please help me to find the answer for part 1, part3 and part4

Queensland University of Technology QUT Business School School of Accountancy AYB 339 Accountancy Capstone Integrated Case Study Semester 2, 2016 ASSESSMENT ITEM 2: INTEGRATED CASE STUDY (Weighting Total: 36%) Due Date: Friday 28 October 2016 (no later than 7:00 pm). Submission: Group or Individual: via QUT's Turnitin. Individual (no collaboration is permitted whatsoever) This assessment item assesses the following learning outcomes: Knowledge and Technological Skills (KS) 1.1 Demonstrate and apply integrated discipline (including technical) knowledge across the broad field of business with depth in one or more core business disciplines Higher Order Thinking (HO) 2.2 Exercise independent judgment and initiative in adapting and applying knowledge and skills for effective planning, problem solving and decision making in diverse contexts. Teamwork and Self (TS) 4.1 Exercise self-reflection, responsibility and accountability in relation to own learning and professional practice ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 2 ASSESSMENT OVERVIEW Part Description Pages 1 Preparation of a Financial Dashboard and Reflection (10 marks) 4-5 2 Enter year-end Adjusting Journals into MYOB and Print out a revised Profit and Loss Statement and Balance Sheet from MYOB (6 Marks) 6-8 3 Prepare the 2016 Annual Report for Cycle Kingdom Pty Ltd in Microsoft Word (14 marks) 9-11 4 Prepare the 2016 Company Income Tax Return and Tax Reconciliation for Cycle Kingdom Pty Ltd (6 marks) 12 5 Professional Approach 13 6 Academic Conduct 14 7 Submission Requirements 15 Notes: Parts 5 and 6 outline various penalty marks which could be imposed, and Part 7 is a detail summary of the submission requirements. It is each student's responsibility to research the issues contained in the case study. QUT staff members will not be answering any questions or issues relating to this case study. However, if clarification of a particular point is required, please send the e-mail directly to the Unit Coordinator, Stephen Marsden, and not to your facilitator. ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 3 Assessment Submission and Extensions In both your QUT study and your professional life you will be expected to meet deadlines. In keeping with this expectation, assessment submitted after the due date will not be marked and will receive a grade of 1 (ie. 0%). Please note that extensions are not given, even if students fall ill the week that the case study is due or experience computer difficulties. The reason being is that students have almost seven weeks to complete the case study and the risk of leaving it to the last minute where these problems may strike is the student's problem alone. For the first time this semester (and as a result of student feedback), for the last two topics (ie. Topics 4 and 5), only one PBL will be presented to students instead of the usual two. The reason for this is a deliberate attempt to reduce student workload in the last four weeks of the unit, thereby allowing students the opportunity to devote more time to completing the integrated case study. For these reasons, it is strongly recommended that students start working on the integrated case study in Week 8 when it is released via the AYB 339 Blackboard site. Once the case study has been submitted via Turnitin, students are not able to resubmit any other versions or attach any supplementary documents. In other words, once submitted, this submission is final. Furthermore, students are not able to resubmit another version as we do not allow multiple submissions of the case study. It is the sole responsibility of each student to ensure that the complete (and final version) of the assignment is submitted by the due date. Students are not permitted to resubmit or send us supplementary pages or replacements pages once the case study is submitted. No submissions will be accepted by any academic staff member by any means (hard copies or emails) at any time. In other words, students get one (and only one) opportunity of submitting their case study via Turnitin. Markers will only be marking the first (and only) submission that was submitted by each student via Turnitin. Feedback and Return of Case Studies Please note that this integrated case study should be viewed by students as a replacement of the final exam. Like a final exam, this case study will not be returned to students via Turnitin and no comments or feedback will be provided. Instead, students wishing to review their case study will need to make an appointment with the unit co-ordinator within two weeks of the results for the unit being released (similar to the other units in the degree). ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 4 ASSESSMENT REQUIREMENTS FOR EACH PART PART 1: (a) Preparation of a Financial Dashboard and Reflection (10 Marks) For the past 10-month period from 1 September 2015 to 30 June 2016, Holly Gardiner (the contract bookkeeper) has been using MYOB to process transactions for Cycle Kingdom Pty Ltd. She has been presenting Luke and Cameron with quarterly Profit and Loss Statements and Balance Sheets of the business. However, Luke and Cameron do not have an accounting background and readily admit that they struggle to read and understand the MYOB management accounts presented to them by their bookkeeper, Holly. Being more visually orientated, they ask you to prepare a financial dashboard for them. The financial dashboard is to be prepared using the four quarterly figures presented in the EXCEL spreadsheet that is available to download from the AYB 339 Blackboard site. The financial dashboard for the four quarters is to be prepared in such a way that enables you to present and highlight key financial information, financial ratios and trends of the business over the four quarters in a highly visual way. The financial dashboard should primarily consist of graphs and charts. Please use the four quarters financial data presented in EXCEL before any adjustments that you make in Part 2 of this case study. In other words, develop a financial dashboard based on Holly's unadjusted figures. (4 marks) (b) For each table or graph developed in the financial dashboard, Luke and Cameron ask you to briefly summarise for them what the chart or graph is