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ACC60008 Accounting Systems and Reporting

Assessment 2

 

General information

This assignment counts 20% towards your final assessment. The assignment must be completed in a group of 2 students.

This assignment requires you to the XERO cloud accounting platform to record transactions for a small business. It covers many of the common everyday transactions of a business in Australia,    including Goods and Service Tax (GST). It is not meant to be a data entry exercise. You are         required to carefully understand each transaction, how the software records the transactions in     ledgers and how reports are created. You must strictly follow the assignment guidelines and must use the XERO education version when recording the data in XERO education accounting platform (the course convenor will send you an invitation to the platform via your university email. Please    do not use your own version or the free XERO trial version. Your assignment will not be                 considered for marking if you use your own version or the XERO 30-day free trial.

Specific information

Deeper Dives (ABN 65 992 718 643) is owned and operated by Fred Flathead and is situated at 122 Slides Street, Williamsville, Victoria, 3957. Deeper Dives specializes in selling locally           manufactured diving equipment and takes students on diving courses in its boat. The business  charges GST on all inventory sales and dive lessons and pays GST on inventory purchases      and most business expenses.

IMPORTANT: When establishing the business name for the assignment record Deeper Dives- your name.

Employees

Deeper Dives employs two casual assistants. Katerina Cray works as a dive instructor on the boat with Fred, and Peter Prawn works in the shop selling stock, and taking bookings for dive lessons. Fred pays Katerina and Peter $30 each per hour. Each employee works between 15 to 30 hours  per week, depending on the season and demand. At the end of July, Deeper Dives owed 8 hours pay each to Peter and Katerina.

Goods and Services Tax

Deeper Dives pays GST of 10% on all business expenses, except Wages. Non-current asset acquisitions are also taxed at 10%.

Merchandise Inventory

The following is a list of closing inventory and the suppliers as at 31st July 2022.

Quantity on hand

Item Code

Description

Unit Cost Price

Unit Selling Price

Supplier

20

SDS

Summer Dive Suit

$280

$560

Right Dive Pty Ltd

20

WDS

Winter Dive Suit

$340

$690

Right Dive Pty Ltd

50

LDM

Learn to Dive Manuals

$20

$30

Plankton Publishers

Each of the above items of inventory is quoted excluding GST.

Deeper Dives maintains inventory records for all inventory items using the F.I.F.O. (first-in, first-

Restocking inventory:

The required inventory is purchased on credit under the terms of payment required by the         suppliers. Fred has a good relationship with each of his suppliers. Once he places an order, the suppliers will deliver the inventory free of charge the same day.

Lessons

Deeper Dives also provides diving lessons charging customers $120 per lesson (excluding GST). All lessons are paid for at the time of the lesson and recorded separately to the sale of inventory.

Supplier information

Suppliers account balances as at 31st July 2022:

Name

Address

ABN

Account Balance

Right Dive Pty Ltd

Factory 11, Tide Towers Business Complex, Williamsville

74 222 233 334

$3,280

Plankton Publishers

87 Circular Drive,

Spotswood

88 222 244 445

$2,330

Each of the above account balances represents deliveries of inventory received on 26 July 2022; all purchases are on terms net 30 days.

Customer information

Deeper Dives sells most of its inventory strictly on a cash basis, but the business has three credit customers. Terms of payment for these customers are net 30 days.

Name

Address

ABN

Last Invoice

date

Account

Balance

Swimmers City

14 Bligh Street,            Williamsville, VIC 3957

37 111 155 556

July 17

$2,350

Williamsville Secondary College

47 Buckley Road,        Williamsville, VIC 3292

41 222 277 778

July 24

$1,940

Bottom of the

Harbour Tours

33 Departed

Drive

Havensville,

3294

55 222 288 889

July 3

$4,400

Bank loan

Deeper Dives has a loan payable to Seaside Bank. Each month principal and interest is paid off

the loan.

Trial Balance as at 31st July 2022

Ledger Account

Debit

Credit

Bank (BSB 137-981, Acct. 9854426)

$16,460

 

Inventory

$13,400

 

Trade accounts receivable

$8,690

 

Trade accounts payable

 

$5,610

Motor Vehicle

$42,500

 

Accumulated Depreciation of Motor Vehicle.

 

$6,750

Diving Equipment & Boat

$78,900

 

Accumulated Depreciation of Dive Equip & Boat

 

$11,670

GST Payable

 

$1,440

Capital – Fred Flathead

 

$104,000

Loan – Seaside Bank

 

$30,000

Wages Payable

 

$480

 

$159,950

$159,950

Transactions: August 2022

1        Paid cash for printing expenses – $660 (GST Inclusive).[Reference: chq 101]

1        Purchased a new computer from the Office Plus for $3,520 (GST inclusive). [Reference: chq 102]. It is expected that the computer will have an effective life of 4 years and a

$0 residual value at the end of its useful life.

