Myob software required

Note: background information at the bottom (starting form page 10) PART 1: Self-Reection 10 Marks do this rt last This reflection asks students to attend to the following two (2) tasks: ii} iii) Prepare a Professional Fee Prepare a professional fee to submit to Bike Galaxy Pty Ltd. The professional fee should include a description of each task undertaken in this case study (being Parts 2 to 4) as well as the number of hours taken to complete each task. Please use a charge-out rate of $200 per hour (exclusive of (38?). Please ensure that the professional fee is placed on your group's letterhead. Please use your linn's letterhead to draft your professional fee on. You do not need to design a new letterhead. You can assume that your firm is registered for the GST. The ABM of your firm is 14 901 044 410 Please date your professional fee \"is September 2020. (4 marks) Strategies to Communicate Complex Technical issues to a Client A professional advisor will often advise their clients on a range of technical accounting and tax matters. However, in many instances clients do not possess the necessary nancial expertise or technical accounting or tax knowledge to completely understand the information/advice provided by the accountant. Throughout your degree, you have acquired a range of technical and disciplinary skills that will serve you well when advising clients. These clients will come from a variety of backgrounds and, in some cases, will not understand the 'language and terminology' that you would ordinarily use to explain (at times) complex technical accounting and taxation concepts. Required: identity and explain three {3} strategies that you would adopt to simplir the content being delivered to clients. in other words, what strategies could you implement to simplify the nancial advice provided to a client (like David and .lake)I where they readily admit that they lack the necessary nancial acumen to understand what you are saying? You must use 11 point Ariai font with 1.5 line spacing. There is no need for references or footnotes. The maximum number of words is \"i 000. (6 marks) {Total forPart 'l = 10 marks] 2 ASSESSMENT REQUIREMENTS FOR EACH PART PART 2: Enter Year-End Adjusting Journal Entries into MYOB & Print out a revised Profit and Loss Statement and Balance Sheet from MYOB - in pdf format (8 Marks) a. Students are required to prepare and enter adjusting general journal entries directly into the MYOB data file to take into account all of the relevant and necessary adjustments (please include cents in all of your journal entries) The MYOB data file is available on the AYB 339 Blackboard site for students to download. The MYOB data file was created using MYOB AccountRight Enterprise (Educational Version 19). This version of MYOB is available in the student labs in both B and Z blocks. However, students can use any version of MYOB to open the data file and make adjustments (provided it is version 19 or higher). It will not be possible to open this MYOB data file if you use the MYOB trial versions available on the MYOB website or any version of MYOB lower than this version. The data file has been created in MYOB 19 for Windows. However, for those students who have an Apple Mac computer or laptop, the data file will be able to be converted and opened in Mac AccountEdge Pro. For those students who do not have MYOB loaded onto their Apple computer, we have provided the link to a compressed zip file containing the appropriate software to enable you to load Mac AccountEdge Pro v15.5 on your home or laptop computer. These entries must be entered, produced and printed out using MYOB. Make sure you use MYOB. Students cannot use other packages like Microsoft EXCEL or Word or any other accounting package. b. Adding Account Names to the Chart of Accounts Please note that students are expected to add additional accounts in the MYOB data file provided on the AYB 339 Blackboard site, as several of your adjusting general journal entries will be made to these new accounts (eg. depreciation expense). C. Dating your Adjusting General Journal Entries 30 June 2020 Please date all of your adjusting general journal entries 30 June 2020. AYB 339 Accountancy Capstone Integrated Case Study Queensland University of Technology Semester 2, 20203 Please also include a brief narration of the adjustment in the memo field in MYOB. d. Printing Adjusting General Journal Entries at 30 June 2020 in pdf format Make sure that you only print out your adjusting journal entries and not all of the other journal entries already residing in the MYOB data file that has been provided to you. Simply select the General Journal function and the date range: 30 June 2020 to 30 June 2020. e. Accounting Depreciation Entries For accounting purposes, each depreciable asset listed on pages 19 and 20 of this case study should be depreciated over their useful lives based on the following straight-line rates (rate shown in the final column). Depreciable Asset Accounting Useful Life Depreciation Rate Straight-Line %) 1. Leasehold Improvements: Fit-out (consisting of floor tiles, ducted air-conditioning, lighting, shelving and signage 40 years 2.5% pa. 2. Property, Plant and Equipment: Cash register 10 years 10% pa. Computer equipment (including printer) 4 years 25% pa, Photocopying machine 5 years 20% pa. Television sets and video equipment 10 years 10% pa. Fluorescent lighting system 20 years 5% pa. Cycling equipment (eg. cycle racks) 10 years 10% pa. Carpets (for the retail store) 8 years 12.5% pa. 3. Computer Software: MYOB AccountRight and retail point of sale software 5 years 20% pa. 4. Leased Motor Vehicle (Right-of-Use Asset): Leased motor vehicle (van) 8 years 12.5% pa. 5. Leased Premises (Right-of-Use Asset): Leased premises a4 14 Dorrington Drive, Paddington 3 years 33.33% AYB 339 Accountancy Capstone Integrated Case Study Queensland University of Technology Semester 2, 2020There are 11 individual assets (listed above]. instead of putting through 11 separate depreciation/amortisation joumal entries, students are asked to only record live (5) journal entries in MYOB for each of the four classes of assets, namely: leasehold improvements (1 asset); property, plant and equipment (total of 7 assets); computer soitware ('l asset); leased motor vehicle (1 asset); and lease business premises (1 asset). This means that you should enter live (5) depreciation/amortisation journal entries into MYOB. As M88 16 Leases will be applying, students are refened to items 3 and 16 of this case study for more information about these "right-ofause assets". For taxation gumes, being a small business entity (SBE), Bike Galaxy Pty Ltd will depreciate those eligible depreciating assets under Division 328 using the simplied depreciation regime (refer rules on page 30 of this case study). 