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NDB507 Accounting Processes

NDB507 Accounting Processes

Assignment 1

Weighting: Assignment 1 is worth 25% of your final grade.

Due: Please refer to the study plan.

Instructions

  • Submit all of your answers in one document (the Excel template is supplied).
  • Write each part of the question you are answering in the appropriate section of each worksheet within the Excel template.
  • Ensure you (first) save the Excel template with your name (first name last name), student number and assessment number in the file name.

Learning outcomes

This assessment covers the following learning outcomes:

  • 1: Manually process transactions from the source documents to trial balance for a business entity registered for GST on the invoice basis of accounting.
  • 2: Apply accounting concepts and process balance day adjustments.

Submission

Submit your work through the online assessment submission link. Upload your assessment, then use the Save and Submit assessment buttons. You will get an electronic receipt and your work is then logged and tracked through our system. Assessments emailed directly to lecturers will not be accepted.

Referencing and plagiarism

Refer to Referencing and avoiding plagiarism for information on avoiding plagiarism.

Assessment guidance

Scope and mark allocation

This assessment is worth 25% of your final mark. You will be given a mark out of 100%, which will be converted to a total of 25% of your final grade.

Part Topic/Task Marks

Part A Journal entries to record transactions 30

Ledger set up, posting and trial balance 25

Subsidiary ledgers for accounts receivable and accounts 20

payable

Part B Balance day adjustments and accounting concepts 25

Total: 100

Assessment requirements

This assessment has two parts. You need to complete both Part A and Part B.

Part A: Journals, general and subsidiary ledgers

Read the following scenario and complete the tasks that follow.

Scenario: Greg’s Mower Services

Greg Saw operates Greg’s Mower Services (GMS), a lawn mower repair service that provides lawn mower repair and servicing to a range of customers. GMS is registered for GST on an invoice basis. His GST period is two-monthly, and the last GST period ended on the 31st of October.

GMS regularly services and repairs lawn mowing and garden power tools for several business customers. They are invoiced monthly, with payment due by the 20th of the following month. Greg also has a fixed price contract with the Central Mowing Company Ltd to service and repair their fleet of tractor-mounted and ride-on lawn mowers. The contract has an agreed fee of $6,000 (excluding GST) per month.

Greg’s Mower Service’s trial balance at the start of November 2020 is as follows:

Greg’s Mower Services Trial Balance as at 1 November 2020

Account

code Account name Dr Cr 1100 Bank 32,000

1200 Accounts receivable 17,250

1500 Workshop Equipment 125,000

1510 Accumulated depreciation – workshop equipment 75,000

1700 Vehicles 34,000

1710 Accumulated depreciation - vehicles 14,000

2200 Accounts payable 15,985

2300 GST payable 5,600

2400 PAYE payable 1,550

2800 Bank loan 34,000

3100 Capital 94,845

3200 Drawings 45,500

4100 Income 170,000

6010 Accounting 2,000

6020 Advertising and marketing 2,100

6030 Bank fees 150

6040 Business insurance 12,000

6050 Electricity 5,000

6060 Interest expense 1,785

6070 Parts and Supplies 25,200

6080 Office expenses 745

6090 Rent 19,500

6100 Repairs and maintenance 4,500

6110 Internet and telephone expenses 2,000

6120 Vehicle expenses 7,250

6130 Wages 75,000

410,980 410,980

Greg’s Mower Services subsidiary ledger accounts showed the following balances as at 1 November:

Accounts receivable

Dr

Central Mowing Company

6,900

Henry’s Mowing

1,380

National Mowing Co

920

Makino Council

2,300

Southern Maintenance Ltd

5,750

Accounts payable

Cr

Allstar Internet Ltd

230

Briggs and Station Ltd

6,900

Engine Parts Ltd

4,600

Parts and More Ltd

2,300

Tarata Garage Ltd

1,380

Westar Energy Co.

575

Greg’s Mower Services transactions for the month of November:

Date November

Details

Amount

($)

2

Purchased parts paying by EFTPOS.

460

3

Invoiced Southern Maintenance Ltd for work completed in addition to contract work.

1,150

3

November rent paid by automatic payment.

5,750

4

Withdrew cash for personal use.

230

4

Purchased parts on credit from Briggs and Station Ltd

4,600

7

Used business EFTPOS card to purchases tea and coffee for staff break room.

230

7

Direct debit to Allstar Internet Ltd, for October account.

230

9

Paid for advertising by EFTPOS.

920

9

Paid Inland Revenue GST Payable by internet transfer.

5,600

9

Invoiced Central Mowing Company for monthly servicing and maintenance work.

6,900

10

Received internet transfer from Southern Maintenance Ltd for their October account.

5,750

10

Used business EFTPOS card to pay for parts.

460

12

Completed a job for a cash customer who paid by EFTPOS.

690

15

Used business EFTPOS card to pay for vehicle service.

345

17

Purchased industrial welding plant (equipment) for $6,900 with an interest-free hire purchase agreement from Tim’s Tools Ltd. (Treat as a separate hire purchase payable, not account payable). The hire purchase will consist of three equal monthly instalments of $2,300. (See 19 November for first cash instalment paid).

6,900

17

Purchased vehicle fuel supplies on credit from Tarata Garage Ltd.

690

19

Paid the first hire purchase instalment by internet transfer.

2,300

19

Invoiced Makino Council for repairs.

2,300

19

Internet transfer to Briggs and Station for October account.

