Prepare Financial Reports V2017 USER GUIDE. sample for review BSBFIA304 BSBFIA401. Part # 410

Transcription

1 Part # 410 Prepare Financial Reports V2017 USER GUIDE BSBFIA304 BSBFIA401

2 All Rights Reserved Copyright 2018 OfficeLink Learning Version This user guide is based on the previous version No part of the contents of this book may be reproduced or transmitted in any form or by any means without the written permission of OfficeLink Learning. All registered trademarks, or service marks of their respective owners. While care has been taken in the preparation of this Training Tool, OfficeLink Learning, the developer does not accept any liability for any damage or loss (including indirect and consequential loss) incurred by any person as a result of relying on the information contained in this material. This tool should not be regarded as professional advice and it should not be relied upon in any important matter without obtaining appropriate advice relevant to your situation. It is the Registered Training Organisation s responsibility to validate the mapping of this tool to the performance criteria. Trademarks and Acknowledgements All terms or products mentioned in this manual that are known to be trademarks have been acknowledged. OfficeLink Learning cannot attest to the accuracy of this information. Use of a term in this manual should not be regarded as affecting the validity of any trademark. Marian Brown s content has contributed to this text. Software Description This course has been designed for users of the MYOB product AccountRight Plus AU (Education) Mac users will need to install and use Parallels or similar software, i.e. an emulator installed to allow the Mac to run PC programs. The case study in this material uses fictional information. Accredited MYOB Publisher OfficeLink Learning has been accredited by MYOB as a Publishing Associate. We have met the selection criteria to hold this status.

3 Elements of Competency and Performance Criteria Appendix A Elements of Competency and Performance Criteria BSBFIA401 Prepare Financial Reports Element Performance Criteria Demonstrated 1 Maintain asset register 2 Record general journal entries for balance day adjustments 1.1 Prepare a register of property, plant and equipment from fixed asset transactions in accordance with organisational policy and procedures. 1.2 Determine method of calculating depreciation in accordance with organisational requirements. 1.3 Maintain asset register and associated depreciation schedule in accordance with organisational policy and procedures and accounting requirements. 2.1 Record depreciation of non-current assets and disposal of fixed assets in accordance with organisational policy, procedures and accounting requirements. 2.2 Adjust expense accounts and revenue accounts for prepayments and accruals. 2.3 Record bad and doubtful debts in accordance with organisational policy, procedures and accounting requirements. Unit 3 Unit 9 Unit 3 Unit 9 Unit 3 Unit 3 Unit 4 Unit 9 Unit 4 Unit 9 Unit Adjust ledger accounts for inventories, if required, and transfer to final accounts. Unit 9 Unit 4 Unit 9 3 Prepare final general ledger accounts 3.1 Enter general journal entries for balance day adjustments in general ledger system in accordance with organisational policy, procedures and accounting requirements. Unit 5 Unit Post revenue and expense account balances to final general ledger accounts system. Unit 5 Unit 9 Copyright 2018 OfficeLink Learning 211

4 Elements of Competency and Performance Criteria Element Performance Criteria Demonstrated 4 Prepare end-ofperiod financial reports 3.3 Prepare final general ledger accounts to reflect gross and net profits for reporting period. 4.1 Prepare revenue statement in accordance with organisational requirements to reflect operating profit for reporting period. Unit 6 Unit 9 Unit 7 Unit Prepare balance sheet to reflect financial position of business at end of reporting period. 4.3 Identify and correct errors or refer errors for resolution in accordance with organisational policy and procedures. BSBFIA304 Maintain a General Ledger Unit 7 Unit 9 All Units Element Performance Criteria Demonstrated 1 Process journal entries 2 Prepare a trial balance 1.1 Prepare general journal entries from source journals in accordance with accounting requirements, organisational policy, procedures and accounting standards. 1.2 Post journal entries into general ledger system in accordance with organisational policy, procedures and accounting standards. 1.3 Reconcile accounts payable and accounts receivable subsidiary ledger systems with general ledger. 1.4 Ensure processing maintains the accounting equation and is completed within designated time lines 2.1 Prepare trial balance of general ledger system in accordance with organisational requirements and accounting standards, and ensure it is checked for accuracy. Unit 4 Unit 5 Unit 4 Unit 5 Unit 4 Unit 5 Unit 4 Unit 5 Unit 4 Unit Identify and rectify irregularities or refer them for resolution when trial balance does not balance, in accordance with organisational policy and procedures. Unit 4 Unit Copyright 2018 OfficeLink Learning

5 Contents Contents Unit 1 Introduction... 1 Purpose of this workbook... 1 Prerequisites... 1 Organisation of this workbook... 2 Relationship to Competency Standards... 2 What you will need... 3 Conventions used in this User Guide... 4 Symbols used in this User Guide... 5 Checking your working environment... 6 Installing AccountRight Plus on a Windows PC... 7 Unit 2 Bookkeeping to Trial Balance Learning outcomes Information - Smiths Tyreworld Extract from Accounting Policies and Procedures Revision Maintaining Financial Records Cash Receipts Journal Smiths Tyreworld Cash Payments Journal Smiths Tyreworld Bank Reconciliation General Ledger of Smiths Tyreworld Preparation of a Trial Balance Trade Debtors (Accounts Receivable) Ledger Trade Creditors (Accounts Payable) Ledger The Accounting Cycle Skills checklist Unit 3 Maintaining an Asset Register Learning outcomes What is an Asset Register? Asset Legislation What is depreciation? Estimating Effective Life Methods of Depreciation Units of Production Method Straight-Line Method Diminishing Value Establishing an Assets Register Calculating Depreciation on 30 June 2018 Canon photocopier Calculating Depreciation on 30 June 2018 Toyota Ute Example using Residual Cost Calculating Depreciation on 30 June 2018 Computer Calculating Depreciation on 30 June 2018 Toyota Kluger Calculating Depreciation on 30 June 2018 Brother Printer Copyright 2018 OfficeLink Learning iii

