Practical Completion Point 3 – Computerised Section
For this final part of the practical assignment you will be using the same information as for Practical Completion Point 1 with a couple of extra transactions but entering all data into a computerised system. The purpose of this exercise is to allow you to compare and contrast the skills needed to utilise different styles of systems.
For this task the Xero Accounting Package will be used. The aim of this exercise is not to train you in the use of this system but to give you exposure to it. Basic instructions and comparable sample data are provided at the end of this document to assist you in navigating the system.
Alistair Adin runs a business Al Adin’s Lamps and Rugs that specialises in ornaments and interior design. He has contacted you for some assistance in setting up a new accounting system. Alistair has managed to collect enough information to create a chart of accounts for you to work from.
Enter the information below from the chart of accounts and schedules in order to set up Alistair’s new system in the Xero Accounting Software.
Al Adin’s Lamps and Rugs - Chart of Accounts as at 1 July 2019
103 Petty Cash 120.00
105 Bank 2,380.00
107 Accounts Receivable Control 9,438.00
109 Allowance for Bad and Doubtful Debts 676.00
111 Inventory 3,458.00
113 Stationery on Hand 220.00
115 Prepaid Insurance 2,400.00
116 Prepaid Rent 12,000.00
140 Warehouses 96,000.00
141 Acc. Depreciation – Warehouses 24,000.00
150 Delivery Vehicle 63,000.00
151 Acc. Depreciation – Delivery Vehicle 13,280.00
160 Shop Fittings 16,400.00
161 Accumulated Depreciation – Shop Fittings 8,460.00
207 Accounts Payable Control 6,149.00
205 Accrued Wages 1,498.00
210 Telephone Expense Payable 264.00
220 Vehicle Maintenance Payable 385.00
299 GST 1,250.00
250 Credit Giving Society Loan (15-year) 103,000.00
303 Capital – Alistair Adin 46,454.00
You need to enter the information below into the appropriate subsidiary ledger accounts.
Schedule of Accounts Receivable
as at 1 July 2019
10701 Just the Palace 1,562
10703 Agro’s Bazzar 649
10705 Arabian Night Lights 3,278
10707 Genieus Home Ideas 3,949
Schedule of Accounts Payable
as at 1 July 2019
20701 Tarnished Lamps 2,145
20703 Jars from Afar 825
20705 Rugs in the Air 3,179
Enter the following transactions into Xero Accounting software using the instructions provided on the subject website to guide you.
July 1 Purchased 10 Hand Woven Rugs from Rugs in the Air. Each rug cost $330 (including GST).
July 2 Sold 25 Table Lamps to Arabian Night Lights for $58 each (net of GST).
July 5 Made a cash sale of 3 rugs to Iago Bird for $750 each (net of GST)
July 8 Paid the full amount owed to Jars from Afar less a 5% discount for early payment.
July 10 Sold 60 candles to Agro’s Bazzar for $40 each (net of GST).
July 12 Received cash (net of GST) from Ms Jasmine Rajah for completing a home inspection and interior design options report. The fee for this service was $620 (net of GST).
July 13 Paid all employees their fortnightly wages. The total cash payment was $2,200 (GST Free).
July 15 Purchases 50 “Scents of the Desert” candles for $25 each from Tarnished Lamps. An additional delivery charge of $50 was incurred (All amounts are net of GST).
July 17 Received a cheque from Genieus Home Ideas being full settlement of their account.
July 21 Paid the $385 owing to the “Camel Masters” for vehicle maintenance completed in June.
July 29 Made a cash payment of $561 (including $27 GST) to Connecting U for the last two months telephone usage.
Once you have completed the data entry in the above two tasks, you will need to export the following reports into a single excel file.
Required Reports – Dated July 31
- Balance Sheet
- Aged Payables
- Aged Receivables
In addition to the above reports you will need to provide a brief statement of approximately 100-200 words indicating what information can be identified from the reports you have produced and how accessing this information compares to the manual system you used in Completion Point 1. This statement should be included in your excel file along with your exported reports.
Once your reports and statement are combined into a single file then this file must be uploaded to the submission point on learnonline.