indicating. Furthermore, please identify any trends or concerns that your financial dashboard has highlighted. (3 marks) ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 5 (c) A professional advisor will often advise their clients on range of technical accounting and tax matters. However, in many instances clients do not possess the necessary financial expertise or technical accounting or tax knowledge to completely understand the information/advice provided by the accountant. Over the course of your QUT 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 accounting and tax concepts. Required: Identify and explain three (3) strategies that you would adopt in order to simplify the content being delivered to clients. In other words, what strategies could you implement to simplify the financial advice provided to a client (like Luke and Cameron) where they readily admit that they lack the necessary financial acumen to understand what you are saying? (3 marks) [Total for Part 1 = 10 marks] ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 6 PART 2: a. Enter Year-End Adjusting Journal Entries into MYOB & Print out a revised Profit and Loss Statement and Balance Sheet from MYOB - (6 Marks) 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. These entries must be entered and produced using MYOB. Make sure you use MYOB. Students cannot use other packages like Microsoft EXCEL or Word or any other accounting package, otherwise a mark of zero out of six will automatically be imposed. 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 2016 Please date all of your adjusting general journal entries 30 June 2016. Please also include a brief narration of the adjustment in the memo field in MYOB. d. Printing Adjusting General Journal Entries 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 2016 to 30 June 2016. ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 7 e. Accounting Depreciation Entries For accounting purposes, each individual depreciable asset listed on pages 18 and 19 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 1. Leasehold Improvements: Fit-out (consisting of floor tiles, ducted airconditioning, lighting, shelving and signage) Accounting Useful Life Depreciation Rate (Straight-Line %) 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: Leased motor vehicle (van) 8 years 12.5% pa. There are 10 individual assets (listed above). Instead of putting through 10 separate depreciation/amortisation journal entries, students are asked to only record four (4) 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 software (1 asset); and leased motor vehicle (1 asset). This means that you should enter four (4) depreciation/amortisation journal entries into MYOB. For taxation purposes, being a small business entity (SBE), Cycle Kingdom Pty Ltd will depreciate those eligible depreciating assets using the simplified depreciation regime (refer rules on pages 27 and 28 of this case study). Please use 366 days for the denominator for all depreciation calculations. ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 8 f. Print out a Revised Profit and Loss Statement and Balance Sheet from MYOB as at 30 June 2016 Finally, students are required to print out a revised Profit and Loss Statement and Balance Sheet from MYOB for Cycle Kingdom Pty Ltd for the year ended 30 June 2016 taking into account their adjusting general journal entries and include it in their submission. In MYOB, your print range for the Profit and Loss Statement should be 1 July 2015 to 30 June 2016. For the Balance Sheet, please print this report out as at 30 June 2016. Please include cents when printing out both reports. Failure to print out and include both your adjusted MYOB Profit and Loss Statement and Balance Sheet will automatically result in the loss of two (2) marks. [Total for Part 2 = 6 marks] ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 9 PART 3: Prepare the 2016 Annual Report for Cycle Kingdom Pty Ltd in Microsoft Word - (14 marks) Students must use Microsoft Word to prepare the annual report. Students are not permitted to use any other electronic account preparation software packages (eg. Handisoft, Solution 6, MYOB Accountants Office etc). Failure to use Microsoft Word will result in a penalty of up to 14 marks. When preparing the external financial statements, please a. Students are required to prepare the Annual Report for Cycle Kingdom Pty Ltd for the year ended 30 June 2016. The annual report should include the following documents (in the following order): - the external financial statements excluding the Statement of Cash Flows, but including all of the notes to the accounts; the Director's Declaration; and the Accountant's Compilation Report. There is no need to prepare a Directors' Report or an Auditor's Independence Declaration, as the financial report was not audited. For the Accountant'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? Cycle Kingdom Pty Ltd is considered a non-reporting entity. Hence, only special purpose financial statements are required to be prepared. Please ensure that the financial statements (and notes to the accounts) are prepared in accordance with the recognition, measurement and disclosure requirements of all of the AASB Accounting Standards with the exception of the following four (4) AASB Accounting Standards: - AASB 8 Operating Segments; AASB 107 Statement of Cash Flows; AASB 124 Related Party Disclosures; and AASB 133 Earnings Per Share. All other AASB Accounting Standards (including their disclosure requirements) must be complied with. This includes the current financial instruments suite of standards (ie. AASB 7, AASB 132 and AASB 139). ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 10 Please note that the unit company has elected not to early adopt any new Accounting Standards (eg. AASB 9 Financial Instruments, AASB 15 Revenue from Contracts with Customers or AASB 16 Leases). Furthermore, the company is not eligible to apply the reduced disclosure requirements (RDR) contained in AASB 1053 Application of Tiers of Australian Accounting Standards as this standard only applies to reporting entities and Cycle Kingdom Pty Ltd is not considered a reporting entity. c. Income Statement For the Income Statement, Luke and Cameron have requested that you classify expenses by nature instead of by function. Furthermore, Luke and Cameron only want you to show those expenses on the face of the Income Statement that are specifically required to be disclosed under AASB 101 Presentation of Financial Statements. d. 