1'. Print out a Revised Prot and Loss Statement and Balance Sheet from MYOB as at 30 June 2020 Finally, students are required to print out a revised Profit and Loss Statement and Balance Sheet hem MYOB for Bike Galaxy Pty Ltd for the year ended 30 June 2020 taking into account their adjusting general journal entries and include it in their submission. in MYOB, your print range for the Prot and Loss Statement should be 1 July 2019 to 30 June 2020. For the Balance Sheet, please print this report out as at 30 June 2020. Please include cents when printing out both reports. [Total forPar't 2 = 8 marks] AYE 339 Accountancy Capstone Integrated Case Study 9 Queensland University of Technology Semester 2. 2020 5 PART 3: Pregare the 2020 Annual Read for Bike Galm Pg Ltd in Microsoft Word [1 5 marks! I Students must use Microsoft Word to prepare the annual report. Students are an: permitted to use any other electronic account preparation software packages (eg. Handlsoft, Xero, Solution 6, W03 Accountants Ofce etc). When preparing the external nancial statements, please round all gures from your MYOB management accounts to the nearest whole dollar. In other words, please do an: Include cents when preparing the external nancial statements. a. Students are required to prepare the Annual Report for Bike Galaxy Pty Ltd for the year ended 30 June 2020. The annual report should include the following documents {in the following order): - the external nancial statements excluding the Statement of Cash Flows, but including all of the notes to the accounts; - the Directors' Declaration ,' and - the Accountant's Compilation Report. There is no need to prepare a Directors' Report or an Auditor's independence Declaration, as the nancial report was not audited. For theAccountant's Compilation Report, please use the name of the firm that you created and used throughout the semester for your PBLs. b. Which Accounting Standards Apply? For the purposes of this assignment, please treat Bike Galaxy Pty Ltd as a reporting entity. in other words, please prepare general purpose nancial statements for Bike Galaxy Pty Ltd. ln other words, please ensure that the 2020 nancial statements (and notes to the accounts) are prepared in accordance with the recognition, measurement and disclosure requirements ofa_ll of the AASB Accounting Standards. However, please do at apply the following four (4) M88 Accounting Standards: - AASB 8 Operating Segments; - AASB 107 Statement of Cash Flows; - AASB 124 Related Party Disclosures; and - M88 133 Earnings Per Share. AVE 339 Accountancy Capstone Integrated Case Study 9 Queensland University of Technology Semester 2, 2020 6 All other AASB Accounting Standards (including their recognition, measurement and disclosure requirements) must be complied with. This includes the suite of financial instruments standards (including AASB 7, AASB 9 and AASB 139, where applicable as well as the recently introduced leasing standard, AASB 16). Please note that in the case of publicly-traded financial instruments, Bike Galaxy Pty Ltd has made an irrevocable election under AASB 9 Financial Instruments to present subsequent changes in the fair value of equity instruments through Other Comprehensive Income (OCI) instead of recording increases and decreases in fair value through profit or loss. There is no need in Note 1 Statement of Significant Accounting Policies to outline or consider the likely impact of the application of new AASB Accounting Standards that may apply in the future. Finally, even though Bike Galaxy Pty Ltd is a reporting entity, it does not wish to apply the reduced disclosure requirements (RDR) contained in AASB 1053 Application of Tiers of Australian Accounting Standards. C. Income Statement For the Income Statement, David and Jake have requested that you classify expenses by function instead of by nature. Please show only those expenses on the face of the Income Statement that are specifically required to be disclosed on the face under AASB 101 Presentation of Financial Statements. Furthermore, please group relevant individual expenses in the MYOB profit and loss statement on the face of the income statement under the following headings: "employee benefits", "depreciation and amortisation", "finance costs", "administrative expenses" and "other expenses". d. Statement of Comprehensive Income When preparing the external financial statements for Bike Galaxy Pty Lid, please ensure that you prepare and include a separate Statement of Comprehensive Income in accordance with AASB 101 Presentation of Financial Statements. The company wishes to adopt a two-statement approach in presenting their statement of profit or loss and other comprehensive income. In other words, David and Jake want you to prepare an Income Statement and a Statement of Comprehensive Income AYB 339 Accountancy Capstone Integrated Case Study Queensland University of Technology Semester 2, 2020separately. e. Statement of Changes in Equity For the Statement of Changes in Equity, please use the minimum disclosure requirements required under AASB 101 Presentation of Financial Statements. f. Balance Sheet For the Balance Sheet, please use the minimum disclosure requirements required under AASB 101 Presentation of Financial Statements. g. "Real" and "Model" Financial Statements Students are advised (and encouraged) to download the 2020 financial report of an Australian