6 Contents Summary of Assets using a Depreciation Schedule Disposal of Assets Asset card solutions Skills checklist Unit 4 Processing journal entries Learning outcomes Analysing and interpreting reports Creating Journals for Depreciation Creating Journals for Disposal of Asset Creating Journals for Balance Day Adjustments Task 1: Prepaid Expenses Task 2: Prepaid Income Task 3: Accrued Expenses (Accrued means owing) Task 4: Accrued Income Creating Journals to account for Doubtful Debts Creating Journals for stock adjustments Creating Journals for Income Tax and Superannuation Creating Journals to correct errors Reviewing your General Journal entries on 30 June Entering Journal Entries in AccountRight Plus Correcting Errors - Policies and Procedures Correcting errors in AccountRight Skills checklist Unit 5 Updating the General Ledger Learning outcomes Updating the General Ledger General Ledger of Smiths Tyreworld Preparation of the Adjusted Trial Balance Updating General Ledger in AccountRight and printing a Bank Reconciliation and Trial Balance Industry Codes of Practice Writing procedures Skills checklist Unit 6 Closing the Ledger Learning outcomes Closing the General Ledger (manual) Transferring the trade accounts to the Trading Account Transferring the other income and overhead expense accounts to the Profit and Loss Account Transferring the Net Profit to the Capital Account Transferring Drawings to the Capital Account Closing the General Ledger for 2018 in AccountRight Closing a financial year in AccountRight Plus Skills checklist iv Copyright 2018 OfficeLink Learning

7 Contents Unit 7 Preparing Financial Reports Learning outcomes Purpose of financial reports Knowledge of relevant legislation Preparing a Profit and Loss Statement Preparing a Balance Sheet Printing a Profit & Loss Statement in AccountRight Printing a Balance Sheet in AccountRight Skills checklist Unit 8 Handling bad debts and balance day adjustments Learning outcomes Balance Day Adjustments Reversing Balance Day Adjustments Reversing entries in AccountRight Accounting for Bad and Doubtful Debts Accounting for Bad and Doubtful Debts in AccountRight Skills checklist Unit 9 Additional exercises Unit 9.1 Activity: Asset Register Card (after Unit 3) Unit 9.2 Activity: Asset Register Card (after Unit 3) Unit 9.3 Activity: Journal Entries (after Unit 4) Unit 9.4 Activity: Asset Register card, journals and ledger (after Unit 6) Unit 9.5 Activity: Journal Entries, Updating Ledger and prepare an adjusted Trial Balance (after Unit 6) Unit 9.6 Activity: Closing Ledger (after Unit 6) Unit 9.7 Activity: Prepare Financial Reports (after Unit 7) Unit 9.8 Activity: Prepare Financial Reports (after Unit 7) Unit 9.9 Activity: Bad and Doubtful Debts exercise (after Unit 8) Unit 9.10 Activity: Bad and Doubtful Debts exercise (after Unit 8) Appendix A Elements of Competency and Performance Criteria Appendix B Solutions to exercises Copyright 2018 OfficeLink Learning v

8 Unit 4 Processing journal entries Learning outcomes In this unit you will continue to process journal entries manually and use AccountRight for the following: depreciation disposal of an asset prepaid income prepaid expenses accrued income accrued expenses stock adjustments bad and doubtful debts Copyright 2018 OfficeLink Learning 73

9 Smiths Tyreworld Policies and Procedures 1. Read the Policies and Procedures of Smiths Tyreworld in Unit What procedures must be followed when entering journal entries? Analysing and interpreting reports In Unit 3 you created a Depreciation Schedule for You will now use this document, approved by Angus, to process journal entries in the books of Smiths Tyreworld. You may need to refer to your double-entry accounting rules in your Maintain Financial Records text. 1. What is the annual amount of Office Equipment depreciation to be written off? What is the annual amount of Motor Vehicle depreciation to be written off? What is the annual amount of Low-Value Pool depreciation to be written off? Copyright 2018 OfficeLink Learning

10 Revision: Recording the purchase of Assets (manual journal entries) In the previous unit the manual purchases of the assets on 01/06/2018 were recorded on asset register cards. Item Amount GST Value Elite Computer $3, $ Toyota Kluger $40, $3, Brother Laser Printer $ $90.00 $43, $4, Total amount to be allocated to the Bank Loans is to be $48, Now prepare the manual journal entries MOTOR VEHICLES AT COST July 1 Balance GJ 35, , Dr June 1 Toyota Kluger GJ OFFICE EQUIPMENT AT COST July 31 Balance GJ 8, , Dr June 1 Elite Computer GJ LOW-VALUE POOL AT COST June 1 Brother Printer GJ Copyright 2018 OfficeLink Learning 75

11 GST PAID July 31 Accounts Payable [Purchases] Accounts Payable [Purchases Returns] PJ 1, , Dr PRJ , Dr Cash Payments CPJ , Dr June 1 Purchase of equipment and car GJ BANK LOAN July 1 Balance GJ 40, , Cr June 1 Purchase of equipment and car GJ 76 Copyright 2018 OfficeLink Learning

12 Creating Journals for Depreciation Task 1: Account for depreciation on Office Equipment $3, Your journal entry will look like this. (Explanation is in italics.) GENERAL JOURNAL Date Particulars Ref Debit Credit June 30 Task 2: Depreciation (Increase in Expenses) Accumulated Depreciation Office Equipment (Decrease in Assets) (Annual depreciation on office equipment using diminishing value method) 3, , Note: It is customary to record the debit first and indent the credit. Account for depreciation on Motor Vehicles refer to Schedule 1. Enter the above transaction in the journal below using the example above as a guide. 2. You may need to refer to the Chart of Accounts on pages GENERAL JOURNAL Date Particulars Ref Debit Credit June 30????? Solutions can be found on page 92. Copyright 2018 OfficeLink Learning 77