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. e. Balance Sheet For the Balance Sheet, please use the minimum disclosure requirements required under AASB 101. f. \"Real\" and \"Model\" Financial Statements Students are advised (and encouraged) to download the 2015 or 2016 financial report of an Australian listed public company (preferably a retailer) and review the content, structure and format of the financial report. Even though listed companies prepare general purpose financial reports as distinct from special purpose financial statements, it will give students an excellent idea as to the layout, format, structure and content of a financial report. Furthermore, most of the \"Big 4\" accounting firms also have model financial statements in pdf format, which can be freely downloaded from CAANZ's website, namely: http://www.charteredaccountants.com.au/Industry-Topics/Reporting/Publicationsand-tools/Specimen-financial-reports/reports/Specimen-accounts.aspx. ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 11 However, when preparing the external financial statements for Cycle Kingdom Pty Ltd, please do not include the references to AASB paragraphs in the left-hand margin of the financial statements like the model sets of accounts do. Students should also prepare a Director's Declaration for Luke and Cameron to sign as well as including the appropriate Accountant's Compilation Report. g. Date of Declarations and Reports and Comparative Figures All declarations and reports should be dated 16 September 2016. Comparative figures are not required in the financial statements, as the business only commenced trading on 1 September 2015. [Total for Part 3 = 14 marks] ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 12 PART 4: a. Prepare the 2016 Company Income Tax Return and Reconciliation for Cycle Kingdom Pty Ltd - (6 marks) Tax Students are required to prepare the company's Income Tax Return & Tax Reconciliation for Cycle Kingdom Pty Ltd for the year ended 30 June 2016 Students are required to prepare the 2016 company income tax return of Cycle Kingdom Pty Ltd. A blank copy of the 2016 company tax return can be downloaded directly from the ATO website in pdf format at: https://www.ato.gov.au/uploadedFiles/Content/MEI/downloads/Company-tax-return2016.pdf. A blank copy of the tax return has also been placed on the AYB 339 Blackboard site. The company's tax file number is: 733 000 152. Please use the company's business address as the postal address on the tax return. Do not complete the BSB 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: 57145-006. Please put your name and contact details in this box. The income tax return should be dated 16 September 2016. It should be signed by Luke 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. [2 marks] b. Students are required to prepare a One-Page Tax Reconciliation for Cycle Kingdom Pty Ltd for the year ended 30 June 2016 Luke and Cameron 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 2016. This one page 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. [4 marks] [Total for Part 4 = 6 marks] ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 13 PART 5: Professional Approach to Presentation This assessment expects a professional approach to presentation similar to that expected in an Accounting firm when delivering documents to a client. For this reason, you must satisfy the following professional presentation requirements or you will incur penalties as detailed in last section of the criteria sheet. A professional approach also means that it is the responsibility of each student to ensure that the complete assignment is submitted by the due date and in the correct format (see below). Once submitted, students are not able to attach or submit any additional documentation whatsoever as in a client situation, you would be unable to deliver additional information to a client and late information will be regarded as being late and may not be useful. As students will be submitting all parts of the case study via QUT's Turnitin, students are asked to collate all of the various documents and save them into one pdf document to upload into Turnitin. Please name your file \"Your Student Name - Integrated Case Study\". Please save the documents in pdf format in the order listed on page 15 of this case study. Students who submit multiple documents (instead of merging into one pdf document) will incur a 10 mark penalty. The following documents are also required to be submitted at the front of your submission: - the criteria sheets (on pages 30 and 31); and the signed student integrity declaration (on page 29). If you do not submit your criteria sheet - you will incur a (2) marks penalty. If you do not sign and submit the student integrity declaration, your case study will not be marked and will be automatically awarded an overall mark of zero out of 36. ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 14 PART 6: Academic Conduct in Completing this Asessment Academic conduct is expected to be ethical and above reproach in producing this assessment in same way you would produce a client document as part of an accounting firm. The following table provides you with clear examples of what constitutes academic misconduct and what does not. Please carefully read this list before starting the assessment. This integrated case study is an individual assignment. As such, no collaboration with other students is permitted in any way whatsoever. Any collaboration between students, including comparing answers, sharing ideas and research etc. constitutes academic dishonesty. Markers will be carefully checking case studies to ascertain whether there is any indication that collusion has taken place (particularly those students that were in the same groups during the semester for the PBLs). Students who are found to have committed academic misconduct as detailed below will be immediately referred to the QUT Business School academic misconduct committee. Please note that penalties will be applied not only to the student(s) who have used this information but also to the student(s) who have shared this information. To this end, each student is required to sign a student integrity declaration confirming that they have not used or plagiarised the work of others (on page 29). More information on plagiarism and QUT's range of penalties that can be imposed can be found at: http://pilot.library.qut.edu.au/module6/6_5/index.jsp. Examples of what constitutes (or does not constitute) Academic Misconduct Does Constitutes Academic Misconduct 1. Using a case study (or any part thereof) of another student from a previous semester. This includes obtaining a soft or hard copy of a previously used annual report from a prior semester and overtyping or re-typing any part and submitting such as part of your submission. 