ACC506 ATMC Task 2
Chalkboard Supplies is a GST registered independent office furniture supplies business owned by Dusty as sole proprietor. This business stared its operation on 1 July 2017 and it is focusing on supplying office and study desks to small businesses. This study is calculating the financial performance and providing the financial statements of the company.
Journal entries for Chalkboard Supplies
| Journal entries for Chalkboard Supplies | |||||
| Date | Account Title and Explanations | Ref | Amount (Rs) | ||
| Debit | Credit | ||||
| 2017 | |||||
| July | 1 | Cash at Bank | $67,000.0 | ||
| To Capital A/c | $67,000.0 | ||||
| July | 3 | Toyota Landcruiser UTE A/c | $44,100.0 | ||
| GST paid A/c | $4,410.0 | ||||
| To sundry creditors | $48,510.0 | ||||
| July | 28 | Purchase A/c | $8,420.0 | ||
| To Homeworks A/c | $8,420.0 | ||||
| (12*585+8*175) | |||||
| Aug | 1 | Cash at Bank | $42,000.0 | ||
| To bank loan (Trusty Bank) | $42,000.0 | ||||
| Aug | 5 | Ace Accountants | $3,520.0 | ||
| To sales | $3,520.0 | ||||
| Aug | 12 | Purchase A/c | $11,016.0 | ||
| To Homeworks A/c | $11,016.0 | ||||
| (18*612) | |||||
| Aug | 19 | Cash at Bank | $3,308.8 | ||
| Discount A/c | $221.2 | ||||
| To Ace Accountants | $3,520.0 | ||||
| Sep | 1 | Insurance | $5,000.0 | ||
| GST Paid | $500.0 | ||||
| To Cash at Bank | $5,500.0 | ||||
| Sep | 2 | Homeworks A/c | $19,436.0 | ||
| To Cash at Bank | $19,436.0 | ||||
| (8420+11016) | |||||
| Sep | 20 | Electrical Training | $16,456.0 | ||
| To sales | $16,456.0 | ||||
| Oct | 1 | Computer system A/c | $20,210.0 | ||
| GST Paid | $2,021.0 | ||||
| To sundry creditors | $22,231.0 | ||||
| Oct | 4 | Purchase A/c | $2,620.0 | ||
| To Homeworks A/c | $2,620.0 | ||||
| (10*262) | |||||
| Oct | 9 | Sundry debtors | $1,991.0 | ||
| To Performed services | $1,810.0 | ||||
| To GST collected | $181.0 | ||||
| Oct | 17 | Cash at Bank | $15,139.5 | ||
| Discount a/c | $1,316.5 | ||||
| To Electrical Training | $16,456.0 | ||||
| Nov | 7 | Cash at Bank | $2,629.0 | ||
| To sales | $2,390.0 | ||||
| To GST paid | $239.0 | ||||
| 2018 | |||||
| Jan | 5 | Drawing a/c | $12,200.0 | ||
| To Cash at Bank | $12,220.0 | ||||
| Mar | 12 | Homeworks A/c | $2,620.0 | ||
| To Cash at Bank | $2,620.0 | ||||
| April | 1 | Computer system A/c | $20,210.0 | ||
| GST Paid | $2,021.0 | ||||
| To sundry creditors | $22,231.0 | ||||
| April | 23 | General supplies | $2,400.0 | ||
| GST Paid | $240.0 | ||||
| To Cash at Bank | $2,640.0 | ||||
| June | 6 | Fortnightly wages | $470.0 | ||
| PAYG | $55.0 | ||||
| To Cash at Bank | $525.0 | ||||
| June | 20 | Fortnightly wages | $955.0 | ||
| PAYG | $97.0 | ||||
| To Cash at Bank | $1,052.0 | ||||
Ledger accounts for Chalkboard Supplies
Cash at Bank A/c
| Date | Particular | Amount | Date | Particular | Amount |
| 1-Jul | To capital | $67,000.0 | 2-Aug | Homeworks A/c | $19,436.0 |
| 1-Aug | To bank loan (Trusty Bank) | $42,000.0 | 1-Sep | Insurance | $5,000.0 |
| 19-Aug | To Ace Accountants | $3,308.8 | 1-Sep | GST Paid | $500.0 |
| 17-Oct | To Electrical Training | $15,139.5 | 5-Jan | Drawing a/c | $12,200.0 |
| 7-Nov | To sales | $2,390.0 | 12-Mar | Homeworks A/c | $2,620.0 |
| 7-Nov | To GST paid | $239.0 | 23-Apr | General supplies | $2,400.0 |
| 23-Apr | GST Paid | $240.0 | |||
| 6-Jun | Fortnightly wages | $470.0 | |||
| 6-Jun | PAYG | $55.0 | |||
| 20-Jun | Fortnightly wages | $955.0 | |||
| 20-Jun | PAYG | $97.0 | |||
| 30-Jun | Balance c/f | $86,104.3 | |||
| $130,077.3 | $130,077.3 |
Capital A/c
| Particular | Amount Dr. | Particular | Amount Cr. |
| Drawings | 12200 | Cash at bank | 67000 |
| Balance c/f | 54800 | ||
| 67000 | 67000 |
Sundry Creditors A/c
| Particular | Amount Dr. | Particular | Amount Cr. |
