This assignment requires you to create a new company, input transactions, and generate financial statements and reports using Xero. This assignment question sheet should be used in conjunction with the weekly Xero helpsheets which explain in more detail the steps required to complete the exercises below. Task Overview The company for which you will be accounting in this assignment buys and sells socks, it commenced business on 1st May 2018. You will be recording transactions for the month of May 2018. The assignment contains 5 separate sections, one for each week of May. You should work though these sections sequentially. Once you have completed all the exercises you should prepare the deliverables listed on page 7 then submit your work via the LMS. You must submit your assignment by 11.59pm, Friday 1st June Week 1 -May 1 to May 6, 2018 You are the accountant and owner of a new business which started up business on 1st May 2018. This business is operating as a sole trader and is registered for GST.
Your first task is to set up a new business in Xero - you must use your Student ID Number and Name as the Business name. Refer to the Workshop 5 Helpsheet if you need detailed help to set up a new company in Xero. Once you have the business set up you need to record the initial capital contributions into the business. To get the company underway you contributed $200,000 of your own money and borrowed $350,000 from the ANZ bank. The loan is a 5-year secured business loan, with an interest rate of 7% and monthly repayments of $6,930. Both the capital contribution and the loan are GST exempt transactions. You should use journal entries to record these initial capital transactions. Refer to the Workshop 5 Helpsheet if you need detailed help to record journal entries in Xero. Make sure you set up your cash at bank account as per the instructions in week 5 The final task for this week is to record transactions for the company. To do this you will need to create new inventory items, suppliers, and customers as required for the transactions. You may also need to add or edit accounts when recording the transactions.
Refer to the Workshop 2 & 3 Helpsheets if you need detailed help to add suppliers and inventory items and record purchases of inventory. Refer to the Workshop 4 Helpsheet if you need detailed help to add customers, record sales and create receipts. Refer to the Workshop 5 Helpsheet if you need detailed help to edit or add new accounts. You may need to record asset related transactions, if so refer to the Workshop 6 Helpsheet for detailed help with recording asset purchases. 2 All transaction values are GST inclusive. Unless noted otherwise all transactions are subject to GST Date Details 1st May You purchased 1,000 pairs of Black Socks @ $3.85 per pair, 500 pairs of Red Socks @ $3.74 per pair, and 500 pairs of Blue Socks @ $3.74 per pair from Sock Daily.
You picked up the socks from their factory in Bundoora and paid 10% of the total cost using a debit card linked to your bank account. You agreed to pay Sock Daily the remaining 90% of the purchase price on 1st June 2018. 1st May You paid Savills Melbourne $30,000 for 6 months’ rent in advance for your retail premises. 1st May You spent $3,257 on miscellaneous office supplies at Officeworks. You paid for these using a debit card linked to your bank account. 1st May You spent $20,500 on office fittings at Rose Office Furniture and paid for them using a debit card linked to your bank account.
The fittings are second-hand, you estimate they will have a useful life of 10 years, and be worth $0 (zero) at the end of the 10 years. Note that the trial Company in Xero does not allow you to add an asset to the register or create asset types as we did in Demo Company in Week 6 so you’ll need to just record this transaction as an asset purchase. 2nd May You sold 10 pairs of Black Socks @ $6.05 per pair and 5 pairs of Red Socks @ $5.72 per pair to Alex Clarke. Alex paid you the full amount using a debit card linked to their bank account. 5th May You sold 150 pairs of Black Socks @ $5.94 per pair and 200 pairs of Blue Socks @ $5.72 to Alex Clarke. Alex paid you a deposit of 20% of the total sale using a debit card linked to their bank account and agreed to pay the remaining 80% on 25th May. 5th May You sold 8 pairs of Black Socks @ $6.05 per pair and 2 pairs of Red Socks @ $5.72 per pair to Charlie Sanders. Charlie paid you the full amount using a debit card linked to their bank account. Details of transactions for Week 1 – 1st to 6th May 2018 3 Week 2 -May 7 to May 13, 2018 The task for this week is to record transactions for the company, you may need to create new accounts, inventory items, suppliers, and customers as required for the transactions.