2. Using a case study (or any part thereof) of another student doing the unit this semester. This even includes a student that has been in your group/team during the semester. 3. Does not Constitutes Academic Misconduct Using a listed public company's annual report or a set of model financial statements as a basis of determining the format, layout and structure for the financial report of Cycle Kingdom Pty Ltd. Using the words contained in a listed public company's annual report or a set of model financial statements (eg. the Note 1 Significant Accounting Policy note) and using these words/sentences for Cycle Kingdom Pty Ltd. Including a requirement that may have been part of a previous semester's case study and including it this semester. ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 15 PART 7: Submission Instructions Please collate the following documents into one pdf document in the following order: Criteria Sheets (on pages 30 and 31); Signed Student Integrity Declaration (on page 29); Part 1 - Preparation of a Financial Dashboard and Reflection. Part 2 - Your MYOB Adjusting Journal Entries dated 30 June 2016 including your revised MYOB Profit and Loss Statement and Balance Sheet as at 30 June 2016; Part 3 - The 2016 Annual Report of Cycle Kingdom Pty Ltd (including the external financial statements, notes to the accounts, the Directors' Declaration and Accountant's Compilation Report) - in that order; and Part 4 - The 2016 income tax return of Cycle Kingdom Pty Ltd, including the one-page tax reconciliation (at the end of the last page of the tax return). ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 16 QUT's Turnitin Electronic Submission of Assignments Tool The integrated case study should be submitted via Turnitin no later than 7:00 pm on Friday 28 October 2016. Details of how to submit the case study through Turnitin are provided as follows. Turnitin is an electronic tool for student assignment submission, originality checking and online marking. It is one of the centrally supported assignment submission services available at QUT. Students are required to submit the integrated case study through Turnitin. There are several benefits of submitting your case study through Turnitin: Students don't need to be on campus to submit the assignment; and Students will receive an e-mail receipt for a successful assignment submission. After you submit your assignment successfully, there is a green banner displaying 'Paper Successfully submitted'. Once the assignment has been submitted via Turnitin, students are not able to resubmit the assignment (even if they realise they have submitted the wrong version or wish to change or edit the document). Hence, it is the responsibility of each student to ensure that the complete assignment (and correct version) is submitted by the due date. Students should refer to the following website for further information and submission details. https://www.student.qut.edu.au/studying/learning-with-technology/assessment/turnitinpage/turnitin. Once marked, the case studies will not be returned to students, nor any feedback provided. Students wishing to review their case study will need to make an appointment with the unit co-ordinator within two weeks after the release of the results for the unit. 2. Where to go for Help? The IT Helpdesk is the first point to contact for assistance with Turnitin, computer or systemrelated queries. Phone: (07) 3138 4000 Web Address: http://www.ithelpdesk.qut.edu.au/ ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 17 INTEGRATED CASE STUDY (TOTAL OF 36%) CYCLE KINGDOM PTY LTD Background Information: The date is Thursday 30 June 2016. The time is 4:00 pm. As the external accountants and tax advisors of Cycle Kingdom Pty Ltd, you are in a meeting with your clients, Luke Foster and Cameron McLeod. The purpose of the meeting is to review the draft MYOB management accounts of Cycle Kingdom Pty Ltd for the year ended 30 June 2016 which have been prepared by their contract bookkeeper, Holly Gardiner. The cycle store has been closed all day as Luke, Cameron and the staff have spent all morning conducting the annual stocktake counting stock on hand. Holly 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 2016. Holly has advised you that she has entered all of the company's transactions for the 2016 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. Please note that the MYOB data file that has been presented to you is not a \"real\" client MYOB data file. All that was done was to enter journal entries so as to arrive at closing balances at 30 June 2016. Hence, please do not analyse the journal entries already existing in this file. ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 18 In your meeting, Luke and Cameron have made you aware of the following information: 1. The bookkeeper, Holly, has not recorded any depreciation/amortisation in respect of any non-current assets acquired by the company during the 2016 financial year. She asks you to calculate the relevant depreciation amounts and process these depreciation/amortisation journal entries for the 2016 financial year directly into MYOB (refer page 7 for details of depreciation rates for accounting purposes). 