13 Task 3: Account for depreciation on Low-Value Pool - refer to Schedule 1. Enter the above transaction in the journal below using the example above as a guide. 2. You may need to refer to the Chart of Accounts on pages GENERAL JOURNAL Date Particulars Ref Debit Credit June 30??? Solution can be found on page 92. Creating Journals for Disposal of Asset The completed Toyota Ute Asset Card (after disposal) looked like this. ASSET: TOYOTA UTE Asset No.: M010 Purchase date: 30/6/17 Class/Category: Motor Vehicles Purchased from: Black Toyota Deprec. Cost: $35, New/second-hand: NEW Location: N/A Effective life: 8 Rego Number 00 OEQ Depreciation method: Straight-Line Date Details Cost GST Depreciation Accumulated Depreciation? Written-down Value 30/6/17 Purchase $35,000 $3,500 $0 $0 $35, /6/18 Depreciation $4, $4, $30, Date of disposal: 30/6/18 Disposal price: $25, Authorised by: Angus Smith Gain/Loss on disposal: Loss $5,625.00? You will record the above disposal as shown in the following journal entries. (Explanation is in italics.) 78 Copyright 2018 OfficeLink Learning

14 You are required to complete the journal by completing the? fields. 30 June 2018 Sold Toyota Ute for $27, including GST to T White. Paid by bank transfer. GENERAL JOURNAL Date Particulars Ref Debit Credit June 30 Bank (Amount actually received and banked.) Accumulated Depreciation Motor Vehicles (Depreciation amount already written off) Loss on Sale (Amount calculated in Unit 3) 27, Motor Vehicle (at Cost) (The cost price of the car which is now 35, being disposed of.) GST Collected (Amount of GST= 1/11 th of $27,500.) (Sale of Toyota Ute 00 0EQ to T White) Totals to check the double-entry is accurate:?? Solution can be found on page 92.?? 2, Copyright 2018 OfficeLink Learning 79

15 Creating Journals for Disposal of Asset The completed Canon Photocopier Asset Card (after disposal) looked like this. ASSET: CANON PHOTOCOPIER Asset No.: P312 Purchase date: 30/6/17 Class/Category: Office Equipment Purchased from: Printer Deprec. Cost: $8, New/second-hand: NEW Location: Print Room Effective life: 5 Serial Number DNRX Depreciation Diminishing Date Details Cost GST Depreciation Accumulated Depreciation Writtendown 30/6/17 Purchase $8, $800 $0 $0 $8, /6/18 Depreciation $3, $3, $4, Date of disposal: 30/6/18 Disposal price: $5, Authorised by: Angus Smith Gain/Loss on disposal: Gain $ Copyright 2018 OfficeLink Learning

16 Record the disposal of the photocopier in the General Journal below. Remember to refer to the Chart of Accounts on pages for appropriate accounts. 30 June 2018 Sold Canon Photocopier for $5, inc GST to Local School. Paid by bank transfer. GENERAL JOURNAL Date Particulars Ref Debit Credit Solution can be found on page 92. Copyright 2018 OfficeLink Learning 81

17 Creating Journals for Balance Day Adjustments The Trial Balance of Smiths Tyreworld on 31 July 2017 is shown on page 34. Our exercise has now jumped forward to the end of financial year. Please note that there are no transactions processed for the intervening months however we are going to assume that several transactions did happen which require adjustments to be to be accounted for in order to report an accurate picture of the business for the 2018 financial year. Task 1: Prepaid Expenses Advertising costs ($ inc GST, i.e. $ ex GST) were paid for 12 months August to July. The business needs to account for 1/12th of the amount ($37.50) which was paid for the next financial year to report the correct amount for the 2018 financial year. The Advertising Account looks like this in the General Ledger ADVERTISING 31/7/17 Cash Payments CPJ Dr However, $37.50 needs to the deducted so that the account is amended to look like this ADVERTISING 31/7/17 Cash Payments CPJ Dr 30/6/18 Prepaid Expenses Dr Therefore, the following journal entry must be created. Complete the? fields from the information above. GENERAL JOURNAL Date Particulars Ref Debit Credit June 30 Prepaid Expenses (see Chart of Accounts) (increase an asset) Advertising (decrease an expense) (Account for advertising paid for July 2018) 37.50? Solution can be found on page Copyright 2018 OfficeLink Learning

18 Task 2: Prepaid Income $1,000 (ex GST) has been paid and recorded in Sales for work not yet done. The business wishes to report the exact sales amount. The Sales Account looks like this in the General Ledger SALES (tyres, accessories) 31/7/17 Accounts Receivable SJ 15, , Cr Cash Receipts CRJ 1, , Cr However, $1, needs to the deducted so that the account is amended to look like this. (There is no GST issue in this entry.) SALES (tyres, accessories) 31/7/17 Accounts Receivable SJ 15, , Cr Cash Receipts CRJ 1, , Cr 30/6/18 Prepaid Income GJ 1, , Cr Therefore, the following journal entry must be created. Complete the? fields from the information above. GENERAL JOURNAL Date Particulars Ref Debit Credit June 30? (decrease income) Prepaid Income (see Chart of Accounts) (increase a liability)?? 1, Solution can be found on page 92. Copyright 2018 OfficeLink Learning 83