listed public company (preferably a retailer) and review the content, structure and format of the financial report. Furthermore, some accounting firms have published model financial statements for companies on their websites that students should consider referring to. For example, a generic Google search on the term "model financial accounts Australia" will list several hyperlinks to a range of accounting firms websites where these model financial statements can be downloaded in pdf format. A copy of the 2020 annual report (containing the 2020 financial statements) of The Reject Shop Lid has been placed on the AYB 339 Blackboard site to assist students. Please make sure that you find general purpose model financial statements and not special purpose model financial statements. Several accounting firms provide model financial statements for proprietary companies. However, in most cases, special purpose financial statements are presented, and not general purpose financial statements. A reminder that in the case of Bike Galaxy Pty Ltd, we are asking that general purpose financial statements be prepared. Furthermore, when preparing the external financial statements for Bike Galaxy Pty Ltd, please do not include the references to AASB paragraphs in the left-hand margin of the financial statements (or notes to the accounts) like the model sets of accounts do. AYB 339 Accountancy Capstone Integrated Case Study Queensland University of Technology Semester 2, 20208 Students should also prepare a Director's Declaration for David and Jake to sign as well as including the appropriate Accountant's Compilation Report. As mentioned in item (a) on page 9, there is no need to prepare a Directors' Report. h. Date of Declarations and Reports and Comparative Figures All declarations and reports should be dated 16 September 2020. Comparative gures are n_ot required in the nancial statements, as the business only commenced trading on 1 September 2019. [Total lorPart 2 = 15 marks] PART 4: Prepare the 2020 Company Income Tax Return and Tax Reconciliation for Bike Galm Pg Ltd [7 marks! a. Students are required to prepare the company's income Tax Retun'r & Tax Reconciliation for Bike Galaxy Pty Ltd for the year ended 30 June 2020 Students are required to prepare the 2020 company income tax return of Bike Galaxy Ptthd. A blank copy of the 2020 company tax return has been placed on the AYB 339 Blackboard site for you to download and complete. No electronic version can be used. in other words, all students must complete the manual version of the form. The company's tax tile number (TFN) is: 733 000 152. The business and postal address of Bike Galaxy Pty Ltd is: 14 Don'ington Drive Phone: (07) 3369 4127 Paddington, QLD, 4064. Facsimile: (07) 3369 4130 Do not complete the BSD and account details on the second page of the tax return. For the purposes of the tax agent declaration (on the last page of the tax return), your tax agent reference number is 57015-006. Please put your name and contact details in this box. The income tax return should be dated 16 September 2020. it should be signed by AYE 339 Accountancy Capstone Integrated Case Study 9 Queensland University of Technology Semester 2. 2020 CO David as he is the company's public officer. There is no need to prepare the dividend franking account for the company or the dividends and interest schedule. Both of these schedules normally form part of the income tax return. However, students are not required to prepare these schedules. [3 marks] b. Students are required to prepare a One-Page Tax Reconciliation for Bike Galaxy Pty Ltd for the year ended 30 June 2020 David and Jake also ask you to prepare a one-page tax reconciliation. Students should start this reconciliation summary with the accounting net profit/(loss) before income tax and then list all relevant adjustments to arrive at the company's taxable income for the year ended 30 June 2020. This one-page tax reconciliation should be included immediately behind the last page of the company's tax return. There is no need to prepare a deferred tax worksheet for this requirement. Furthermore, when presenting your tax reconciliation, there is no need to refer or quote sections of the ITAA (1936), ITAA (1997), cases or taxation rulings. Finally, please round all figures in the tax reconciliation to the nearest whole dollar. [4 marks] [Total for Part 4 = 7 marks] AYB 339 Accountancy Capstone Integrated Case Study Queensland University of Technology Semester 2, 202010 INTEGRATED CASE STUDY BIKE GALAXY PTY LTD Background Information: The date is Tuesday 30 June 2020. The time is 1:00 pm. As the external accountants and tax advisors of Bike Galaxy Pty Lid, you are in a meeting with your clients, David Robson and Jake Montgomery at their cycle store in Paddington. The purpose of the meeting is to review the draft MYOB management accounts of Bike Galaxy Pty Ltd for the year ended 30 June 2020 which have been prepared by the company's contract bookkeeper, Summer Jones. The cycle store has been closed all day as David, Jake and the staff have spent most of the morning conducting the annual stocktake counting stock on hand. Unfortunately, Summer is unable to attend the end-of-year meeting but has provided you with the MYOB data file. She asks that if you make any adjustments, you do so directly into the MYOB data file and date any adjustments 30 June 2020. Summer has advised you that she has entered all of the company's transactions for the 2020 financial year (unless otherwise indicated). She has reconciled the company's bank account and has reconciled the GST payable and GST receivable accounts in the Balance Sheet MYOB data file. Please note that the MYOB data file that has been presented to you is not a "real" client All that was done was to enter journal entries to arrive at closing balances at 30 June 2020. Hence, please do not analyse the journal entries already existing in this MYOB data file. AYB 339 Accountancy Capstone Integrated Case Study Queensland University of Technology Semester 2, 202011 In your meeting, David and Jake have made you aware of the following information: 1 . The bookkeeper, Summer, has not recorded any depreciation/amortisation in respect of any non-current assets acquired by the company during the 2020 financial year. She asks you to calculate the relevant depreciation amounts and process these depreciation/amortisation journal entries for the 2020 financial year directly into MYOB (refer page 7 for details of depreciation rates for accounting purposes). 