A quick introduction to Xero Accounting
The purpose of the following notes are to allow you to set up a Xero Account and interact with the software in a way that enables you to complete the requirements of this assignment. The purpose of this exercise is not to provide training in the use of this software, rather it is aimed at giving you exposure to a popular accounting package and allow you to contrast this with a manual system.
The images/details in these guidelines are for reference only and do not represent the data you should be entering. Students need to use the names/titles from the above assessment information.
One of the first things you will need to do is give yourself full control over the system.
Enabling the Adviser option
? From the menu, click on Settings.
? Under the heading “Organisation”, select “Users”.
? From the list of users, click on three dots by your username.
? Select the “Adviser” role (and remember to click “Update Permissions” at the bottom of the page:
Entering Opening Balances
At this point we are ready to enter the opening balances from our chart of accounts into the system. As Xero is designed to track all activity and simplify the data entry process there is no separate General Journal.
The accounts can be entered all at once by
- Selecting the Accounting Tab and choosing Advanced
- Select the Conversion Balances
- Select Conversion Date – use the start of the month for your practical task
- Now you can enter the balances from your chart of accounts, make sure they all balance and the select SAVE
- After this is done you should click on the Dashboard tab and you should see a screen similar to this one.
The final step before you can enter your transactions is to use the knowledge, we developed in Topic 2 about reversing entries.
- In order to make a reversing entry you will need to select the + in the top right of the screen and select Manual Journal
- From there you are simply making a journal entry for any accounts you need to reverse. You should already have this information from the first feedback file.
- The system should now be set up ready for normal data entry.
The next stage is to now enter the transactions.
Sales and Purchases
Essentially what you see on screen should reflect the substance of the transaction
- The date is correct, including a due date
- There is an appropriate description
- An appropriate account (Sales or Purchases) is selected
Using a purchase as an example
- You can either start from the Dashboard and select New Bills
- On the Business Tab select Purchases Overview.
- Now select New and then select Bill
- Set the supplier name in From
- Make sure the date is set
o You have to set a due date
- Enter the Description by selecting the item or typing in the code
- Enter the Amount (you will have to set the Qty)
- Set the Account as INVENTORY (Xero uses a perpetual system)
- Check that GST on Expenses is selected in Tax Rate and make sure the other information on screen matches the details provided for the transaction
- Then APPROVE
- On the Business Tab select Sales Overview or from the Dashboard select New Invoices
- Now select New and then select Invoice
- Enter the relevant details for customers as you did for any new purchases above and then APPROVE each one.
Receipts and Payments
For any receipts and payments not directly related to a previous Invoice or Bill you will need to click on the + and then you can select Spend or Receive Money
- Select the Business Account to pay money from or receive money into
- Enter the relevant details for the payment or receipt depending on whether it is an expense or a cash sale
- Once you are satisfied all the details are correct SAVE the transaction
For payments to suppliers or receipts from customers
These are achieved by
- Selecting the Dashboard Tab then choosing either Invoices owed to you or Bills you need pay.
- From here selecting the Awaiting Payment option
- Then select the invoice or bill that needs to be dealt with
- In the bottom left of the screen you can record
o The amount paid
o The date it was paid on
o The account paid “to for Invoices” or “from for Bills” (Business Account)
For early payments - Discounts/Returns
These are entered in much the same way as Sales and Purchases
- Instead of selecting New Invoice or Bill you will select New and then Credit Note.
- Once you have entered a credit note and approved it you will have to Allocate the Credit Balance
- When you entered the credit note you will have selected a Customer/Supplier and so only the transactions relevant to them will show up.
- Enter the appropriate Amount to Credit and then Allocate Credit
This is potentially the simplest part of using Xero and one of the great positives of a computerised system.
To generate a report
- Select the Accounting Tab and then choose Reports then select the report you need (Balance Sheet/Aged Receivables/Aged Payables)
The report will generate instantly
- Check the date is appropriate and adjust any other setting as you see fit
That’s it. While this only touches the surface of what accounting packages and in particular Xero can do it should give you some insight into the different knowledge bases needed for different systems.