For detailed help refer to the Xero helpsheets. All transaction values are GST inclusive. Unless noted otherwise all transactions are subject to GST Date Details 7th May You transferred surplus cash out of the bank account to an investment account. You realised that you don’t need all your capital sitting in the low interest working bank account so have transferred $300,000 into a higher interest-bearing account. This account will pay 3.5% interest per annum, credited monthly on the 7th of each month. 7st May You sold 20 pairs of Black Socks @ $6.15 per pair and 12 pairs of Red Socks @ $5.85 per pair to Patrick Hanrahan. Patrick paid you the full amount using a debit card linked to their bank account.
8st May You purchased 1,000 pairs of Striped Socks @ $4.07 per pair and 2,000 pairs of Rainbow Socks @ $4.29 per pair from Sock Daily. You picked up the socks from their factory in Bundoora and agreed to pay Sock Daily 100% of the cost of the socks on 22nd May 2018. 9st May You sold 100 pairs of Red Socks @ $5.75 per pair and 200 pairs of Striped Socks @ $6.60 to Melissa Crotty. Melissa paid you a deposit of 50% of the total sale using a debit card linked to their bank account and agreed to pay the remaining 50% on 16th May. 10th May You sold 5 pairs of Black Socks @ $6.15 per pair and 2 pairs of Red Socks @ $5.80 per pair to Sam LaRocca. Sam paid you the full amount using a debit card linked to their bank account. 10th May You sold 200 pairs of Rainbow socks @ $6.80 to Warwick Smith.
Warwick paid you the full amount using a debit card linked to their bank account. 11th May You spent $18,000 on a delivery van at Cars R Us and paid for it using a debit card linked to your bank account. The van is second-hand, you estimate it will have a useful life of 5 years, and be worth $3,000 at the end of the 5 years 11th May You opened an account with Shell Australia to use the businesses debit card to pay for fuel for the delivery van Details of transactions for Week 2 – 7th to 13th May 2018 4 Week 3 -May 14 to May 20, 2018 The only task for this week is to record transactions for the company, you may need to create new accounts, inventory items, suppliers, and customers as required for the transactions. For detailed help refer to the Xero helpsheets. All transaction values are GST inclusive.
Unless noted otherwise all transactions are subject to GST Date Details 14th May You sold 15 pairs of Red Socks @ $3.20 per pair and 15 pairs of Striped Socks @ $4.00 per pair to Jake Wishart. Jake paid you the full amount using a debit card linked to their bank account. 14th May You sold 10 pairs of Black Socks @ $5.95 per pair and 20 pairs of Blue Socks @ $6.20 to Hoa Pham. Hoa paid you the full amount using a debit card linked to their bank account. 15th May You paid Facebook $25,000 for online advertisements.
These ads will run over the next 2 months, with an end date of 15th July 2018. 17th May You sold 15 pairs of Blue Socks @ $6.20 per pair and 5 pairs of Striped Socks @ $6.05 per pair to Diane Evers. Diane paid you the full amount using a debit card linked to their bank account. 18th May You sold 200 pairs of Rainbow socks @ $6.80 to Warwick Smith. Warwick paid you the full amount using a debit card linked to their bank account. 18th May You paid an invoice for a week’s fuel bill of $297.65 from Shell Australia Details of transactions for Week 3 – 14th to 20th May 2018 5 Week 4 -May 21 to May 27, 2018 The only task for this week is to record transactions for the company, you may need to create new accounts, inventory items, suppliers, and customers as required for the transactions. For detailed help refer to the Xero helpsheets. All transaction values are GST inclusive.