2. On 1 September 2019, Bike Galaxy Pty Ltd purchased the following assets outright (all amounts are shown GST-exclusive): (a) Leasehold Improvements: - Fit-out (consisting of floor tiles, ducted air-conditioning, lighting, in-built shelving and signage) - $142,400. (b ) Property, Plant and Equipment: Cash registers - $8,200 Computer equipment (including printer) - $8,140 Photocopying machine - $4,780 Television sets and video equipment - $9,650 Fluorescent lighting system - $16, 120 Cycling equipment (eg. cycle racks) - $32, 150 Carpets (for the retail store) - $36,300 (c) Computer Software: Accounting software and retail point of sale software - $11,440. Summer coded all of these purchases to their various asset category accounts in the Balance Sheet. Note: There are 304 days from 1 September 2019 to 30 June 2020. Note: Please note that 2020 is a leap year. Hence, please use 366 days in your calculations. Please refer to the accounting useful lives for each of the abovementioned assets on page 7 of the case study. AYB 339 Accountancy Capstone Integrated Case Study Queensland University of Technology Semester 2, 202012 3. On 18 February 2020, Bike Galaxy Pty Ltd entered into a lease agreement to finance the acquisition of a motor vehicle (ie. a Ford Transit SWB Van) that will be used exclusively in the business. Details of the finance lease agreement are Fair value of van (GST-exclusive) $42,000 Present value of the minimum lease payments including the present value of the guaranteed residual). $42,000 Amount financed under the lease agreement $42,000 Lease term 5 years Number of monthly lease payments 60 Monthly lease payments (GST-inclusive) due on the 18th day of each month $726 The first lease payment of $726 is made in advance on 18 February 2020 As the payment is made in advance, there is no interest on the first lease payment. Thereafter, 59 monthly lease payments are due on the 18" day of each month. The 60" and final lease payment is due on 18" January 2025. Under the lease agreement on 18 January 2025 (being the same date as the final $726 lease payment, the company is also required to make the guaranteed lease residual payment of $11,000 (GST-inclusive). The company intends to pay out the guaranteed lease residual in 5 years time and take full legal possession of the van. Total GST-inclusive lease payments (including the guaranteed residual) $54,560 Total GST-exclusive lease payments (including the guaranteed residual) $49,600 Useful/(effective) life of the van (same for accounting and taxation) 8 years Depreciation policy: the company uses the straight-line method for accounting purposes and the SBE simplified depreciation regime for small business entities for taxation purposes. The residual value of the van at the end of the eighth year $Nil Note: There are 134 days from 18 February 2020 to 30 June 2020. Note: Please note that 2020 is a leap year. Hence, please use 366 days in your calculations. David and Jake have provided you with the original lease agreement. All of the above information is contained in the lease agreement. Unfortunately, the lease agreement does not stipulate the implicit interest rate. Hence, you will need to calculate the implicit interest rate when preparing your EXCEL lease spreadsheet. Ignore any accrued interest between 18 June to 30 June each year. In other words, the outstanding lease liability at 30 June 2020 is effectively the amount of the outstanding lease liability on 18 June 2020. David and Jake use the van to pick up various stock items, and visit cycle company representatives and suppliers. It is therefore used 100% for business purposes. AYB 339 Accountancy Capstone Integrated Case Study Queensland University of Technology Semester 2, 202013 The van is garaged every day and night of the year at the store. As there is no private use, all of the mnning costs associated with the van shown in the Prot and Loss Statement are fully tax-deductible to the company. As it is not available for private use by any employee, there are no fringe benets tax implications in respect of the vehicle. In the MYOB management accounts that Summer has provided you with, on 18 February 2020, as per M88 16 Leases, she recorded the right-ofuse leased motor vehicle in the Balance Sheet (as a non-current asset) by debiting it for its lGST- exclusive cost of $42,000 and crediting the corresponding lease liability for $42,000. This lease liability was recorded exclusively as a non-cunent liability by Summer in MYOB. A total of ve {5) lease repayments of $660 each (GSTexclusive) have been made between 18 February 2020 and 30 June 2020. Summer has debited the 5 lease payments for their GST-exclusive amount totalling $3,300.00 to the \"lease payments\" account which is shown as an expense in the Prot and Loss Statement and credited "cash at bank\" for this amount. Being a lease, the company has claimed back the $66 GST input tax credits associated with each lease payment on the 18\"1 day of each month in the company's Business Activity Statement (BAS) for the relevant quarter. Summer has correctly debited the total GST paid of $330 associated with the 5 monthly lease payments of $66 each to the "GST receivable" account in the company's Balance Sheet. Please make sure that [our include Eur ieage beduie as art of [our case sfu submission. 