| Balance c/f | 92972 | Toyota Landcruiser UTE A/c | 44100 |
| GST paid A/c | 4410 | ||
| Computer system A/c | 20210 | ||
| GST Paid | 2021 | ||
| Computer system A/c | 20210 | ||
| GST Paid | 2021 | ||
| 92972 | 92972 |
Trial Balance for Chalkboard Supplies
| Particulars | Amount | |
| Dr | Cr | |
| Cash at bank | 86104.32 | 0 |
| Capital | 0 | 54800 |
| Toyota Landcruiser ute A/c | 44100 | 0 |
| GST | 8712 | 0 |
| Sundry Creditors | 0 | 92972 |
| Sundry debtors | 1991 | 0 |
| Purchase A/c | 22056 | 0 |
| Homeworks A/c | 0 | 0 |
| Bank loan (Trusty Bank) | 42000 | |
| Ace Accountants | 0 | 0 |
| Sales A/c | 22366 | |
| Discount A/c | 1527.68 | |
| Insurance A/c | 5000 | |
| Electrical Training | 0 | 0 |
| Computer system A/c | 40480 | |
| Performed services | 1810 | |
| General supplies | 2400 | |
| Fortnightly wages | 1425 | |
| PAYG | 152 | |
| Total | 213948 | 213948 |
| Income statement | ||
| Sales | 22366 | |
| Closing Stock | 13951 | |
| Cost of goods sold | 19976 | |
| Gross profit | 16341 | |
| Wages | 1425 | |
| PAYG | 152 | |
| Discount A/c | 1527.68 | |
| Insurance A/c | 5000 | |
| General supplies | 2400 | |
| Total expenses | 10504.68 | |
| Net earning | 5836.32 | |
| Balance Sheet and shareholder’s Equity | Amount in $ |
| Assets | |
| Cash at bank | 86104.32 |
| Toyota Landcruiser UTE | 44100 |
| GST paid | 8712 |
| Sundry debtors | 1991 |
| Closing Stock | 14221 |
| Computer system | 40480 |
| Total Assets | 195608.32 |
| Liabilities | |
| Sundry Creditors | 92972 |
| Bank loan (Trusty Bank) | 42000 |
| Total liabilities | 134972 |
| Shareholder’s Equity | |
| Equity Capital | 54800 |
| Retained earnings | 5836.32 |
| Total shareholder’s Equity | 60636.32 |
| Total shareholder’s Equity and Liabilities | 195608.32 |
The financial position of Chalkboard Supplies is showing that the company has a good financial position because it has earned profit of $5836.32 in the starting year of the business.
The financial position is showing that the company has total shareholder’s equity of $60636.32 in this financial year. The business make a profit of $5836.32 and the company can increase the overall profit by adopting a manufacturing strategy where the company will design and manufacture the products also.
In the coming year, Chalkboard Supplies expects to invest in further assets. The available depreciation methods are balance method for computer equipment and straight line method for vehicles.
The main differences between these methods are that straight-line depreciates the value of asset in equivalent installment of its useful life, whereas balance method depreciates the value of asset with a specific percentage.
The main benefit of this method is that the straight-line depreciation method is easy to use and simplifies accounting calculations. Beside this, the balance method provides an extra accurate accounting of value of an asset. So that it is recommended that they should continue with their current depreciation methods.
Chalkboard Supplies used weighted average perpetual inventory method for FY 2018. There are some other methods like FIFO, LIFO, contingency planning, etc. that could be used by the company. These methods might impact on the financial position of the business because all inventory calculation methods provide different values of stock.
It is recommended that internal control mechanisms should focus on the Bank Reconciliation because the interest rate of the bank is much high.
Edmonds, T.P., McNair, F.M., Olds, P.R. and Milam, E.E., 2013. Fundamental financial accounting concepts. New York, NY: McGraw-Hill Irwin.
Cairns, R.D., 2013. The fundamental problem of accounting. Canadian Journal of Economics/Revue canadienne d’économique, 46(2), pp.634-655.
