(Assessment objectives ...)

Project A - Part 2-

Scenario

XYZcom is a startup that builds high-end BBQs for the consumer market. It commenced operations on 1 July. You are the Bookkeeper for XYZcom.

Interpreting information from organisational policies, procedures, and job requirements is crucial for bookkeepers to ensure compliance, accuracy, relevance, and consistency in financial reporting. To achieve a satisfactory outcome for this assessment task, you must use the case scenario provided to populate the appropriate financial forms.

• Review the Policy Procedure for Financial Reporting.pdf
• Review the Job Requirements.pdf

HINT

If you need some extra help, please use the TUTOR ASSIST document we have prepared to guide you through each step of the project: FNSACC421 Tutor Assist_Project A Part 2.

STEP 1: Asset Register and first-year depreciation calculation

Instructions

On 1 July 20XX, XYZcom buys the equipment needed to produce their range of BBQs. The equipment purchased is:

• BBQ stamping machine for $220,000 (ID: PR001)
• BBQ seam welder for $25,000 (ID: PR002)

Complete the Asset Register for XYZcom and calculate the depreciation for the first year using the diminishing value method. Assume a Depreciation Rate of 20% and use the provided asset information.

Asset Register

ID	Asset Name	Purchase Date	Purchase Price	Effective Life	Depreciation Rate	Year 1 Depreciation Expense	Accumulated Depreciation	Current Value
PR001
PR002

Evidence Required

• Completed Asset Register
• Year 1 Depreciation Expense (shown in the table)

STEP 2: Insurance Prepayment

Instructions

XYZcom pays $4,800 for 12 months of insurance in July. Instead of recording the whole amount against July's expenses, show the expense equally across the periods for which the premium was paid (i.e., $400 expense in all months).

Record the insurance payment and allocate the expense equally across the 12-month period.

GL7 General Journal (showing the entire transaction)

Date	Description	Ref	Debit	Credit
31-Jul-XX
31-Jul-XX
31-Jul-XX
31-Jul-XX

6010 Insurance (showing the Insurance Expense account)

Date	Description	Ref	Debit	Credit	Balance
31-Jul-XX

1945 Pre-paid Insurance (showing the Prepaid Insurance account)

Date	Description	Ref	Debit	Credit	Balance
31-Jul-XX
31-Jul-XX

Evidence Required

Three completed tables

STEP 3: Bad Debt

Instructions

One of XYZcom's account customers, JZ House and Garden, has gone broke, owing XYZcom $5,700. Prepare the appropriate journal or ledger entries to write off the debt. Use docket number JZ345, move the debt into bad debts in April, and finalise the transactions on the 31st of July. Before the write-off, profit is $275,300.00.

You will write off the debt owed by JZ House and Garden and complete the required tables.

Journal entry for the bad debt write-off

Date	Account	Ref	Debit	Credit
31-Jul-XX
31-Jul-XX

Debtors Ledger - JZ House and Garden

Date	Description	Ref	Debit	Credit	Balance
1-Jul-XX	Opening balance
31-July-XX

Bad Debts account

Date	Description	Ref	Debit	Credit	Balance
31-Jul-XX

Profit and Loss account (updated to reflect the bad debt expense)

Date	Description	Ref	Debit	Credit	Balance
1-Jul-XX	Opening balance

Bad debt expense account updated to reflect the transfer to the profit and loss account

Date	Description	Ref	Debit	Credit	Balance
31-Jul-XX
31-Jul-XX

Evidence Required

Five completed tables

1. The general journal entry to write off the bad debt.
2. The general ledger bad debt expense account showing the bad debt written off.
3. The debtors ledger account for JZ House and Garden.
4. The profit and loss account showing the bad debt has been transferred
5. A second bad debt account to show the bad debt has been transferred to profit and loss.

STEP 4: Cost of Goods Sold and Periodic Inventory

Instructions

XYZcom, being a startup, had a zero beginning inventory. The company spent $425,000 on inventory items, receiving $12,000 for prompt payment and paying $10,000 for freight. The closing inventory is $84,000.

Determine the cost of goods sold and the closing entries for a periodic inventory. Determine the cost of goods sold and the closing entries for XYZcom's periodic inventory system and prepare the Periodic Inventory.

Hint

Review the learning material in Part 2 pages 21 and 22. Then complete the tables.

Periodic Inventory - Calculate the Cost of Goods Sold

			$	Debit	Credit
	Less:
	Plus:
	Less:
Cost of Goods Sold

Periodic Inventory: Closing Entry

Account	Debit	Credit

Evidence Required

• Cost of goods sold (COGS) calculation
• Periodic Inventory Closing Entry
• Two completed tables

STEP 5: Income Statement

Instructions

Prepare an Income Statement for XYZcom using your calculations. Show gross profit and net income. You will need the following information:

• Sales: $1,375,000.00
• The cost of goods sold figure you calculated in step 4
• Administrative and sales expenses: $225,000.00
• Interest on debt: $97,000.00
• Depreciation expense: $49,000.
• Tax paid at 30%

Income Statement for XYZcom

For the period ended XX/XX/XXXX

Account	Amount

Evidence Required

A complete Income Statement, including:

• Sales
• Cost of Goods Sold (COGS)
• Gross Profit
• Administrative and Sales Expenses
• Interest on Debt
• Depreciation expense
• Profit Before Tax
• Income Tax Expense
• Net Profit

STEP 6: Trial Balance

Instructions

At the end of the period, XYZcom has the following account balances:

• Cash: $550,000
• Accounts Receivable: $117,000
• Inventory: $84,000
• Prepaid Expenses: $4,800
• Equipment: $245,000
• Accumulated Depreciation: $49,000
• Accounts Payable: $125,000
• Loans Payable: $361,300
• Net Profit: $465,500

Prepare a Trial Balance using these amounts by completing the table below.

Hint

The assessment instruction includes a net profit figure you do not need to split out all the expense and revenue items. Please note that the debits are on the left and the credits are on the right side.

Trial Balance for XYZcom

For the period ended XX/XX/XXXX

Account	Debit	Credit

Evidence Required

Completed Trial Balance