4. On 31 August 2019, Bike Galaxy Pty Ltd held an opening party at the store for suppliers, major customers and local business owners. The party consisted of food and drinks (both alcoholic and non-alcoholic). A total of 40 guests attended the opening party. No employees attended the opening party. You can assume that at this point, that David and Jake were not yet formally employed by the company. Hence, they were not yet employees for FBT purposes. The occasion was purely social. The cost of the opening party came to $4,400 (GST- inclusive). A lucky door plize consisting a weekend at The Star Casino (Deluxe room for two with breakfast included) on the Gold Coast plus two tickets to see "The Australian Bee Gees'I tribute concert was presented to the person whose business card was drawn out of the bucket. The company paid the cost of this prize of $880 (GSTinclusive). AVE 339 Accountancy Capstone Integrated Case Study 9 Queensland University of Technology Semester 2, 2020 6. 8. 14 Summer has correctly coded the total amount of $5,280 (comprising the opening party of $4,400 and the lucky door prize of $880) to \"opening party 8: lucky door prize\" in the Prot and Loss Statement. Ignore an: GST consguences. The company's Christmas party was held on Friday 20 December 2019I at a nearby licensed Italian restaurant. David, Jake and the three employees attended the Christmas party. No customers were invited. The cost of the Christmas party came to $370 (or $74.00 per head). This amount was coded to \"Entertainment Christmas Party" in the Prot and Loss Statement. Ignore an: GST consequences. Apart from Items 4 and 5 above, the company did not provide any other meal entertainment to clients or employees whatsoever during the 2020 nancial year. For FBT purposes, the company adopts the actual method in valuing its meal entertainment fringe benets. No FBT applies as in the case of the opening party, due to the fact that no meal entertainment was provided to employees. In the case of the Christmas party, whilst the meal entertainment was provided to employees, the cost per head per employee was under $300. Hence, no FBT applies. The amounts of these expenses shown in the Prot and Loss Statement are shown GST-inclusive as the company is not entitied to claim back any GST input tax credits associated with these expenditure items. David, Jake and the staff undertook a stocktake on the morning of 30 June 2020. Closing stock (which consists of bicycles, bicycle accessories, bicycle clothing and drinks) has been reliably ascertained at $264,090 (GST-exclusive). The company adopts a perpetual inventory system and uses the weighted average cost inventory valuation method for both accounting and taxation purposes. The opening balance of inventory on the rst day of business (ie. 1 September 2020) was $228,600. Being a perpetual inventory system, the computer system keeps a mnning balance of inventory each time the company buys and sells stock. As such, the closing stock gure of $264,090 is shown in the balance sheet conectly, and the cost of goods sold gure of $334,046 (comprising bicycle plus bicycle accessories) correctly represents the cost mice of the various inventory items sold during the 2020 financial year. AYE 339 Accountancy Capstone Integrated Case Study 9 Queensland University of Technology Semester 2, 2020 15 9. Bike Galaxy Pty Ltd extends credit to selected customers. For those customers that have been approved, the company has trade credit terms of net 30 days. The company rigorously pursues any bad debts owing by customers. The company uses the "provisioning" method in accounting for their badldoubtil debts, not the \"direct write-oft\" method. At 30 June 2020, Summer sat down with David and Jake and printed out an aged debtors report. Based on this report, David and Jake determined the likely collectability of each bracket (see below). On 30 June 2020, Summer debited \"bad debts expense\" and credited \"provision for doubtful debts\" for $1,444.00 (being the estimated total uncollectible bad debts). AYE 339 Accountancy Capstone Integrated Case Study 9 Queensland University of Technology Semester 2, 2020 _l I The breakdown of this amount (apportioned across the age of each debt) is summarised below. 10. 11. Age of Debtor Armani! Eimalbd 96 Prlwion (or Receivable Uncoiiocbio Doubtful Debs M0 days (not past due) $45,892.00 0% $ - $9320.00 $466.00 $3,912.00 $978.00 $58,124.00 $1 .4441\" At your year-end meeting with David and Jake. they present you with a letter irom one of the debtors dated 24 June 2020 (John Waite) confirming that this debtor has been imprisoned due to traud and as such, is unable to pay their outstanding debt totalling $780. After a brief discussion with David and Jake, it has been decided that this debt of $780 should be written off at 30 June 2020. This debt of $780 was included as part of the 51-90 debtors days breakdown above. In other words, the amount of $780 was included in the $1,440 'Provision for doubtful debts' gure shown in the table above. ignore any GST conseguences. if any adjusting en tries are required, piease do them in the general journal in MYOB. Do not worry about the Individual (subsidiary) debtor account for John Waite. Several cyclists pay tor their coaching lessons in advance. As at 30 June 2020, a total amount of $7.170 (GSTexclusive) had been paid in advance. This amount relates to cycling classes that will be provided during July and August 2020. Summer has correctly credited the current liability account \"coaching fees received in advance' for the GST exclusive portion of this payment and the GST input tax credit has been booked to the GST payable account. These coaching fees are non-refundable. meaning that cyclists will not receive any refunds for any coaching classes that they do not attend or cancel. The employees of Bike Galaxy Pty Ltd are as iollows: I David Robson (Director and full-time head coach of the coaching division); - Jake Montgomery (Director and lull-time retail store manager): - One full-time cycle coach; - One part-time cycle coach and wind training assistant; and - One full-time repair mechanic. The total salaries and wages for these six employees are shown in the Prot and Loss Statement. There are no outstanding (accmed) wages owing to any of the employees at 30 June 2020. 12. 13. 