19 Task 3: Accrued Expenses (Accrued means owing) The Lease of Premises is paid on the 1st of the following month, however, the lease payment for June of $1, inc GST (only the $1,000 is accounted for here) needs to be accounted for in June. The Lease of Premises Account looks like this in the General Ledger LEASE OF PREMISES 31/7/17 Cash Payments CPJ 1, , Dr However, $1, needs to the added to the amount so that the account is amended to look like this. (There is no GST issue in this entry Tax Invoice not yet received.) LEASE OF PREMISES 31/7/17 Cash Payments CPJ 1, , Dr 30/6/18 Accrued Expenses GJ 1, , Dr Therefore, the following journal entry must be created. Complete the? fields from the information above. GENERAL JOURNAL Date Particulars Ref Debit Credit?? (increase an expense) June 30 Accrued Expenses (see Chart of Accounts) (increase a liability)? 1, Solution can be found on page Copyright 2018 OfficeLink Learning

20 Task 4: Accrued Income An Insurance Refund of $400 (no GST involved) is owing and not yet received, however the payment has been made to repair the motor vehicle. The Insurance Refund Account looks like this in the General Ledger INSURANCE REFUNDS 31/7/17 Cash Receipts CRJ Cr However, $ needs to the added to the amount so that the account looks like this. (There is no GST issue in this entry.) INSURANCE REFUNDS 31/7/17 Cash Receipts CRJ Cr 30/6/18 Accrued Income GJ Cr Therefore, the following journal entry must be created. Complete the? fields from the information on the previous page. GENERAL JOURNAL Date Particulars Ref Debit Credit June 30 Accrued Income (increase in an asset)? (increase in income)? ? Solution can be found on page 93. Copyright 2018 OfficeLink Learning 85

21 Creating Journals to account for Doubtful Debts In the books of Smiths Tyreworld, the invoices listed as owing were as follows: Schedule of Trade Debtors Invoice Due Date Name Balance N/A Pine Shire Council -$ /7/17 Seymore Logistics /7/17 Hugh Jackson 1, Reconciles with balance of Trade Debtors A/c in the General Ledger Smiths Tyreworld Policies and Procedures $1, Read the Policies and Procedures of Smiths Tyreworld in Unit What procedure is followed in relation to Bad and Doubtful Debts? 86 Copyright 2018 OfficeLink Learning

22 On 30 June, a provision for doubtful debts (5% of Trade Debtors ex GST) will be made. Calculating the base amount: = $935 + $1,265 (do not include the credit) = $2,200 less 10% GST = $2, % = $ Therefore, the following General Journal will be made: GENERAL JOURNAL Date Particulars Ref Debit Credit June 30 Bad and Doubtful Debts (see Chart of Accounts) Provision for Doubtful Debts (see Chart of Accounts) (A provision of 5% of Trade Debtors ex GST made for doubtful debts.) How to deal with debts written off is covered later in this workbook Copyright 2018 OfficeLink Learning 87

23 Creating Journals for stock adjustments The Trial Balance of Smiths Tyreworld on 31 July 2017 looked like this (extract only): Account Name Dr Balance Cr Balance Bank 17, Trade Debtors 1, Stock on Hand 15, The Stock on Hand figure is actually the Stock on Hand at the end of June A stocktake was carried out on 30 June 2018 and the amount of stock on hand (ex GST) was calculated to be $12, The amount must now be entered in the books and the existing amount transferred to the Cost of Sales to calculate the Gross Profit from trading (covered in Unit 6). The above Stock on Hand account looks like this in the General Ledger STOCK ON HAND 1/7/17 Balance GJ 15, , Dr The following entries need to be entered in this account to report the correct amount on hand STOCK ON HAND 1/7/17 Balance GJ 15, , Dr 30/6/18 Transfer to Cost of Sales 15, Dr 30/6/18 Stock take 30 June , , Dr 88 Copyright 2018 OfficeLink Learning

24 Therefore, the following Journal entries will be made. GENERAL JOURNAL Date Particulars Ref Debit Credit June 30 Opening Stock (see Chart of Accounts) 15, Stock on Hand 15, (Transfer opening stock to Cost of Sales.) June 30 Stock on Hand 12, Closing Stock (see Chart of Accounts) 12, (Account for 30 June stocktake figure.) Creating Journals for Income Tax and Superannuation 1. Account for Income Tax withheld from Wages - $ Account for Superannuation on Wages - $84.00 To account for the above transactions, the following journal entry is created. Complete the? fields. GENERAL JOURNAL Date Particulars Ref Debit Credit June 30 Wages? PAYG Withholding (see Chart of Accounts) (Account for Income Tax withheld from wages) 30 Superannuation? Superannuation Payable (see Chart of Accounts) (Account for superannuation payable on wages) Solution can be found on page 93. Copyright 2018 OfficeLink Learning 89

25 Creating Journals to correct errors Read the Policies and Procedures of Smiths Tyreworld. What procedures must be followed if an error has been identified in the manual set of books? Error 1: On checking the original invoice, it has been discovered in June 2018 that the information on the cheque butt below is incorrect. The payment of $700 was actually for Advertising in the college magazine. You are now required to make an appropriate journal entry to fix this mistake. No: 614 6/7/17 To: Downs College For: School Fees for daughter This cheque $ This entry was allocated to the Drawings A/C and no GST. This entry should have been allocated to Advertising with GST. The cheque butt should have looked like this: No: 614 6/7/17 To: Downs College For: Advertising (not drawings) This cheque $ Copyright 2018 OfficeLink Learning

26 The original tax invoice has been photocopied and filed in the journals section of your information folder as evidence. Try this journal by yourself and then check with the solution on page 93. There is a GST issue in this entry. GENERAL JOURNAL Date Particulars Ref Debit Credit June 30 Error 2: It has been identified that the stocktake figure for June 2018 was $13, not $12, Make the necessary adjustment to the journal entry. Later you will record the total amount of $13,000 in AccountRight (see page 101). Copyright 2018 OfficeLink Learning 91

