Project B

Scenario-

Today is 1 August 20XX.

You are working as a bookkeeper at XYZcom, a startup specialising in high-end BBQs for the consumer market. As part of your regular duties, you have been assigned the task of reviewing the Profit and Loss Statement for July 20XX. Your objective is to identify errors or inconsistencies within the report and communicate them to your supervisor, Matt Peach, for resolution.

Before reviewing the Profit and Loss Statement, it is important to understand the various expense categories and their expected figures. Use the following expense breakdown as a reference point when checking the accuracy of the Profit and Loss Statement:

• Advertising expense: $6,500
• Rent expense: $8,000
• Utilities expense: $1,200
• Salaries expense: $15,000
• Depreciation expense: $3,500
• Other expenses: $4,000

Profit and Loss Statement for July 20XX

Sales	Amount
Gross sales	$150,000.00
Cost of goods sold	$80,000.00
Gross profit	$70,000.00
Operating expenses
Advertising expense	$0.00
Rent expense	$8,000.00
Utilities expense	$1,200.00
Salaries expense	$1,500.00
Depreciation expense	$3,500.00
Other expense	$10,500.00
Total expenses	$24,700.00
Net profit before tax	$45,300.00

Instructions

STEP 1: Identify errors

Review the case scenario and identify two errors in the Profit and Loss Statement for July 20XX. Make a note of the errors, as you will need to know them for STEP 2.

To help you complete the task, cross reference each expense category and their respective amounts with the Profit and Loss Statement. Ensure the figures on the statement align correct with the provided breakdown. Be attentive to any inconsistencies or errors in the allocation of expenses.

STEP 2: Refer errors for resolution

Use the template below to compose an email to your Supervisor, Matt Peach, to refer the errors for resolution according to XYZcom's policies and procedures. Your email must:

• Include correct details in relation to recipient, sender, date, subject.
• Greet your supervisor by name.
• Introduce the purpose of the communication, referencing the financial document you reviewed and advising you identified two errors that require attention and resolution.
• Explain each error, including error type and the affect it has on the financial report.
• Request guidance on the actions to take to rectify the identified errors.
• Include a polite close, including your name and job title.

Email

TO: (Insert name of recipient)
FROM: (Insert your name)
DATE: (Insert date of preparation)
SUBJECT: (Insert relevant subject name)
MESSAGE (Insert message)
Yours sincerely (Insert your name and job title)

STEP 3: Record errors in General Journal

Review the email from your supervisor in relation to the errors identified in the July 20XX Profit and Loss Statement. Then, complete the tasks that follow.

FROM:	Matt Peach
DATE:	1 August 20XX
SUBJECT:	Correcting the identified errors in the July P&L Statement
MESSAGE
Hi, I hope this email finds you well. I want to express my appreciation for your keen attention to detail in identifying the errors in the July 20XX profit and loss statement. Your proactive approach demonstrates your commitment to maintaining accurate financial records and ensuring the integrity of our financial statements. To address the errors, please follow the instructions below: Recording the errors in the General Ledger: Open the general ledger or accounting software system. Locate the appropriate accounts for the identified errors: Advertising Expense and Other Expenses. Record the necessary journal entries to correct the misclassification and duplication errors. Remember to use positive and negative signs to reflect the appropriate debit and credit entries. Please ensure that you include clear descriptions in the journal entries to explain the nature of each error and the corrective action taken. Additionally, keep any supporting evidence or calculations that highlight the discrepancies for future reference. If you have any further questions or need clarification, please don't hesitate to reach out to me. I am here to assist you throughout the error correction process. Thank you once again for your diligence and dedication to maintaining accurate financial records. Your attention to detail is invaluable to the success of our team.
Yours sincerely Matt Peach Finance Manger

Use the General Journal templates below to record and correct the entries relating to:

1. Misclassification of expense
2. Incorrect amount entered

General Journal

Error 1
Date	Description	General ledger account	Debit	Credit

Error 2
Date	Description	General ledger account	Debit	Credit

Hint: Incorrect amount posted to salaries will result in an incorrect amount also being posted to the bank account.

Evidence required

• Email to Supervisor, referring errors for resolution
• Two completed general ledger entries, correcting the two identified errors