2. On 1 September 2015, Cycle Kingdom Pty Ltd purchased the following assets outright (all amounts shown GST-exclusive): (a) Leasehold Improvements: Fit-out (consisting of floor tiles, ducted air-conditioning, lighting, in-built shelving and signage) - $157,200. (b) Property, Plant and Equipment: Cash register, standalone - $2,800 Desktop computers (general) - $5,820 Photocopying machine - $4,430 Television sets - $8,710 Fluorescent lighting system - $13,720 Racks (eg. cycle racks) - $25,800 Carpets for the retail store - $23,400 (c) Computer Software: Accounting software and retail point of sale software - $9,470 Holly coded all of these purchases to their various asset category accounts in the Balance Sheet. No other non-current assets were purchased during the year. Note: There are 304 days from 1 September 2015 to 30 June 2016. Please use 366 days for the denominator for all depreciation calculations. ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 19 3. On 18 February 2016, Cycle Kingdom Pty Ltd entered into a non-cancellable 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) $40,000 Present value of the minimum lease payments (including the present value of the guaranteed residual). $40,000 Amount financed under the lease agreement $40,000 Lease term 6 years Number of monthly lease payments 72 Monthly lease payments (GST-inclusive) due on the 18th day of each month $660 The first lease payment of $660 is made on 18 February 2016. As the payment is made in advance, there is no interest on the first lease payment. Thereafter, 71 monthly lease payments are due on the 18 th day of each month. The 72nd and final lease payment is due on 18 th January 2022. Under the lease agreement on 18 th January 2022 (being the same date as the final $660 lease payment, the company is also required to make the guaranteed lease residual payment of $8,800 (GST-inclusive). The company intends to pay out the guaranteed lease residual in 6 years time and take full legal possession of the van. Total GST-inclusive lease payments (including the guaranteed residual) $56,320 Total GST-exclusive lease payments (including the guaranteed residual) $51,200 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 2016 to 30 June 2016. Luke and Cameron have provided you with the original finance 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. Luke and Cameron use the van to pick up stock items, and visit cycle company representatives and suppliers. It is therefore used 100% for business purposes. The van is garaged every day and night of the year in the lock-up garage at the store and is never used by Luke or Cameron for private purposes whatsoever. As it is not available for private use by any employee, there are no fringe benefits tax implications in respect of the vehicle. As there is no private use, all of the running costs associated with the motor vehicle are fully tax-deductible to the company. ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 20 In the MYOB management accounts that Holly has provided you with, on 18 February 2016, she correctly recorded the motor vehicle in the Balance Sheet by debiting it for its GST-exclusive cost of $40,000 and crediting the corresponding lease liability for $40,000. This amount was recorded as a non-current liability. A total of five (5) lease repayments of $600 each (GST-exclusive) have been made between 18 February 2016 and 30 June 2016. Holly has debited the 5 lease payments for their GST-exclusive amount totalling $3,000 to the \"lease payments\" account which is shown as an expense in the Profit and Loss Statement and credited \"cash at bank\" for this amount. Being a lease, the company has claimed back the $60 GST input tax credits associated with each lease payment on the 18 th day of each month in the company's Business Activity Statement (BAS) for the relevant quarter. Holly has correctly debited the total GST paid of $300 associated with the 5 monthly lease payments of $60 each to the \"GST receivable\" account in the company's Balance Sheet. 4. On 31 August 2015, Cycle Kingdom 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 Luke and Cameron 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 $4,000 (GSTinclusive). A lucky door prize consisting of a weekend at Jupiter's Casino (Deluxe room for two with breakfast included) on the Gold Coast plus two tickets to Jimmy Barnes -Soul Searchin' concert was presented to the person whose business card was drawn out of the bucket. The company paid the cost of this prize of $1,000 (GST-inclusive). Holly has correctly coded the total amount of $5,000 (comprising the opening party of $4,000 and the lucky door prize of $1,000) to \"opening party & lucky door prize\" in the Profit and Loss Statement. No GST has been claimed back as in the case of client entertainment, the entity is not able to claim back any input tax credits. 5. The company's Christmas party was held on Friday 18 December 2015 at a nearby licensed steak and seafood restaurant. Luke, Cameron and the three employees attended the Christmas party. No customers were invited. The cost of the Christmas party came to $398. This amount was coded to \"Entertainment - Christmas Party\" in the Profit and Loss Statement. Ignore any GST consequences. 6. Apart from Items 4 and 5 above, the company did not provide any other meal entertainment to clients or employees whatsoever during the 2016 financial year. 7. For FBT purposes, assume that the company adopts the actual method in relation to ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 21 valuing meal entertainment fringe benefits. No fringe benefits tax has been paid as in the case of the opening party and lucky door prize (Item 4), this entertainment was provided to non-employees. Hence, no FBT applies. Furthermore, in respect of the Christmas party (Item 5), as the cost per head for each of the five (5) employees that attended came to less than $300 per head, it is regarded as a minor fringe benefit under Section 58P of the FBTAA (1986). The amounts of these expenses shown in the Profit and Loss Statement are shown GST-inclusive as the company is not entitled to claim back any GST input tax credits associated with these expenditure items. 8. Luke, Cameron and the staff undertook a stocktake on the morning of 30 June 2016. Closing stock has been reliably ascertained at a cost of $247,140 (GST-exclusive). This amount reconciles with the computer system. This amount is shown as \"inventory\" in the Balance Sheet at 30 June 2016. 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 first day of business (ie. 1 September 2015) was $218,154. 