ACC506 ATMC Task 2 Assignment in 2020

ACC506 ATMC Task 2

Introduction

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
DateAccount Title and ExplanationsRefAmount (Rs)
DebitCredit
2017
July1Cash at Bank$67,000.0
To Capital A/c$67,000.0
July3Toyota Landcruiser UTE A/c$44,100.0
GST paid A/c$4,410.0
To sundry creditors$48,510.0
July28Purchase A/c$8,420.0
To Homeworks A/c$8,420.0
(12*585+8*175)
Aug1Cash at Bank$42,000.0
To bank loan (Trusty Bank)$42,000.0
Aug5Ace Accountants$3,520.0
To sales$3,520.0
Aug12Purchase A/c$11,016.0
To Homeworks A/c$11,016.0
(18*612)
Aug19Cash at Bank$3,308.8
Discount A/c$221.2
To Ace Accountants$3,520.0
Sep1Insurance$5,000.0
GST Paid$500.0
To Cash at Bank$5,500.0
Sep2Homeworks A/c$19,436.0
To Cash at Bank$19,436.0
(8420+11016)
Sep20Electrical Training$16,456.0
To sales$16,456.0
Oct1Computer system A/c$20,210.0
GST Paid$2,021.0
To sundry creditors$22,231.0
Oct4Purchase A/c$2,620.0
To Homeworks A/c$2,620.0
(10*262)
Oct9Sundry debtors$1,991.0
To Performed services$1,810.0
To GST collected$181.0
Oct17Cash at Bank$15,139.5
Discount a/c$1,316.5
To Electrical Training$16,456.0
Nov7Cash at Bank$2,629.0
To sales$2,390.0
To GST paid$239.0
2018
Jan5Drawing a/c$12,200.0
To Cash at Bank$12,220.0
Mar12Homeworks A/c$2,620.0
To Cash at Bank$2,620.0
April1Computer system A/c$20,210.0
GST Paid$2,021.0
To sundry creditors$22,231.0
April23General supplies$2,400.0
GST Paid$240.0
To Cash at Bank$2,640.0
June6Fortnightly wages$470.0
PAYG$55.0
To Cash at Bank$525.0
June20Fortnightly wages$955.0
PAYG$97.0
To Cash at Bank$1,052.0

Ledger accounts for Chalkboard Supplies

Cash at Bank A/c

DateParticularAmountDateParticularAmount
1-JulTo capital$67,000.02-AugHomeworks A/c$19,436.0
1-AugTo bank loan (Trusty Bank)$42,000.01-SepInsurance$5,000.0
19-AugTo Ace Accountants$3,308.81-SepGST Paid$500.0
17-OctTo Electrical Training$15,139.55-JanDrawing a/c$12,200.0
7-NovTo sales$2,390.012-MarHomeworks A/c$2,620.0
7-NovTo GST paid$239.023-AprGeneral supplies$2,400.0
23-AprGST Paid$240.0
6-JunFortnightly wages$470.0
6-JunPAYG$55.0
20-JunFortnightly wages$955.0
20-JunPAYG$97.0
30-JunBalance c/f$86,104.3
$130,077.3$130,077.3

Capital A/c

ParticularAmount Dr.ParticularAmount Cr.
Drawings12200Cash at bank67000
Balance c/f54800
6700067000

Sundry Creditors A/c

ParticularAmount Dr.ParticularAmount Cr.
Balance c/f92972Toyota Landcruiser UTE A/c44100
GST paid A/c4410
Computer system A/c20210
GST Paid2021
Computer system A/c20210
GST Paid2021
9297292972

Trial Balance for Chalkboard Supplies

ParticularsAmount
DrCr
Cash at bank86104.320
Capital054800
Toyota Landcruiser ute A/c441000
GST87120
Sundry Creditors092972
Sundry debtors19910
Purchase A/c220560
Homeworks A/c00
Bank loan (Trusty Bank)42000
Ace Accountants00
Sales A/c22366
Discount A/c1527.68
Insurance A/c5000
Electrical Training00
Computer system A/c40480
Performed services1810
General supplies2400
Fortnightly wages1425
PAYG152
Total213948213948

Financial Statements

Income statement
Sales22366
Closing Stock13951
Cost of goods sold19976
Gross profit16341
Wages1425
PAYG152
Discount A/c1527.68
Insurance A/c5000
General supplies2400
Total expenses10504.68
Net earning5836.32

 

Balance Sheet  and shareholder’s EquityAmount in $
Assets
Cash at bank86104.32
Toyota Landcruiser UTE44100
GST paid8712
Sundry debtors1991
Closing Stock14221
Computer system40480
Total Assets195608.32
Liabilities
Sundry Creditors92972
Bank loan (Trusty Bank)42000
Total liabilities134972
Shareholder’s Equity
Equity Capital54800
Retained earnings5836.32
Total shareholder’s Equity60636.32
Total shareholder’s Equity and Liabilities195608.32

Best ACC506 ATMC Task 2 Assignment in 2020

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.

References

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’économique46(2), pp.634-655.

 

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