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
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

Financial Statements

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

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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