6,900

19

Internet transfer to Engine Parts Ltd for part of October account.

3,450

19

Direct debit to Westar Energy for October account.

575

20

Received invoice from Allstar Internet for monthly internet and phone calls.

299

20

Received payment from National Mowing Co towards their October account.

920

20

Received internet transfer from Makino Council in payment of their account.

2,300

20

Received internet transfer from Henry’s Mowing for October account.

1,380

22

Paid PAYE payable to Inland Revenue by internet banking.

1,550

22

Withdrew cash from ATM with business EFTPOS card for personal use.

460

24

Invoiced Henry’s Mowing for completed work.

2,300

24

Used business EFTPOS card to pay for personal meal.

465

25

Invoiced National Mowing Co for repairs completed

6,900

26

Paid for advertising by EFTPOS.

230

26

Paid net monthly wages by internet transfer.

9,200

26

PAYE on wages is recorded.

1,840

29

Received invoice from Westar Energy Co. for electricity.

690

29

Received payment from Central Mowing for their October account.

6,900

30

A cash customer paid for work by EFTPOS.

920

30

Received invoice from Briggs and Station for repairs to equipment.

2,300

30

Bank fees were direct debited.

90

30

Interest on bank loan was direct debited.

200

Tasks: Complete the following tasks using the Excel templates provided. Note that some items have extra rows that are not required. Show all items in whole dollars only, do not show cents.

  1. Complete the sales journal, purchases journal, cash receipts journal, cash payments journal, and general journal entries, to record the above transactions in the template provided.

Note: Include posting references using the chart of accounts code numbers, as appropriate, for each individual sundry amount, for column totals, and for each line entry in the general journal.

  1. Using the template provided, complete entry of the general ledger opening balances and complete the general ledger, with postings from the journals in Task 1 as appropriate. Prepare a trial balance for the end of the period.
  2. Complete the Accounts Receivable subsidiary ledger, and Schedule of Accounts Receivable (list of balances) with postings from the journals in Task 1, as appropriate for the ledger. Include a reconciliation with the Accounts Receivable control account balance.
  3. Complete the Accounts Payable subsidiary ledger, and Schedule of Accounts Payable (list of balances), with postings from the journals in Task 1, as appropriate for the ledger. Include a reconciliation with the Accounts Payable control account balance.

[Part A total: 75 marks]

Part B: Adjusting and reversal journals

Read the following scenario and complete the tasks that follow.

Scenario: Green’s Parts and Services

Antonio Green is the owner of Green Parts and Services, which is a supplier of agricultural machinery parts and services. They are registered for GST.

Antonio has supplied you with the following information about his accounts as at 30 November 2020, their balance date. As his accountant, you have been requested to make relevant adjustments and corrections to Antonio’s accounting records for each of the following items.

  1. A payment of $2,300 to an account payable was incorrectly recorded as electricity expenses.
  2. The purchase of an office computer worth $1,725 inclusive of GST, was incorrectly coded to general expenses.
  3. An account for advertising fees for $1,150 inclusive of GST was incorrectly coded to general expenses.
  4. The business has completed service work for Gwen’s Consulting as at 30 November but has not invoiced Gwen’s Consulting. The work completed to date is worth $3,000 excluding GST. Gwen’s consulting will not be invoiced until the consulting job is completed in mid-December.
  5. An insurance policy to cover the firm’s equipment was paid for, and recorded as an expense, on 1 October, which insures the firm’s equipment for a year. The policy runs from the 1 October to 2020 to 31 September 2021 and costs $12,000 excluding GST. The firm uses months out of twelve to calculate the insurance adjustment.
  6. Greens Parts and Services has a short-term loan from NZ Bank Ltd for $45,000. The loan was drawn down on 1 September 2020. The loan has an 8% interest rate, with interest being paid annually. The business has not recorded any interest expense since the commencement of the loan and uses days out of 365 to calculate interest. Exclude the day the loan was drawn down from your calculation.
  7. Green’s Parts and Services is yet to complete all the work for Max Ltd. Max Ltd paid $8,000 exclusive of GST for the planned services. Green’s Parts and Services has recorded this as income. On 30 November, Green’s Parts and Services has completed just one quarter of the work.
  8. Green’s Parts and Services purchased a new CNC cutter on 1 June for a GST inclusive cost of $97,750. The firm was granted 30 days credit for the purchase. The cleaner has an estimated life of 10 years with an estimated residual value of $15,000. The firm has not recorded the purchase of the asset or any depreciation for it. Record the purchase of the asset and depreciation.

Tasks:

Complete the following tasks.

  1. Prepare the general journal entries to record the above items using the Excel template provided. Include a brief narration, with calculations where relevant, for each general journal entry. All adjustment amounts in this question should be shown in whole dollars only; do not show cents.

(15 marks)

  1. Prepare general journal reversing entries as appropriate using the Excel template provided, with dates. Include a brief narration for each general journal entry. All adjustment amounts in this question should be shown in whole dollars only; do not show cents.

(7 marks)

  1. Identify which journal each of the following transactions should be recorded in:
  1. Payment of Income tax owed to Inland Revenue.
  2. Receipt of GST refund. Cash withdrawn by the owner of the business for personal use.
  3. A loan payment made to the bank
  4. Inventory purchased which will be paid for in 30 days vi. Payment to a creditor by direct debit

(3 marks)

[ Part B total: 25 marks]

[ ASSIGNMENT 1 TOTAL: 100 MARKS]

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