Unless noted otherwise all transactions are subject to GST Date Details 21th May You sold 20 pairs of Red Socks @ $5.20 per pair and 15 pairs of Blue Socks @ $5.20 per pair to Freya Leonard. Freya paid you the full amount using a debit card linked to their bank account. 22th May You sold 10 pairs of Striped Socks @ $5.95 per pair and 10 pairs of Black Socks @ $5.75 to Gabby Stannus. Gabby paid you the full amount using a debit card linked to their bank account.
22nd May You paid Sock Daily the amount owing from your 8th May purchase 23th May You sold 10 pairs of Blue Socks @ $6.20 per pair and 3 pairs of Striped Socks @ $6.05 per pair to Diane Evers. Diane paid you the full amount using a debit card linked to their bank account. 24th May You sold 200 pairs of Rainbow socks @ $6.80 to Warwick Smith. Warwick paid you a deposit of 50% of the total sale using a debit card linked to their bank account and agreed to pay the remaining 50% on 16th May.
25th May You paid an invoice for a week’s fuel bill of $286.79 from Shell Australia Details of transactions for Week 4 – 21st to 27th May 2018 6 Week 5 -Monday May 28 to Thursday May 31, 2018 The first task for this week is to record transactions for the company, you may need to create new accounts, inventory items, suppliers, and customers as required for the transactions. For detailed help refer to the Xero helpsheets. All transaction values are GST inclusive. Unless noted otherwise all transactions are subject to GST Date Details 28th May You sold 15 pairs of Black Socks @ $5.60 per pair and 10 pairs of Striped Socks @ $6.80 per pair to Charlie Sanders. Charlie paid you the full amount using a debit card linked to their bank account.
29th May You sold 6 pairs of Striped Socks @ $5.95 per pair and 3 pairs of Red Socks @ $5.75 to Goh See Kwang. Goh paid you the full amount using a debit card linked to their bank account. 30th May You sold 20 pairs of Rainbow Socks @ $6.50 per pair to Jennie Carroll. Jennie paid you the full amount using a debit card linked to their bank account. 30th May You sold 100 pairs of Striped socks @ $6.80 per pair to Warwick Smith. Warwick paid you a deposit of 40% of the total sale using a debit card linked to their bank account and agreed to pay the remaining 60% on 8th June. Details of transactions for Week 5 – 28th to 31st May 2018 This is the final week in the calendar month so your main task is to prepare the month end accounting entries.
The best way to approach this task is to run a Trial Balance after you have input all the transactions for the month and use that report to determine what accrual accounting adjustments are required. You should examine each account line in the Trial Balance and decide if the balance currently shown is correct under accrual accounting principles. For any adjustments required you will need to prepare and input a general journal entry. If you depreciate any assets you should use the straight line depreciation method.
Answer:
This motive of the following report is to make a vivid analysis and evaluation of the financial performance of the company 18840507 for the month of May. It has been found that the company had various transactions for the month of May and journal entries have been passed along with the preparation of the income statements and the balance sheet. The company of 18840507 has been engaged in the operation of selling and buying of inventories. There has been preparation of the profit and loss account and a balance sheet for the month of May in the organization (Levinson 2014). There is Trial Balance has also been also prepared in the organization which are shown in the Appendix which is given below.
Financial analysis
During the year the record of the transactions that are made by necessary journal entries passing in the month of May. After the journal entries the transactions are then transferred to the various ledger accounts (Grant 2016). For confirming the mathematical accuracy and balance of the debit and the credit side of the transactions of the organization the trial balance has been prepared.
The trial balance which is the statement where the debit and the credit balances are matched in order to find out the mathematical accuracy of the bookkeeping process. The trial balance also helps in pointing out the errors of commission and omission that have been occurred in the book keeping process (Rothaermel 2015). While analyzing the trial balance it can be found out that amount of sales in the credit side is $9829. Following the sales there are direct expenses that includes the cost of goods sold and the expensed related to the Motor Vehicles that has taken place in the month of May. The amount of cost of goods sold is $ 5,932 and the motor vehicle expense is $ 531.The owners capital equity amounts to $ 200000.The trial balance total is $566660 in both the debit and the credit side representing a general accuracy.
References
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