TOTALS PROFIT/(LOSS) Schedules of Subsidiary Ledgers
Schedule of Accounts Receivable
as at 30 June 2017
Acc. No. Account Amount ($) TOTAL Schedule of Accounts Payable
as at 30 June 2017
Acc. No. Account Amount ($) TOTAL $12,740 ( 39 )
for the year ending 30 June 2017
Gross Sales Less: Sales Returns & Allowances Less: Sales Discounts Net Sales Opening stock Add: Gross Purchases Less: Purchase Discounts Less: Purchase Returns and Allowances Less: Closing stock Cost of Goods Sold Gross Profit Other Revenue Expenses Selling Expenses Wages Expense – Sales Staff Advertising Expense Administration Expenses Freight-Out Depreciation Expense – Store Shelving & Fittings Depreciation Expense – Equipment Supplies Expense Rent Expense Insurance Expense Utilities Expense Sundry Expenses Salaries Expense–Office Staff Bad Debts Expense Financial expenses Interest expense Total Expenses Profit Before Income Tax Income Tax Expense Profit After Income Tax Statement of Changes in Equity
for the year ending 30 June 2017
Share Capital Retained Profits Total Equity Opening Balance as at 1 July 2016 Shares issued Profit after tax Dividends declared Ending Balance as at 30 June 2017 Statement of Financial Position
as at 30 June 2017
Current Assets Cash at Bank Accounts Receivable Control Store Supplies Inventory Prepaid Store Rent (Paid 1 Mar. 2017) Prepaid Insurance (Paid 1 Nov. 2016) Total Current Assets Non-Current Assets Store Shelving & Fittings Accumulated Depreciation – Store Shelving & Fittings Equipment Accumulated Depreciation – Equipment Total Non-Current Assets TOTAL ASSETS Current Liabilities Accounts Payable Control Interest Payable Utilities Payable Wages Payable Salaries Payable Tax Payable Dividend Payable Total Current Liabilities Non-Current Liabilities Bank Loan (due 1 June 2022) Total Non-Current Liabilities TOTAL LIABILITIES EQUITY Share Capital Retained Profits (1 July 2015) TOTAL EQUITY TOTAL LIABILITIES & EQUITY As at 30 June 2017
Acc. No. Account Debit ($) Credit ($) 100 Cash at Bank 101 Accounts Receivable Control 102 Store Supplies 103 Inventory 104 Prepaid Store Rent (paid 1 March 2017) 105 Prepaid Insurance (paid 1 Nov. 2016) 150 Store Shelving & Fittings 151 Accum. Depreciation – Shelving & Fittings 160 Equipment 161 Accumulated Depreciation – Equipment 200 Accounts Payable Control 201 Interest Payable 202 Utilities Payable 203 Wages Payable 204 Salaries Payable 205 Tax Payable 206 Dividend Payable 250 Bank Loan (due 1 June 2022) 300 Share Capital 301 Retained Profits (1 July 2016) Total ( 42 )
Discuss which parts of the Accounting cycle process could have been completed automatically by using a computer software package such as ACCPAC or QuickBooks. Your answer should make reference to any specific documents or statements found in Edward’s Electrical Goods Pty Ltd accounts where this occurs
As the firm is interested in developing an Accounting system in the near future, explain to
Edward Wright (the Managing Director of the company), the important phases in implementing and maintaining an Accounting system and the factors that need to be considered when developing such a system
STUDENT DECLARATION FOR COMPLETION OF WORK
Academic misconduct as defined in the “Guidelines on Ethical Scholarship, Academic Literacy and Academic Misconduct” is any activity or practice engaged in by a student that breaches explicit guidelines relating to the production of work for assessment, in a manner that compromises or defeats the purpose of that assessment. Students must not engage in academic misconduct.
Penalties for academic misconduct vary according to seriousness of the case, and may include the requirement to do further work or repeat work; deduction of marks; the award of zero marks for the assessment; failure of one or more units; suspension from a course of study; exclusion from the University; non-conferral of a degree, diploma or other award to which the student would otherwise have been entitled. For further information on the rules and procedures in respect of appropriate academic conduct you shouldvisit:
Plagiarism is one example of academic misconduct
- Plagiarism is taking someone else’s thought, writing or invention and claiming it as yourown.
- All references to other work must be properly cited in the text eg. (Smith 1996) and the e article must be fully described in a references section including author’s name, date, title, book/journal, volume/ page numbers.
The Faculty of Business has the following regulation on Plagiarism:
“The Faculty will promote the highest levels of probity and honesty amongst students and will provide instruction on
ethical conduct. By submitting assignments and other work for assessment, students acknowledge Faculty’s duty to guard against plagiarism, including by electronic means such as Turnitin or Mydropbox. A lecturer may require students submitting writtenor electronic work to sign a Plagiarism Declaration Form indicating that the work is original.”
No assignment will be accepted unless the following statement is signed and dated:
“I certify that I possess a copy of the attached work submitted.”
“I certify that the attached assignment/report is my own work and that all material drawn from other sources has been fullyacknowledged.”
“I acknowledge that by submittingmy assignment with this generic cover page and not the automated version available to me that I will not receive an email receipt from the BusinessSchool.”
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RUBRIC
Excellent Quality
95-100%
Introduction 45-41 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Literature Support
91-84 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Methodology
58-53 points
Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met.
Average Score
50-85%
40-38 points
More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided.
83-76 points
Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration.
52-49 points
Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met.
Poor Quality
0-45%
37-1 points
The background and/or significance are missing. No search history information is provided.
75-1 points
Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration.
48-1 points
There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met
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