14. Each iull-time employee is entitled to four (4) weeks paid annual leave per annum. Part-time staff are entitled to pro-rate annual leave. At 30 June 2020. Summer had not yet recorded a journal entry to accrue the annual leave for these employees. Based on the projected salaries of when each employee is expected to take their annual leave, the total provision for annual leave (in respect of all employees) as at end oi nancial year totals $12,680. The company's policy is that all annual leave must be taken within 12 months. No annual leave was taken by any employee during the 2020 nancial year. No sick leave was taken by employees during the 2020 nancial year. No provision for sick leave should be made in the 2020 accounts as no employee is considered likely to take more than their allocated sick leave entitlements. The sick leave is non- accumulating and non-vesting meaning that no entitlement (and thereiore, no accrued sick leave) is carried over to the following nancial year for any employee. Similarly. no employee is eligible for long service leave. As such, no provision for long service leave should be made in the 2020 accounts as, at 30 June 2020, it is not currently considered probable that any employee will reach the 10-year employment target with the company in order to qualify for long service leave. The initial set-up costs of $1,580 incurred to establish the company and associated accounting and legal fees are shown as an expense in the Profit and Loss Statement under 'Establishment Costs". Assume that these costs were incurred directly by the company on 22 July 2019, being the date that the company was established. 0n 2 May 2020, Bike Galaxy Pty Ltd purchased 5,000 shares in Qantas Ltd at a cost of $3.00 per share (including brokerage). Summer recorded the shares in the company's Balance Sheet at their cost of $15,000. These shares were purchased with the view to holding them for the long-tenn. Hence, why they were recorded as a non-current asset. No other shares were bought or sold during the 2020 nancial year. As at 30 June 2020, the share price oi Qantas Ltd was trading on the ASX at $3.60 per share (fair value of 518,000). No dividends were paid by Qantas Ltd between acquisition date and 30 June 2020. As previously mentioned, the company has made an irrevocable election to present subsequent changes in fair value at these shares through Other Comprehensive Income (OCI) instead of recording increases and decreases in lair value through profit orloss. AVE 339 Accountancy $305an lnteoraled Case Study to Queensland Unwamry of Technology I 15. 16. Bike Galaxy Pty Ltd has made the compulsory 9.5% employer-sponsored superannuation contributions into all employee's nominated superannuation funds (including David and Jake's superannuation fund). However, as the company has a sizeable cash balance, on 30 June 2020, David and Jake decide to contribute an additional $5,000 each into their respective superannuation funds (being a total of $10,000). On 30 June 2020, Summer put through the following journal entry in MYOB: Superannuation - (Directors Additional) Superannuation payable (Recording the additional superannuation contributions for David and Jake) The company uses the Small Business Superannuation Clearing House (SBSCH). Summer paid the $10,000 superannuation owing at 30 June 2020 into the SBSCH on Thursday 3 July 2020. As outlined in the business plan, the directors of Bike Galaxy Pty Ltd signed a three- year non-cancellable operating lease at: $6,000 per month (GST-exclusive commencing 1 September 2019). A 2.5% annual increase is to take effect on 1 September each year. There is an option in the lease agreement to renew the lease for an additional three years at the expiration of the current lease and in perpetuity thereafter. For the year ended 30 June 2020. the company made ten (10) lease payments totalling $50,000 (SST-exclusive). Summer has coded these payments to "rent expense" in the MYOB Profit and Loss Statement. Being a bookkeeper, Summer did not know how to apply the principles contained in the recently introduced leasing standard. M85 16 Leases. She requests that you put through the appropriate journal entries to record the 'right of-use asset\" and corresponding lease liability at 30 June 2020 and to also adjust the AVE 339 Accountancy Capstone integrated Case Study at Queensland Unlversity of Technology gures in the Prot and Loss Statement. The following information is relevant for you to calculate the "right-ot-use" asset and lease liability as per M88 18 Leases: - Monthly lease payments (G ST-exolusive) $6,000.00 - Monthly lease payments for first 12 months $8,000.00 - Monthly lease payments for second 12 months ' $6,150.00 I Monthly lease payments for third 12 months \" $8,303.75 - Total undiscounted lease payments over 3-year period $221,445 - Period of the lease 36 months - Depreciation method straight-line - Rent increase to take effect on 1 September each year 2.5% I Discount rate to be used tor the 38 monthly lease payments 4.00% ' calculated at $6.000 x 2.5% increase (for the period 1 Septerrber 2020 to 31 August 2021). ' calculated at $6,150 x 2.5% increase (for the period 1 September 2021 to 31 August 2022). Students will need to calculate the present value of the lease payments to determine the lease liability and then this will be the same amount as the 'rightofuse" asset to be recorded in the Balance Sheet. Additional information Relating to the Lease: - Assume that there is no "reasonable certainty" at the inception of the lease (ie, 1 September 2019) that David and Jake will exercise the option to extend the lease term for an additional three years at the end of the original lease on 31 August 2022. Hence. the terms of the lease gthree years. - Assume that there were no initial direct costs incurred in drafting and signing the lease agreement. These costs were borne by the lessor, and not the lessee. - Assume that there were no prepaid lease payments made by Bike Galaxy Pty Ltd to the lessor. - There were no lease incentives received. nor any 'make good provision' (ie. no costs are estimated to be incurred at the end of the three years to restore the premises to its original condition). When drafting your external nancial statements, please