27 Reviewing your General Journal entries on 30 June 2018 GENERAL JOURNAL Date Particulars Ref Debit Credit June 30 Depreciation 3, Accumulated Depreciation Office Equipment (Annual depreciation using diminishing value method) June 30 Depreciation 4, Accumulated Depreciation Motor Vehicles (Annual depreciation using straight-line method) June 30 Depreciation Accumulated Depreciation - Low- Value Pool (Annual depreciation on Low-Value pool written off) June 30 Bank 27, Accumulated Depreciation Motor Vehicles 4, Loss on Sale 5, , , Motor Vehicle (at Cost) 35, GST Collected 2, (Sale of Toyota Ute 00 0EQ to T White) June 30 Bank 5, Accumulated Depreciation Office 3, Equipment Gain on Sale Office Equipment at Cost 8, GST Collected (Sale of Canon photocopier) June 30 Prepaid Expenses Advertising (Account for advertising paid for July) June 30 Sales (tyres, accessories) 1, Prepaid Income 1, (Account for work not yet done) 92 Copyright 2018 OfficeLink Learning

28 June 30 Lease of Premises 1, Accrued Expenses 1, (Account for Lease Payment on 1 July) (General Journals are totalled to check Dr = c/f $56, $56, Cr) June 30 Accrued Income Insurance Refunds (Account for insurance refund not received) June 30 Bad and Doubtful Debts Provision for Doubtful Debts (A provision of 5% of Trade Debtors ex GST made for doubtful debts.) June 30 Opening Stock 15, Stock on Hand 15, (Transfer opening stock to Cost of Sales.) June 30 Stock on Hand Closing Stock 13, , Approved by Angus (Account for 30 June stocktake figure.) June 30 Wages , , PAYG Withholding (Account for Income Tax withheld from wages) Superannuation Superannuation Payable (Account for superannuation payable on wages) June 30 Advertising Approved by Angus Smith GST Paid Drawings (Cheque no 614 dated 6 July 17 was initially allocated to drawings, however, the cheque was written out to pay for advertising in the $85, $85, college magazine.) Copyright 2018 OfficeLink Learning 93

29 Entering Journal Entries in AccountRight Plus You will now open an AccountRight Plus company file and enter the journal entries on the previous pages. (You need no prior MYOB knowledge to enter these journals, because the procedure is almost the same as you did manually.) 1. AccountRight Plus should be loaded on your computer (see page 7). 2. You should have downloaded the Smiths Tyreworld v myox file (see page 9). Log on 1. Double-click on the MYOB icon on the desktop. The following window is displayed: 2. Ignore the list of any recently opened files and click on the Open a company file button. 94 Copyright 2018 OfficeLink Learning

30 3. Locate the AccountRight Plus company file Smiths Tyreworld v myox found in This PC/Documents/MYOB/My AccountRight Files/BSBFIA Select to Add a company file if you have saved the file in another location. 5. Click on Smiths Tyreworld v myox file and then Open 6. There are no passwords in a training environment; however, this is where you would normally type in your User ID and Password. Leave User ID as Administrator and the Password blank 7. Click OK. Finally, the Command Centre of AccountRight will appear. Copyright 2018 OfficeLink Learning 95

31 Exploring AccountRight You will now explore the parts of AccountRight and compare with the information in Unit Click the Accounts Command Centre 2. Click on Accounts List in the flowchart. Accounts 3. Click the Asset tab to display just those accounts. This window represents the Assets part of Chart of Accounts on pages of this book. Asset Accounts List 4. You can click on the maximise button or double-click on the Accounts List title bar to maximise your window so that the information is easier to read. 5. Click Close to return to the Accounts Command Centre. 96 Copyright 2018 OfficeLink Learning

32 Revision task: Viewing the purchases of assets Find and check the transactions for the purchase on 01/06/2018 of the asset cards in Unit 3. The total amount of new purchases allocated to the Bank Loan account is $48,210. Item Amount GST Value Elite Computer $3, $ Toyota Kluger $40, $3, Brother Laser Printer $ $90.00 Entering Journal Entries $43, $4, In the preceding sections you have processed a lot of journal entries manually. Now you are going to enter them into Account Right using the following instructions. 1. In the Accounts command centre, select Record Journal Entry. The Record Journal Entry window is displayed. Copyright 2018 OfficeLink Learning 97

33 Follow the instructions below to enter the first journal entry: GENERAL JOURNAL Date Particulars Ref Debit Credit June 30 Depreciation 3, Accumulated Depreciation Office Equipment 3, (Annual depreciation using diminishing value method) 2. Type 30/6/18 in the Date box. Press TAB. 3. Type in the reason for the entry (narration) in the Memo field: Annual depreciation using diminishing value method then press TAB. Note: You can key in 255 characters if needed. Your window should look like this so far: 4. With your cursor in the Acct No. column, press TAB again to display the Chart of Accounts. 5. Scroll up or down to find the appropriate account Depreciation, point to the account and double-click to select. You window should look like this. 6. Key in the depreciation amount in the Debit column then press Enter to go to the next line. 7. Press TAB (or Enter) to display the Chart of Accounts and now select Accumulated Dep Office Equipment. 8. Press TAB to move to the Credit column. The amount should automatically be entered. Press TAB to update the totals at the bottom of the screen. The Journal has been entered. 98 Copyright 2018 OfficeLink Learning

34 Your entry should look like this. 9. Click Record to record the entry in the AccountRight company file. Now to enter more general journal entries. 10. Enter the details for the Motor Vehicle depreciation and Record. 11. Record the low-value pool depreciation in the same manner. Copyright 2018 OfficeLink Learning 99

