Question 1 [30 marks] Preparation of accounting records -using spreadsheets Flash Cleaning Services commenced operations on 1 July 2018. The com pany opened a cleaning business - providing cleaning services to local schools, preschools and childcare centres. During its first month of operations, the following transactions occurred: Date 1 July 2018 Transaction details Sally Flash invested $30,000 into the business, and the money was deposited into the bank the business as a sole-trader. account. Sally Flash operates 1 July 2018 Flash Cleaning Services borrowed $20,000 from the bank. The loan is interest-only, and interest is charged at 12% pa. 1 July 2018 Flash Cleaning Services purchased a motor vehicle- a van that will be used for the cleaning business. The motor vehicle cost $18,000, and Flash Cleaning Services paid for the vehicles from the bank account. The motor vehicle has an estimated useful life of six years, and an estimated residual value of $3,000. 1 July 2018 1 July 2018 9 July 2018 13 July 2018 Flash Cleaning Services paid $3,600 for insurance for the period 1 July 2018-30 June 2019. Flash Cleaning Services purchased cleaning equipment for $4,800, paid from the bank account. Flash Cleaning Services purchased supplies for $2,400, on credit terms. Flash Cleaning Services provided cleaning services to Rainbow Childcare Centre for $500, and the Centre deposited this money into Flash Cleaning Services' bank account. 2.u90.edu.au Flash Cleaning Services purchased cleaning equipment for $4,800, paid from the bank account. 1 July 2018 9 July 2018 13 July 2018 Flash Cleaning Services provided cleaning services to Rainbow Childcare Centre for $500, and the Centre deposited this 20 July 2018 Flash Cleaning Services paid wages of $1,600 to employees, for services to 20 July 25 July 2018 Flash Cleaning Services received $5,500 for cleaning services to be provided to ABC Public School between 25 July 2018 Flash Cleaning Services purchased supplies for $2,400, on credit terms money into Flash Cleaning Services' bank account. 27 July 2018 1 July 2018 1 July 2018 Flash Cleaning Services paid advertising costs of $1,600 to the local newspaper, for July advertising and 30 September 2018. Flash Cleaning Services paid $2,000 of the money owing to the supplier in relation the supplies purchased on 9 July 2018. Interest of $300 on the bank loan is charged, and it is paid from the bank account. Additional information as ot 31 July 2018 . Flash Cleaning Services owes wages of $2,200 to employees, for services to 31 July. e Flash Cleaning Services has invoiced a number of customers for cleanings services provided during July, and needs to accrue service revenue of $12,600 Accrued expenses as at 31 July include: fuel ($190) and telephone ($100) for the month of July. . Supplies on hand at 31 July 2018 amount to $2,100. Flash Cleaning Services provided cleaning services to ABC Public School on 28 July 2018, earning $500 of the $5,500 that was paid to Flash Cleaning Services on 25 July 2018. Required: 1. Prepare the journal entries for the twelve transactions listed above that occurred during July 2018. (6 marks) 2. Prepa re T-accounts and post all of the above journal entries to the T-accounts. Total all of the T-accounts to determine their balances at the end of the month. (3 marks) 3. Based on the balances in the T-accounts above, prepare the 'Unadjusted Trial Balance' in an Excel spreadsheet. (2 4. Explain what the five types of adjusting entries are. Prepare all of the adjusting entries for Flash Cleaning Services as at 31 July 2018.(6 marks) 5. Using your 'Unadjusted Trial Balance' and adjusting entries prepared above, prepare the ten column worksheet in Excel for the month ended 31 July 2018 (refer to page 167 -171 of the prescribed text for an example of this worksheet). In the spreadsheet, you are required to have a 'data' section separated from the 'worksheet'section. Use formulas to generate all of the figures in the 'worksheet' from the data' section. Use the IF function for the 'Profit'or 'Loss' and also to check that the debit and credit columns balance. (5 marks) Using the ten column worksheet prepared above as your 'data, prepare the income statement, balance sheet, and statement of changes 6. 8 in equity in Excel. Use formulas to generate all of the figures in the financial statement reports. (6 marks) 7. Calculate and evaluate the business's current ratio and debt ratio. If Flash Cleaning Services repays the bank loan, how would these ratios change? Do you recommend that the bank loan is repaid? Why or why not. (2 marks)