show the "right of use asset\" as part of "property, plant and equipment". Please make sure mat you include your lease Selledule as part of your case study submission. AVE 339 Accountancy Capstone integrated Case Study a Queensland Urllversity of Technology Additional Facts: All four PAYG income tax instalments totalling $11,745 have been debited to "income tax The MYOB management accounts have been prepared on an accruals basis. receivable" in the Balance Sheet. This amount represents the total of the four PAYG quarterly income tax instalments paid/(payable) to the ATO in respect of the 2020 income The company is on the accruals basis for income tax purposes. year (being $952 plus $2,024 plus $4,594 for the first three quarters as well as the $4,175 The Australian Company Number (ACN) of Bike Galaxy Pty Ltd is: 006 287 485 July 2020). accrued June 2020 quarterly instalment which is due and payable by the company by 28 Bike Galaxy Pty Ltd is registered for the GST. Its ABN is: 14 006 287 485 The share capital of $300,000 shown in the Balance Sheet comprises the following: David and Jake are the only two Directors of the company. David Robson (150,000 x $1.00 fully paid ordinary shares) $150,000 Jake Montgomery (150,000 x $1.00 fully paid ordinary shares) $150,000 Being a small proprietary company, the company's accounts were not required to be audited for the 2020 financial year (and were not). These 300,000 fully paid ordinary shares were issued by the company on 15 August 2019. All PAYG withholding tax owing in respect of employee's salaries and wages have been remitted by Bike Galaxy Pty Ltd to the ATO by the due dates. The 30 June 2020 PAYG The original $300,000 loan from The Bank of Australia that the company took out is fixed withholding tax has not yet been remitted to the ATO. This amount of $14,560 shown in at an interest rate of 5% per annum and fully repayable in five years. The company has the Balance Sheet as a current liability will be paid to the ATO when the company lodges been making loan repayments and as at 30 June 2020, the outstanding balance of the its June 2020 Business Activity Statement with the ATO (sometime before the due date of loan is $264,103 (split in the MYOB Balance Sheet as $58,776 current and $205,327 non- 28 July 2020). current). The bookkeeper, Summer, has correctly split each loan payment between interest paid and reduction of the loan liability. The three quarterly Business Activity Statements (BAS) for September 2019, December 2019 and March 2020 quarters have been lodged with the ATO by their due dates and the There were no initial borrowing costs associated with the bank loan. The borrowings are net GST owing (ie. GST payable minus GST receivable) for each quarter have been paid unsecured and no assets were pledged as security against these borrowings. to the ATO. Assume that on the 2 May 2020 (being the date that Bike Galaxy Pty Ltd acquired the The amount of GST payable and GST receivable shown in the Balance Sheet at 30 June 5,000 shares in Qantas Lid) that Jake and David made an irrevocable election to present 2020 represents the amount of GST collected ($16,860) and GST paid ($9,290) by the subsequent changes in fair value in OCI. company to the ATO in respect of the June 2020 quarter. The net amount of $7,570 will be paid to the ATO before the due date for lodgement of the BAS (ie. before 28 July 2020). The company has been making the compulsory 9.5% employer-sponsored superannuateon contributions into each employee's superannuateon fund on a quarterly The company has paid the following PAYG income tax instalments to the Australian basis on the last day of each quarter based on each employee's ordinary times earnings Taxation Office on each BAS: (OTE). Accordingly, all superannuateon amounts owing in respect of the 2020 financial year have been paid into each employee's superannuateon fund by 30 June 2020 September 2019 quarter ($952 income tax paid to the ATO on 20 October 2019) including the amount owing in respect of the June 2020 quarter). December 2019 quarter ($2,024 income tax paid to the ATO on 15 February 2020) March 2020 quarter ($4,594 income tax paid to the ATO on 14 April 2020) The only exception was the additional superannuateon contributions of $10,000 made on behalf of the two directors (refer Item 15) which were paid into the director's The fourth quarterly PAYG income tax instalment payable of $4,175 shown in the current superannuateon funds on Thursday 3 July 2020. liability section of the Balance Sheet at 30 June 2020 represents the amount owing in respect of the April-June 2020 quarter. This amount will be paid when the company lodges nts contained in the MYOB data file are based on the actual results of Bike its June 2020 Business Activity Statement (sometime before 28 July 2020). Galaxy Pty Ltd for the period 1 September 2019 to 30 June 2020 (ie. 10 months of trading). These amounts override any amounts contained in the business plan and in any Please ignore cash flow boost payments for the purposes of this case study. of the PBLs during the semester relating to Bike Galaxy Pty Ltd. Students should also note AYB 339 Accountancy Capstone AYB 339 Accountancy Capstone Integrated Case Study Integrated Case Study Queensland University of Technology Queensland University of TechnologyI that the figures contained in the initial business plan were budgeted amounts, not actual amounts. Background information relating to Bike Galaxy Pty Ltd and personal details involving David and Jake can be found in the business plan. Furthennore. ignore any additional information in PBLs during the semester relating to Bike Galaxy Pty Ltd (eg. PBL 1 Part B when students were asked to develop a chart of accounts). Only use the information contained in this case study. Assume that Bike Galaxy Pty Ltd did not require any wage subsidies under the Federal Government's JobKeeper program during the 2020 nancial year. Impairment testing has been conducted at 30 June 2020 in respect at all assets (including the leased motor vehicle). There is no indication that any asset shown in the