35 Entries that involve GST must be entered in a slightly different manner to account for the GST on the Business Activity Statement accurately. The fourth entry to record the Sale of the Ute must be entered as shown below to include the GST code. You can only choose the Sale option once you have entered the details into the first line of the Journal entry boxes and make sure the transaction is entered as tax exclusive. 12. Check the Date is entered and Type the in reason for the entry on the Memo 13. Enter the Debits as shown here 14. Click on the Sale option 15. Split the cost of the vehicle to $25,000 and $10,000 as GST was received only on $25,000. Check that GST appears in the Tax column and the Sale option is selected. The GST received is calculated and accounted for in the Tax box. Make sure the Tax Inclusive box is NOT ticked In AccountRight, you rarely allocate an amount to the GST accounts. The GST Tax Code is used to automatically calculate the amount of GST (in Tax ) 16. Click on Edit in the Menu bar and Recap Transaction the result is on the following page 100 Copyright 2018 OfficeLink Learning

36 17. Click on OK then Record. 18. Record the entry for the sale of the photocopier in the same manner. 19. Record the closing stock entry of $13,000 using the tax code N-T. This takes into account the stocktake error. 20. Record the remaining entries. (Watch tax codes only use GST if GST is applicable.) You may need to change the GST code to N-T just highlight GST and type over it. Note: Your general journal numbers may be different to those shown in the book as they will depend on the order that the transactions are entered. Copyright 2018 OfficeLink Learning 101

37 Note: The entry to correct the allocation error will look like this: 19. Select Cancel to return to the Command Centre. Revision task - Recording a journal entry for a sales transaction A cash sale was made on 01/06/2018 for tyres of $22,000 (inc GST). Record a journal entry for this sale. Allocate money to the Bank Account. 102 Copyright 2018 OfficeLink Learning

38 PRINTOUT 1a & 1b - Journal Entries To print a copy of the journal entries viewed and entered to check for accuracy: 1. In the Command Centre, select Transaction Journal in the Accounts flowchart 2. In Date Range, type 01/06/18 to 01/06/ Click on the All tab. 4. Click on the Print button and the report opens in another window. 5. Select All again in the Source Journal drop down box and then Run Report. 6. Print a copy of the journal listing. 7. Now change the date range to 30/06/18 to 30/06/18 and click Run Report. Print a copy of the journal listing. 8. Check the accuracy of your entries on this printout with the journals printed earlier in the unit. A solution for Printout 1b is included at the end of this unit. (See next page for instructions on how to correct errors.) 9. Your tutor should approve these journals. File them in your Journal section of your ring binder. Solution to Printout 1a can be found in Appendix B. Copyright 2018 OfficeLink Learning 103

39 Correcting Errors - Policies and Procedures Read the Policies and Procedures of Smiths Tyreworld. What procedures must be followed if an error has been identified in AccountRight after end of month reports have been printed? Correcting errors in AccountRight If you find you have made an error entering the journals, you will need to correct your error in the following manner. 1. Display the Transaction Journal and enter the relevant dates 2. Click on Zoom to the left of the entry in which the error has been made to display the transaction. 3. Fix the error in the journal window and select OK to record the correction. 4. In your Transaction Journal, check that the entry is now accurate. 5. Reprint your journal. 6. Return to the Command Centre. Note: If errors are corrected in a business environment, screen images should be taken if end of month reports, Business Activity Statements, etc, have been printed and issued. 104 Copyright 2018 OfficeLink Learning

40 Printout 1b Journal Entries Copyright 2018 OfficeLink Learning 105

41 Exit AccountRight To Exit your company file: 1. Select File in the menu bar. 2. Select Exit. In Unit 5 you will learn how to post these transactions to your General Ledger (manually and in AccountRight). Skills checklist Tick the skills that you have learnt in this unit. Skills Depreciation Disposal of an asset Prepaid Income Prepaid Expenses Accrued Income Accrued Expenses Stock Adjustments Bad and Doubtful Debts 106 Copyright 2018 OfficeLink Learning

42 Updating the General Ledger Unit 5 Updating the General Ledger Learning outcomes In this unit you will learn how to: post the General Journal entries to the General Ledger (manually) post the General Journal entries to the General Ledger (in AccountRight Enterprise) prepare manual Adjusted Trial Balance print General Ledger and Trial Balance reports in AccountRight Enterprise. Copyright 2018 OfficeLink Learning 107

43 Updating the General Ledger Revision task View the General Ledger A manual General Ledger is provided on pages View this ledger and locate the entries for the purchase of the assets recorded on the asset cards in Unit 3. The total amount allocated to the Bank Loan account is $48,210. Item Amount GST Value Elite Computer $3, $ Toyota Kluger $40, $3, Brother Laser Printer $ $90.00 $43, $4, Also locate a cash sale of $22,000 made on 01/06/2018. The sale is allocated to the Bank account. Updating the General Ledger You will now update the General Ledger you started with at the beginning of this workbook by posting the General Journal entries created in Unit 4 to this General Ledger. 108 Copyright 2018 OfficeLink Learning

44 Updating the General Ledger Posting the first entry GENERAL JOURNAL Date Particulars Ref Debit Credit June 30 Depreciation , Accumulated Depreciation Office , Equipment (Annual depreciation using diminishing value method) The above entry gives the following instruction: 1. Go to the debit side of the Depreciation account and write 3, in the debit column (see below). 2. Write an explanation in the Particulars column. 3. Calculate the running balance and indicate if the balance is a Dr or Cr (in the last column) DEPRECIATION 30/6/18 Accumulated Depreciation Office Equipment GJ 3, , Dr 4. In the General Journal, indicate that the entry has been posted by writing the account number in the Ref column. Copyright 2018 OfficeLink Learning 109

45 Updating the General Ledger Now go to the Accumulated Depreciation Office Equipment account and write 3, in the credit column and an explanation like this. Record the account number in the ref column of the General Journal ACCUMULATED DEPRECIATION OFFICE EQUIPMENT 30/6/18 Depreciation GJ 3, , Cr 5. You are now required to post the remaining journals to the General Ledger in the same manner. (Use the General Journal on pages and the General Ledger on the following pages.) Remember to write the account number in the Ref column to indicate that the entry has been posted. Solution can be found in Appendix B. 110 Copyright 2018 OfficeLink Learning