9. Cycle Kingdom 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 bad/doubtful debts, not the \"direct write-off\" method. At 30 June 2016, Holly sat down with Luke and Cameron and printed out an aged debtors report. Based on this report, Luke and Cameron determined the likely uncollectability of each bracket (see below). On 30 June 2016, Holly debited \"bad debts expense\" and credited \"provision for doubtful debts\" for $1,338.17 (being the estimated total uncollectible bad debts). The breakdown of this amount (apportioned across the age of each debt) is summarised below. Age of Debtor Account Receivable Estimated % Uncollectable $27,201.45 0% $ 31-60 days $5,607.45 5% $280.37 61-90 days $2,115.60 50% $1,057.80 0-30 days (not past due) Totals: $34,924.50 Provision for Doubtful Debts - $1,338.17 ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 22 At your year-end meeting with Luke and Cameron, they present you with a letter from one of the debtors dated 27 June 2016 (Jordan Packer) confirming that this debtor has been imprisoned due to fraud and as such, is unable to pay their outstanding debt totalling $420. After a brief discussion with Luke and Cameron, it has been decided that this debt should be written off at 30 June 2016. This debt of $420 was included as part of the 61-90 debtors days breakdown above. Ignore any GST consequences. If any adjusting entries are required, please do them in the general journal. Do not worry about the individual debtor account for Jordan Packer. 10. Several cyclists pay for their coaching lessons in advance. As at 30 June 2016, a total amount of $7,120 (GST-exclusive) had been paid in advance. This amount relates to cycling classes that will be provided during the months of July and August 2016. Holly 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 nonrefundable, meaning that cyclists will not receive any refunds for any coaching classes that they do not attend or cancel sessions. 11. The employees of Cycle Kingdom Pty Ltd are as follows: Luke Foster (Director and full-time head coach of the coaching division); Cameron McLeod (Director and full-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 directors and employees are shown in the Profit and Loss Statement. There are no outstanding (accrued) wages owing to any of the employees at 30 June 2016. 12. Each full-time employee is entitled to four (4) weeks paid annual leave. Part-time staff are entitled to pro-rata annual leave. At 30 June 2016, Holly had not yet recorded a journal entry to accrue the annual leave for these employees. The total provision for annual leave (in respect of all employees) has been calculated at $8,125. The company policy is that all annual leave must be taken within 12 months. No annual leave was taken by any employee during the 2016 financial year. No sick leave was taken by employees during the 2016 financial year. No provision for sick leave should be made in the 2016 accounts as no employee is considered likely to take more than their allocated sick leave entitlements. The sick leave is nonaccumulating and non-vesting meaning that no entitlement (and therefore, no accrued sick leave) is carried over to the following financial year for any employee. ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 23 Similarly, no employee is eligible for long service leave. No provision for long service leave should be made in the 2016 accounts as, at 30 June 2016, 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. 13. Cycle Kingdom Pty Ltd paid their rent of $6,600 (GST-inclusive) for the month of June 2016. However, due to surplus cash in the bank account, on 30 June 2016, Cycle Kingdom Pty Ltd prepaid two month's rent totalling $13,200 (GST-inclusive) to the landlord. By making this payment, it effectively meant that the store's rent is prepaid until 1 September 2016. Holly recorded the following journal entry in MYOB on 30 June 2016: DATE 30 June PARTICULARS POST REF DEBIT Rent expense 6-1160 12,000 GST receivable 2-1040 1,200 Cash at bank 1-1010 CREDIT 13,200 (Payment of two months rent of $6,600 per month GST-inclusive to the landlord) 14. On 1 June 2016, Luke and Cameron invested $40,000 of the company's surplus cash into a 60-day term deposit with The First National Bank of Australia at an interest rate of 3.00% per annum. Interest totalling $197.26 will be paid by the bank on maturity 60 days later (ie. 30 July 2016). The company does not intend to rollover the term deposit once it matures. Holly recorded the $40,000 in the \"term deposit\" account (current asset) in the company's Balance Sheet. Note: 15. There are 30 days from 1 June 2016 to 30 June 2016. On 11 March 2016, Cycle Kingdom Pty Ltd purchased 1,000 shares in Woolworths Ltd at a cost of $23.34 per share (including brokerage). Holly recorded the shares in the company's Balance Sheet at their cost of $23,340. These shares were purchased with the view to holding them for the long-term. No dividends were paid by Woolworths Ltd between acquisition date and 30 June 2016. No other shares were bought or sold during the 2016 financial year. As at 30 June 2016, the share price of Woolworths Ltd was trading on the ASX at $20.90 per share. Luke and Cameron anticipate that the company will derive further capital gains in the future (in the form of goodwill) if, and when, they sell their business. ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 24 16. The initial set-up costs of $1,640 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\". These costs were incurred directly by the company on 1 September 2015. 17. On 1 September 2015, Cycle Kingdom Pty Ltd signed a 3-year non-cancellable operating lease with the landlord to rent commercial premises at 17 Dixon Parade in Aspley for $6,000 per month (GST-exclusive). Under the lease agreement, a 2.5% annual increase to this rent will 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 this stage, Luke and Cameron intend on renewing the lease when the current lease term expires. ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 25 Additional Facts: The MYOB management accounts have been prepared on an accruals basis. The company is on the accruals basis for income tax purposes. Cycle Kingdom Pty Ltd is registered for the GST. Its ABN is: 57 602 940 974. Luke and Cameron are the only two Directors of the company. Being a small proprietary company, the company's accounts were not required to be audited for the 2016 financial year (and were not). All PAYG withholding tax owing in respect of employee's salaries and wages have been remitted by Cycle Kingdom Pty Ltd to the ATO by the due dates. The 30 June 2016 PAYG withholding tax has not yet been remitted to the ATO. This amount of $11,780 shown in the Balance Sheet as a current liability will be paid to the ATO when the company lodges its June 2016 Business Activity Statement with the ATO (sometime before the due date of 28 July 2016). The three quarterly Business Activity Statements (BAS) for the September 2015, December 2015 and March 2016 quarters have been lodged with the ATO by their due dates and the net GST owing (ie. GST payable minus GST receivable) for each quarter have been paid to the ATO. The amount of GST payable and GST receivable shown in the Balance Sheet at 30 June 2016 represents the amount of GST collected ($15,150) and paid ($11,496) by the company to the ATO in respect of the June 2016 quarter. The net amount of $3,654 will be paid to the ATO before the due date for lodgement of the BAS (ie. before 28 July 2016). The company has paid the following PAYG instalments to the Australian Taxation Office on each BAS: - September 2015 quarter ($910 income tax paid to the ATO on 24 October 2015) December 2015 quarter ($1,630 income tax paid to the ATO on 9 February 2016) March 2016 quarter ($2,230 income tax paid to the ATO on 15 April 2016) The fourth quarterly PAYG instalment payable of $2,460 shown in the current liability section of the Balance Sheet at 30 June 2016 represents the amount owing in respect of the April-June 2016 quarter. This amount will be paid when the company lodges its June 2016 Business Activity Statement (sometime before 28 July 2016). All four PAYG instalments totalling $7,230 have been debited to \"income tax receivable\" in the Balance Sheet. This amount represents the total of the four PAYG quarterly instalments paid/(payable) to the ATO in respect of the 2016 income year (being $910 plus $1,630 plus $2,230 for the first three quarters as well as the $2,460 accrued June 2016 quarterly instalment which is due and payable by the company by 28 July 2016). ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 26 The share capital of $300,000 shown in the Balance Sheet comprises the following: - Luke Foster (150,000 x $1.00 fully paid ordinary shares) Cameron McLeod (150,000 x $1.00 fully paid ordinary shares) $150,000 $150,000 These 300,000 fully paid ordinary shares were issued by the company on 15 August 2015. The original $300,000 loan from The First National Bank of Australia that the company took out is fixed at an interest rate of 5% per annum and fully repayable in five years time. The company has been making loan repayments and as at 30 June 2016, the outstanding balance of the loan is $242,806 (split in the MYOB Balance Sheet as $51,082 current and $191,724 non-current). The bookkeeper, Holly, has correctly split each loan payment between interest paid and reduction of the loan liability. There were no initial borrowing costs associated the bank loan. The borrowings are unsecured and no assets were pledged as security against these borrowings. The company has been making the compulsory 9.5% employer-sponsored superannuation contributions into each employee's superannuation fund on a quarterly basis on the last day of each quarter based on each employee's ordinary times earnings (OTE). Accordingly, all superannuation amounts owing in respect of the 2016 financial year have been paid into each employee's superannuation fund by 30 June 2016. The amounts contained in the MYOB data file are based on the actual results of Cycle Kingdom Pty Ltd for the period 1 September 2015 to 30 June 2016 (ie. 10 months of trading). These amounts override any amounts contained in the business plan and in any of the PBLs during the semester relating to Cycle Kingdom Pty Ltd. Students should also note that the figures contained in the initial business plan were budgeted amounts. Furthermore, ignore any additional information in PBLs during the semester relating to Cycle Kingdom Pty Ltd. Only use information contained in the case study provided to you. Impairment testing has been conducted at 30 June 2016 in respect of all assets (including the leased motor vehicle). There is no indication that any asset shown in the Balance Sheet is impaired. In the MYOB management accounts, no non-current asset has been revalued to fair value. Other income ($21,430) refers to income generated from cycle tours organised by Cycle Kingdom Pty Ltd. The legal expenses ($2,145), general expenses ($4,780) and repairs and maintenance ($2,309) shown in the Profit and Loss Statement are all tax-deductible. The staff amenities ($672) shown in the Profit and Loss Statement relates to tea, coffee and biscuits purchased by the company and provided to employees for consumption on the business premises during morning and afternoon tea breaks. ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 27 The sundry expenses ($824) shown in the Profit and Loss Statement represent non-tax deductible expenses. They are shown GST-inclusive as no GST can be claimed back. Workers compensation ($578) relates to the workers compensation premium paid to Workcover Queensland on behalf of the employees and is tax-deductible. The motor vehicle expenses ($5,116) 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 figure. These motor vehicle expenses 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 $3,986 represents premiums paid by the company during the 2016 financial year to Topstar Insurance in respect of both public liability insurance and directors and officer'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 entries as 30 June 2016. In other words, all journal entries you decide to make to the MYOB data file provided should be made using the GST tax code \"N-T\" (except where otherwise indicated in the case study). In terms of depreciation for accounting purposes, 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 value of $Nil. As noted on page 7, for accounting purposes, the company will use the straight-line depreciation method for all depreciable assets (including the motor vehicle). As previously noted, in the case of accounting depreciation/amortisation 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 ten individual assets listed on pages 18 and 19 of the case study. In terms of depreciation for taxation purposes, being a small business entity (SBE), Cycle Kingdom Pty Ltd will depreciate those eligible depreciating assets using the simplified depreciation regime (refer rules below). Streamlined depreciation rules apply to small business entity taxpayers who elect to take advantage of these depreciation concessions. The rules relating to the simplified depreciation regime changed on 12 May 2015, being the date of the 2015 Federal Budget. As all eligible tax depreciating assets were acquired by Cycle Kingdom Pty Ltd after 12 May 2015, students need only consider these rules. ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 28 A summary of these tax depreciation rules that applied in respect of depreciating assets acquired after 12 May 2015 are summarised below. (i) an immediate 100% deduction applies in respect of depreciating assets costing less than $20,000 (GST-exclusive); and (ii) depreciating assets costing $20,000 or more (GST-exclusive) are automatically pooled (ie. lumped together) and are depreciated in a general small business pool at the diminishing value rate of 30% per year (15% DV in the first year). For taxation law purposes, computer software is considered to a depreciating asset for the purpose of Division 40 of the ITAA (1997). According to Item 8 of Section 40-95(7), software that is purchased on or after 1 July 2015 is to be depreciated over 5 years using the prime cost method (Sections 40-95(7) and 40-70(2)). In other words, the tax depreciation rate is 20% prime cost. For the purposes of this case study, please do not allocate the computer software costing $9,470 to an SBE pool, but instead, depreciate the software at 20% prime cost for taxation purposes. Hence, the accounting depreciation figures put through in MYOB for Part A may not necessarily be the same depreciation figures for taxation purposes. Please use 366 days for the denominator for all depreciation calculations. The company is also keen to take advantage of any other SBE tax concessions that it may be eligible for. In the case of any temporary differences that give rise to deferred tax assets (DTA's) and/or deferred tax liabilities (DTL's), instead of recording multiple journal entries in MYOB for each individual DTA and each individual DTL, students are asked to combine all of those 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, please use the \"memo field\" in MYOB to explain how you calculated the total of your DTA's and DTL's. In other words, for arguments sale, if the total DTA was determined to be $3,206, your memo would explain that it comprised $818 + $1,147 + $1,241. Furthermore, 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, rather than offset the two amounts in the financial statements. Some Australian companies elect to net off their DTA's and DTL's and show the net figure as an asset or liability in their Balance Sheet. In this case study, students are asked not to do this, but to show their DTA's as an asset and their DTL's as a liability (with relevant note disclosures). All calculations should be made on a daily basis. The ATO has a useful facility where you are able to calculate the number of days, being: http://calculators.ato.gov.au/scripts/axos/axos.asp? CONTEXT=&KBS=Calculate_Days.xr4&go=ok. ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 29 AYB 339 ACCOUNTANCY CAPSTONE STUDENT INTEGRITY DECLARATION (MUST BE COMPLETED, SIGNED AND SUBMITTED BY EACH STUDENT AND INCLUDED AS PART OF YOUR SUBMISSION DECLARATION 1. I have complied with all the unit coordinator's instructions for this assessment. 2. I understand that plagiarism involves using another person (or persons') ideas or work as one's own, as explained in the QUT Manual of Policies and Procedures at C5.3 which is available at: http://www.mopp.qut.edu.au/C/C_05_03.jsp. 3. I understand that it is a breach of academic integrity to assist, or allow another person/s to copy our work. 4. I declare that this work is entirely my own, and no part of it has been copied from any other person's (or persons') words or ideas, except as specifically acknowledged through the use of inverted commas and appropriate referencing. 5. I declare that no part of this assessment has been written for me by any other person or persons except where such collaboration has been authorised by the unit co-ordinator concerned. 6. I give permission for our assessment to be reproduced (copied), communicated, compared with other sources and stored (including electronically) in order to detect plagiarism and agree that plagiarism detection software may be used. 7. I declare that this assessment has not been submitted, in whole or in part, for any other unit at QUT or any other institution, unless authorised by the relevant unit co-ordinator. I, the undersigned, declare that I have read, accepted and agree to the statements in the Declaration above, which are true and correct. Student Number Note: Student Name Signature If this declaration is not completed, signed and submitted, the case study will simply not be marked and the student will automatically receive a mark of zero out of 36 for the case study, thereby jeopardizing their ability to pass the unit and graduate. ________________________________________________________________________________________________________ AYB 339 Accountancy Capstone Queensland University of Technology Integrated Case Study Semester 2, 2016 30 AYB 339 ACCOUNTANCY CAPSTONE INTEGRATED CASE STUDY - FINANCIAL DASHBOARD AND REFLECTION CRITERIA SHEET - PART 1 (10%) STUDENT NAME & STUDENT NUMBER: ________________________________________________ YOUR FACILITATOR'S NAME: ________________________________________________ YOUR DISCUSSION FORUM TIME: CRITERIA Teamwork and Self (TS 4.1) - 10 Marks Demonstrate reflective thinking, responsibility and accountability for own learning and professional practice Preparation of a financial dashboard and explanation and interpretation of key trends and ratios within the dashboard (7 marks). Consideration and reflection on the development of strategies to be adopted when providing difficult and at time, complex financial advice to a client (3 marks) ________________________________________________ 7 8.5 -10 6 7.5- 8 5 6.5 - 7 4 5-6