ACC506 Task 2A – Semester 3, 2017
1. R Reed Co Pty Ltd
Having identified a gap in the Brisbane market after returning from two years living in London, Ryan Reed, launched a high end men’s fashion and accessories retail outlet in the increasingly fashionable Brisbane suburb of Fortitude Valley on July 1st, 2016.
R Reed Co Men’s Emporium stocks niche brands and products not available elsewhere in the city and Ryan Reed’s personal style and flair is a unique attraction for his loyal customers. Initially, Ryan runs the business alone but as sales increase and the business grows, he adds a sales assistant and a part time accountant towards the end of the quarter.
Whilst the accountant intends to introduce an online accounting package, at this stage Ryan Reed maintains an Excel based spreadsheet systems until the accountant convinces of him to make the transition.
1.2 Accounting policies and other details
Like all Australian businesses, R Reed Co Pty Ltd uses the financial year: 1 July to 30 June, withholds PAYG for its employees, and pays GST on sales to the Australian Government. The business uses a GST paid (Asset account) and GST collected (Liability account) to record its GST. Unless otherwise stated, assume all transaction amounts are inclusive of GST (10%).
R Reed Co Pty Ltd was founded with a cash injection from Ryan Reed, who also makes periodic withdrawals of funds from the business to meet his personal expenses.
R Reed Co Pty Ltd uses the accounts listed in the Chart of Accounts (please note, the Accounts in italics in the Chart of the Accounts template will be used in Task 2B only).
Additional Information for Task 2B
The following details on the accounting policies adopted by the business are required for Task 2B:
R Reed Co Pty Ltd:
1. Uses the accrual accounting method.
2. Uses a perpetual inventory system using weighted average.
3. Is preparing an annual Business Activity Statement (BAS) in this first year of its operation and will remit the net GST liability due to the ATO following the end of the September quarter.
4. Depreciates furniture using reducing balance method at the rate of 30%.
5. Pays wages monthly, part in arrears and part in advance, for the dates specified in the transaction list. The shop assistant is employed on a full time basis and the accountant on a part time basis.
1.3 The business records the following transactions in the accounts:
1.4 Chart of Accounts:
R Reed Co Pty Ltd’s Chart of Accounts are shown below. (Please note, the Accounts in italics in the Chart of the Accounts template will be used in Task 2B only when completing the adjustments and closing entries).
Chart of Accounts
Account Name Account Type Usual Balance
Cash at Bank Asset Debit
Accounts Receivable Asset Debit
Provision for Doubtful Debts Contra - Asset Credit
Supplies Asset Debit
Inventory Asset Debit
Prepaid Insurance Asset Debit
Prepaid rent Asset Debit
GST Paid Asset Debit
Furniture at cost Asset Debit
Accum Dep - Furniture Contra - Asset Credit
Accounts Payable Liability Credit
GST Collected Liability Credit
PAYG Tax Payable Liability Credit
Wages Payable Liability Credit
R Reed, Capital Equity Credit
R Reed Drawings Equity Debit
Sales Revenue Revenue Credit
Discount Received Revenue Credit
Cost of Goods Sold Cost of Goods Sold Debit
Advertising Expense Expenses Debit
Bad Debts expense Expenses Debit
Dep - Furniture Expenses Debit
Discount Allowed Expense Expenses Debit
Wages Expense Expenses Debit
Supplies Expense Expenses Debit
Inventory Loss Expenses Debit
Rent Expense Expenses Debit
Insurance Expense Expenses Debit
Profit and Loss Closing Temporary only N/A
1.5 July to September 2016 Calendar Dates
Calendar dates are actual dates so please refer to a 2016 calendar as required.
1.6 Journals and Ledgers
The business uses the following journals and ledgers:
General Journal - to record all transactions (including Adjustments and Closing entries in Task 2B)
General Ledger - all GJ entries are posted to the General Ledger (please note, do not post closing entries of Task 2B)
Please note: All amounts are to be in whole dollars.
1.7 Financial Reports
The business uses the following Financial Statements:
Balance Sheet - Assets, Liabilities, Owners’ Equity
Income Statement - Revenue, Expenses, Goss/Net Profit (Loss)
Statement of Changes in Equity - Capital, Drawings
2. Task 2A Requirements
(Use the Task 2A template. Make adjustments as required including using formulas and links.)
a. Prepare the General Journal entries for the transactions that occurred July – September 2016 using the correct format and notations. Transactions are listed above at 1.3. Use the accounts listed in the Chart of Accounts at 1.4. These also appear in the template.
b. Post the GJ entries to the General Ledger. Enter names for the ledger accounts and add accounts to the template as necessary. Link the transaction amounts to the GJ values. (Please note, the template uses a running balance method. Create the formulas and links for these.)
c. Prepare a Trial Balance as at 30 September 2016 by linking to the ledger accounts. It will be a live Trial Balance but at this point it is to be unadjusted as adjustments are not to be made until Task 2B.
3. Task 2A Marking
This is an individual assignment to be submitted via Safe Assign on the USC course Blackboard site. Further details relating to the assessment including late penalties, can be found in the Course Outline. For extension of submission dates, please refer to USC’s extension policies (see below), and get in contact with the Course Co-ordinator.
Academic misconduct, including plagiarism is taken very seriously. Please refer to USC’s Academic Misconduct Policy, available on the website and contact the Course Co-ordinator if you have any queries:
Task 2A is worth 5% and will be marked out of 100 according to the table below:
General Journal 65
General Ledger 20
Trial Balance 10
Excel functionality 5