46 Updating the General Ledger GENERAL LEDGER of Smiths Tyreworld BANK 1/7/17 Balance GJ 10, , Dr 31/7/17 Cash Receipts CRJ 16, , Dr Cash Payments CPJ 9, , Dr 1/6/18 Cash Sales CRJ 22, , Dr 30/6/18 Sale of ute GJ 27, , Dr 30/6/18 Sale of copier GJ 5, TRADE DEBTORS 72, (balance in Trial Balance) 31/7/17 Sales and GST SJ 16, , Dr Sales Returns & Allowances and GST SRJ , Dr Cash Receipts CRJ 14, , Dr STOCK ON HAND 1/7/17 Balance GJ 15, , Dr Dr PREPAID EXPENSES Copyright 2018 OfficeLink Learning 111

47 Updating the General Ledger ACCRUED INCOME PROVISION FOR DOUBTFUL DEBTS MOTOR VEHICLES AT COST 1/7/17 Balance GJ 35, , Dr 1/6/18 Toyota Kluger GJ 40, , Dr ACCUMULATED DEPRECIATION MOTOR VEHICLES OFFICE EQUIPMENT AT COST 1/7/17 Balance GJ 8, , Dr 31/7/17 Officeworks GJ , Dr 1/6/18 Elite Computer GJ 3, , Dr 112 Copyright 2018 OfficeLink Learning

48 Updating the General Ledger ACCUMULATED DEPRECIATION - OFFICE EQUIPMENT LOW-VALUE POOL AT COST 1/6/18 Brother Printer GJ Dr ACCUMULATED DEPRECIATION LOW VALUE POOL GST COLLECTED 31/7/17 Accounts Receivable (Sales) SJ 1, , Cr Accounts Receivable (Sales Returns) SRJ , Cr Cash Receipts CRJ , Cr 1/6/18 Cash Sales CRJ 2, , Cr Copyright 2018 OfficeLink Learning 113

49 Updating the General Ledger GST PAID 31/7/17 Accounts Payable (Purchases) PJ 1, , Dr Accounts Payable (Purchases Returns) PRJ , Dr 1/6/18 Cash Payments CPJ , Dr Purchase of equipment and car PAYG WITHHOLDING GJ 4, , Dr SUPERANNUATION PAYABLE TRADE CREDITORS 31/7/17 Purchases and GST PJ 15, , Cr Purchases Returns and GST PRJ , Cr Cash Payments CPJ 5, , Cr ACCRUED EXPENSES 114 Copyright 2018 OfficeLink Learning

50 Updating the General Ledger PREPAID INCOME BANK LOAN 1/7/17 Balance GJ 40, , Cr 1/6/ CAPITAL Purchase of equipment and car GJ 48, , Cr 1/7/17 Balance GJ 28, , Cr DRAWINGS 31/7/17 Cash Payments CPJ Dr SALES (tyres, accessories) 31/7/17 Accounts Receivable SJ 15, , Cr Cash Receipts CRJ 1, , Cr 1/6/18 Cash Sales CRJ 20, , Cr Copyright 2018 OfficeLink Learning 115

51 Updating the General Ledger SALES RETURNS AND ALLOWANCES 31/7/17 Accounts Receivable SRJ Dr INTEREST RECEIVED 31/7/17 Cash Receipts CRJ Cr INSURANCE REFUNDS 31/7/17 Cash Receipts CRJ Cr OPENING STOCK 116 Copyright 2018 OfficeLink Learning

52 Updating the General Ledger PURCHASES (tyres, accessories) 31/7/17 Accounts Payable PJ 14, , Dr PURCHASES RETURNS AND ALLOWANCES 31/7/17 Accounts Payable PRJ Cr CLOSING STOCK ADVERTISING 31/7/17 Cash Payments CPJ Dr Copyright 2018 OfficeLink Learning 117

53 Updating the General Ledger BANK CHARGES 31/7/17 Cash Payments CPJ Dr BAD AND DOUBTFUL DEBTS LEASE OF PREMISES 31/7/17 Cash Payments CPJ 1, , Dr WAGES 31/7/17 Cash Payments CPJ Dr 118 Copyright 2018 OfficeLink Learning

54 Updating the General Ledger SUPERANNUATION DEPRECIATION MOTOR VEHICLE EXPENSES 31/7/17 Cash Payments CPJ Dr GAIN ON SALE LOSS ON SALE Copyright 2018 OfficeLink Learning 119

55 Updating the General Ledger Preparation of the Adjusted Trial Balance After all the adjustment journal transactions have been posted to the General Ledger, an adjusted Trial Balance will be drawn up to summarise the transactions in the General Ledger and check the accuracy. Your next task is to prepare the adjusted Trial Balance as at 30 June A 12-column worksheet can also be used. This topic is covered in Preparing Financial Statements User Guide. Solution can be found in Appendix B. Adjusted TRIAL BALANCE AS AT 30 JUNE 2018 Account Name Dr Balance Cr Balance Bank Trade Debtors Stock on Hand Prepaid Expenses Accrued Income Provision for Doubtful Debts Motor Vehicles at Cost Accumulated Depreciation Motor Vehicles Office Equipment at Cost Accumulated Depreciation Office Equipment Low-Value Pool at Cost Accumulated Depreciation Low-Value Pool GST Collected GST Paid PAYG Withholding Superannuation Payable Trade Creditors Accrued Expenses Prepaid Income Bank Loan Capital Drawings Sales (tyres, accessories) Sales Returns and Allowances Interest Received Insurance Refunds 120 Copyright 2018 OfficeLink Learning