Balance Sheet is impaired. For the purposes ot preparing the nancial statements, David and Jakes have considered the current impact of the COVlD-19 pandemic on the company as well as the general economic and business conditions in which the company operates and concluded that the company was able to trade through the initial phase of the COVlD-19 pandemic with minimal disruption. In the MYOB management accounts. no non-current asset has been revalued (or devalued) to fair value. All assets are shown at their historical cost. Other income ($14,754) refers to income generated from cycle tours organised by Bike Galaxy Pty Ltd. The legal expenses ($1.215), general expenses ($2,278) and repairs and maintenance ($1,970) shown in the Prot and Loss Statement are all tax-deductible. The staff amenities ($818) shown in the Prot and Loss Statement relates to tea. coffee and biscuits purchased by the company and provided to employees for consumption on the business premises during moming and afternoon tea breaks. The sundry expenses ($524) shown in the Prot and Loss Statement represent l'IDlI-t_L dedudibleexpenses. They are shown GST-inclusive as no GST can be claimed back. Workers compensation ($642) relates to the workers compensation premium paid to Workcover Queensland on behalf of the employees and is tax-deductible. The motor vehicle expenses ($3.165) represent the running costs associated with the motor vehicle (including petrol and oil, registration, insurance and RACQ). Depreciation has not been calculated or included as part of this gure. These motor vehicle expenses AVE 339 Accountancy Capstone integrated Case Study o Queensland Unlversity of Technology have been paid directly by the company. In other words, there was no employee contribution or reimbursement in respect of the running costs of the vehicle. Insurance of $7,040 represents premiums paid by the company during the 2020 nancial yearto Topstar Insurance Ltd in respect of both public liability insurance and directors and ofcer's professional indemnity insurance. Any adjusting journal entries made in MYOB (through the \"Record Journal Entry' function) should be made without adjusting for the effects of the GST (except where otherwise indicated in the case study). Please date all of your MYOB adjusting journal entrles as 30 June 1020. In other words, all journal entries you decide to make to the MYOB data le provided should be made using the GST tax code "N-T\" (except where otherwise indicated in the case study). In terms of depreciation for accountlng Qumoses, please refer to the table on page 7 of this case study which outlines each depreciable asset for accounting purposes, its estimated useful life and depreciation rate. Assume that all assets listed have an estimated residual (salvage) value of SN\". As noted on page 7. for accounting purposes. the company will use the straight-line depreciation method for all depreciable assets (including the leased motor vehicle). As previously noted, in the case of accounting depreciationlamortisation journal entries. students are requested to combine depreciation/amortisation amounts for each individual asset class and show depreciation per asset class (ie. leasehold improvements, property. plant and equipment, computer software and the leased motor vehicle). This should result in four (4) separate depreciation journal entries in MYOB. Do not put through separate MYOB journal entries for each of the eleven individual assets listed on pages 19 and 20 of the case sit1d); (including the leased business premises). There igalso the relevant journal entries relating to the leased premises (see Item 16). In terms of depreciation for taxation pumoses, being a small business entity (SBE), Bike Galaxy Pty Ltd will depreciate those eligible depreciating assets using the simplied depreciation regime (refer rules below). Streamlined depreciation rules apply to small business entity taxpayers who elect to take advantage of these depreciation concessions. A summary of these simplied depreciation rules are as follows: AVE 339 Accountancy Capstone integrated Case Study a Queensland University of Technology I Simplified Depreciation Rules for Small Business Entities (SBE's) use the rates contained in Division 43 of the ITAA (1997). In the case of any temporary differences that give rise to deferred tax assets (DTA's Does the depreciating asset YAS and/or deferred tax liabilities (DTL's), instead of recording multiple journal entries in MYOB 100% immediate write-off cost less than the "immediate or each individual DTA and each individual DTL, students are asked to combine all of allowe write-off threshold"? hose adjustments that give rise to DTA's into one journal entry and those adjustments that give rise to DTL's into a separate journal entry. However, when drafting your external financial statements (and in particular, the notes to the financial statements), please show (ie. disclose) your DTA's and DTL's separately, No General Small Business Pool rather than offset the two amounts in the financial statements Depreciation Rates Allocate to a general les Some Australian companies elect to net off their DTA's and DTL's and show the net figure small business pool First Year: 15% DV as an asset or liability in their Balance Sheet. In this case study, students are asked not to Future Years: 30% DV do this, but to show their DTA's as an asset and their DTL's as a liability (with relevant note (No need to apportion for the disclosures). number of days) All calculations should be made on a daily basis. The ATO has a useful facility where you can calculate the number of days, being: Date Immediate Write-off Annual SBE Threshold Turnover https://www.ato.gov.au/Calculators-and- ools/Host/?anchor=CalculateDays&anchor=CalculateDays#CalculateDays/questions. Before 12 May 2015 (7:30 pm) $1,000 $2 million 12 May 2015 (7:30 pm) to 28 January 2019 $20,00 $10 million Please note that 2020 is a leap year. Hence, please use 366 days in your calculations. 9 January 2019 to 2 April 2019 (7:30 pm) 25,000 $10 million After 7:30 pm on 2 April 2019 to 11 March 2020 $30,000*