2        Paid shop rent for 1 Aug 2022 to 28 Feb 2023) of $5,280 (GST inclusive) [Reference: chq 103]

3        Paid cash for vehicle expenses- $187 – (Including GST) [Reference: chq 104]

3        Paid Right Dive Pty Ltd for the July account. [Reference: chq 105]

4         Paid for two months (August and October) advertising in the Williamsville Times

 $198 (GST inclusive) [Reference: chq 106]

4        Cash sales of 5 summer dive suits, 3 winter dive suits, and 20 Learn to Dive manuals. [Invoice: Cash4)

4        Received payment from Swimmers City for July account.

4        Four customers paid $120 each for diving lessons. [Reference: DL4]

8        Paid Plankton Publishers for July account. [Reference: chq 107]

9        Credit purchase of 15 summer dive suits and 20 winter dive suits.[Reference SDWDS]

9        Sales Invoice sent to Swimmers City for the following items (Invoice 617):

●    10 summer dive suits

●    10 Learn to Dive manuals

10      10 customers paid $120 each for diving lessons. [Reference: DL10]

10      Purchased stationery for $1,540 (GST inclusive) from Max Office Services [Reference: chq 108]

12      Pay day. Katerina was paid for 28 hours and Peter was paid for 22 hours which included payment for wages owing 31 July. [References: chqs 109 & 110]

12      Credit purchase of 25 Learn to Dive manuals. [Reference LDM]

14      Received payment from Williamsville Secondary College for July account.

14      Credit sale to Williamsville Secondary College of 8 summer dive suits, 3 winter dive suits and 11 Learn to Dive manuals.[Invoice 618]

15      Williamsville Secondary College returned 1 winter dive suit and received a credit note. The dive suit was undamaged.

16      Cash drawings Cheque payable to Fred Flathead $3,900 [Reference: chq 111]

16      Paid cash for vehicle expenses – $220 (Including GST) [Reference: chq 112]

17      Credit purchase of 26 summer dive suits. [Reference SD]

17    Fred introduces a new product for sale. He has purchased 20 Dive Starter Kits from          Sponge Bob Industries for $120 each (GST exclusive) (P.O. 334). Selling price of the Dive Starter kits is $250 each (GST exclusive).

18      Credit sale of 10 summer dive suits and 10 Dive Starter kits to Bottom of the Harbour Tours . [Invoice 619]

19      Credit purchase of 30 dive starter kits. [Reference DSK]

19      Cash sale of 20 winter dive suits [Invoice: Cash19]

20      Paid Australian Taxation Office GST owing [Reference: chq 113]

20 Returned 2 summer dive suits to Right Dive Pty Ltd. They were slightly damaged. A Credit Note was issued by the supplier. These items were from the purchase on 17 August.

22      Paid Right Dive Pty Ltd for inventory purchased on 9 August [Reference: chq 114]

23      Credit purchase of 15 Learn to Dive manuals. [Reference LDM]

23 Paid monthly repayment to Seaside Bank for bank loan of $350 (this includes $200 interest) [Reference: chq 115]. GST is not payable on this transaction.

Fred decided that the business would pay an additional $3,000 off the loan principal.

23      Paid Telstra Ltd for business phone accounts - $385 (GST Inclusive) [Reference: chq 116]

25     Cash Drawings cheque payable to Fred Flathead $2 500 [Reference: chq 117]

25      Credit sale to Swimmers City of 5 summer dive suits, 5 winter dive suits, 10 Dive Starter kits and 10 Learn to Dive [Invoice 620]

26      Pay day. Peter was paid for 30 hours and Katerina was paid for 24 hours. [References: chqs 118 & 119]

27      12 customers paid $120 each for diving lessons. [Reference DL12]

27      Swimmers City paid for items purchased on 9 August.

27     A customer purchased 12 Dive Starter Kits for cash at a special price of $65 each        (including GST). The customer also purchased 12 Learn to Dive manuals at the normal price for cash. [Invoice: Cash 12]

28      Received payment from Williamsville Secondary College of the balance owing in the account.

28      Paid Sponge Bob the balance owing on the account. [Reference: chq 120]

29      Paid Right Dive Pty Ltd the balance outstanding in the account [chq 121]

30      Received payment from Bottom of the Harbour Tours for the balance owing in the account.

31      The ANZ Bank in Williamsville has sent a bank statement for the month of August

2022. The following items were noted from the bank statement.

●   Bank fees of $15 were debited to the account on 30 August.

Adjustments at 31st August 2022

Some of the necessary adjustments are to be worked out from the transactions above. Other adjustments are listed below.

   The physical stock take agreed with the inventory on hand in the business records.

•    The motor vehicle, diving equipment and boat are to be depreciated using the

•    Wages owing: Peter – 8 hours, and Katerina – 9 hours.

•    A stock stake revealed stationery on hand of $730

Required:

Transaction Recording and Reporting using XERO

1.   Click on the link to the XERO Learning platform which is in an email sent to you from XERO. (Note: You must complete the assignment within the XERO Learning platform)

2.   From your XERO Learning platform, click on the template for Deeper Dives.

3.   Create an appropriate Chart of Accounts for Deeper Dives (a sample Chart of Accounts is provided - see the Canvas document Deeper Dives - sample Chart ofAccounts”)

4.   Enter the conversion balances as at 1st August 2022.

5.