56 Updating the General Ledger Account Name Dr Balance Cr Balance Opening Stock Purchases Purchases Returns and Allowances Closing Stock Advertising Bank Charges Bad and Doubtful Debts Lease of Premises Wages Superannuation Depreciation Motor Vehicle Expenses Gain on Sale Loss on Sale TOTALS Checking the accuracy of your General Ledger 1. Does the Debit column equal the Credit column? If not, the following errors could exist in your ledger. Incorrect calculation of the balance in the account Incorrect amount posted from the journal to the ledger Amount posted to the incorrect column in the ledger Incorrect balance written in the Trial Balance Balance written in the incorrect column in the Trial Balance Tip: Calculate the difference between the debit and credit column and look for an amount half or double this amount indicates amount on the wrong side. 2. Also view your accounts to make sure that the Ledger tells the correct story about the business, e.g. you would not see Depreciation in the Bank Account. Copyright 2018 OfficeLink Learning 121

57 Updating the General Ledger Updating General Ledger in AccountRight and printing a Bank Reconciliation and Trial Balance When the journal entries were entered in AccountRight and you selected Record, the General Ledger and Trial Balance were automatically updated and prepared. 1. Start MYOB AccountRight and open the company file used in Unit 4, Smiths Tyreworld v myox. PRINTOUT 2a Bank Reconciliation 2. Select Banking in the Command Centre and then Reconcile Accounts. 3. Select Bank Account and enter the Bank Statement date of 30/06/2018. Account Banking Reconcile Accounts Date 4. Select the transactions and print a report before reconciling. Solution can be found in Appendix B. 122 Copyright 2018 OfficeLink Learning

58 Updating the General Ledger PRINTOUT 2b General Ledger Report 1. Click on Reports in the menu and then Accounts tab 2. Select the General Ledger [Detail] report 3. Set the date range to 01/06/ /06/2018 and click Display Report. 4. Click on the Insert/Modify tab and select Show Hide. Choose to hide the Job No and Net Activity fields then click OK. 5. Select to NOT include accounts with no activity and then click Run Report. 6. Print a copy of the General Ledger - Printout 2b. Solution can be found in Appendix B. 7. Click on Close to return to Reports. Copyright 2018 OfficeLink Learning 123

59 Updating the General Ledger PRINTOUT 3 Trial Balance 30 June In Accounts reports, click on Trial Balance and set the As of date field to June. 2. Click Display Report. 3. Print a copy of the Trial Balance. 4. Compare the Trial Balance with the manual Adjusted Trial Balance on page 120. If you find an error, identify the account, call up the account and make the necessary adjustment. Reprint the Trial Balance. The only error you can have in AccountRight is an error in entering the journals in Unit Copyright 2018 OfficeLink Learning

60 Updating the General Ledger Your Trial Balance should look like this: File the above report in your ring binder in the appropriate section. Copyright 2018 OfficeLink Learning 125

61 Updating the General Ledger Industry Codes of Practice As the bookkeeper you could be directed to enter journals which are not supported by appropriate Institute of Certified Bookkeepers Code of Conduct Go to the website of the Institute of Certified Bookkeepers and download the Code of Professional Conduct of members of the ICB. This is found within the membership section. Read through the code and apply it to the following case study. Angus Smith actually purchased the Brother Printer for his daughter and will not be used by the business in any way. If you were a member of the ICB, what guidelines should you follow in the code when dealing with this situation? (List one fundamental principle.) 126 Copyright 2018 OfficeLink Learning

62 Updating the General Ledger Writing procedures As the bookkeeper working with AccountRight, you have been asked to rewrite the procedures (step by step) for entering journal entries in AccountRight only. 1. Save a copy of these procedures, or even better, prepare a set of procedures in Microsoft Word and print. 2. File these procedures in your ring binder as evidence of your ability to write procedures. Copyright 2018 OfficeLink Learning 127

63 Updating the General Ledger Skills checklist Tick the skills that you have learnt in this unit. Skills Post the General Journal entries to the General Ledger (manually) Post the General Journal entries to the General Ledger (in AccountRight Enterprise) Prepare manual Adjusted Trial Balance Print General Ledger and Trial Balance reports in AccountRight Enterprise 128 Copyright 2018 OfficeLink Learning

64 Solutions to exercises Appendix B Solutions to exercises UNIT 3 Page 43 IAS 16 requires that an item is initially measured at its cost. What elements are included in the cost? The purchase price, including all costs directly attributable to bringing the asset to the location and condition necessary for its intended operation. Page 43 There are two classes of asset: 1. Assets costing less than $1000 ex GST. These assets will be pooled in the low-value pool and depreciated at 18.75% in the first year and 37.5% thereafter using the diminishing value method of calculating depreciation. 2. Assets costing more than $ ex GST: These assets will not be pooled and will be depreciated according to the recommended effective life of the asset. Page What is the effective life of office equipment? 5 years 2. What is the effective life of motor vehicles? 8 years Copyright 2018 OfficeLink Learning 213

65 Solutions to exercises 3. What method is used to depreciate office equipment? Diminishing value method 4. What method is used to depreciate motor vehicles? Straight-line method Page 62 What procedure must be followed when disposing of an asset? Quotes must be obtained from at least two dealers and the final decision approved by Angus. The entry must be recorded in both the fixed asset register and the general ledger as soon as possible after the disposal. UNIT 4 Page What procedures must be followed when entering journal entries? All general journal entries (for example, depreciation) must have some form of supporting documentation and be authorised by Angus. 1. What is the annual amount of Office Equipment depreciation to be written off? $3, What is the annual amount of Motor Vehicle depreciation to be written off? $4, What is the annual amount of Low-Value Pool depreciation to be written off? $ Copyright 2018 OfficeLink Learning