Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed

Snapshot 1 Scenario XYZcom is a startup that builds high-end BBQs for the consumer market. It commenced operations on 1 July. You are the Bookkeeper for XYZ.com. Interpreting information from organisational policies, procedures, and job requirements is crucial for bookkeepers to ensure compliance, accuracy, relevance, and consistency in financial reporting. To achieve a satisfactory outcome for this assessment task, you must use the case scenario provided to populate the appropriate financial forms. Review the Policy Procedure for Financial Reporting.pdf Review the Job Requirements.pdf HINT If you need some extra help, please use the TUTOR ASSIST document we have prepared to guide you through each step of the project: FNSACC421 Tutor Assist Project A Part 2. STEP 1: Asset Register and first-year depreciation calculation Instructions On 1 July 20XX, XYZcom buys the equipment needed to produce their range of BBQs. The equipment purchased is: BBQ stamping machine for $220,000 (ID: PR001) BBQ seam welder for $25,000 (ID: PR002) Complete the Asset Register for XYZcom and calculate the depreciation for the first year using the diminishing value method. Assume a Depreciation Rate of 20% and use the provided asset information. Asset Register ID Asset Name Purchase Date Purchase Price Effective Life Rate Depreciation Year 1 Accumulated Depreciation Depreciation Expense Current Value PRO01 BBQ 1 $220,000 10 20% $44,000 $44,000 $176,00 stamping July Years machine 20XX PRO02 BBQ 1 $25,000 10 20% $5,000 $5,000 $20,000 seam July years welder 20XX Evidence Required Completed Asset Register Year 1 Depreciation Expense (shown in the table) STEP 2: Insurance Prepayment Instructions XYZcom pays $4,800 for 12 months of insurance in July. Instead of recording the whole amount against July's expenses, show the expense equally across the periods for which the premium was paid (i.e., $400 expense in all months). Record the insurance payment and allocate the expense equally across the 12-month period. GL7 General Journal (showing the entire transaction) Date Description Ref Debit Credit 31-Jul-XX Insurance Expense account 1945 $4800 31-Jul-XX Prepaid insurance account 6010 31-Jul-XX 31-Jul-XX 6010 Insurance (showing the Insurance Expense account) Date Description 31-Jul-XX Insurance expense $400 Ref Debit Credit Balance 1945 $400 1945 Pre-paid Insurance (showing the Prepaid Insurance account) Date Description 31-Jul-XX prepaid insurance 31-Jul-XX Insurance expense for July Ref $400 Debit Credit Balance 6010 $4,800 -$4,800 $400 -$4,400 Evidence Required Three completed tables STEP 3: Bad Debt Instructions One of XYZcom's account customers, JZ House and Garden, has gone broke, owing XYZcom $5,700. Prepare the appropriate journal or ledger entries to write off the debt. Use docket number JZ345, move the debt into bad debts in April, and finalise the transactions on the 31st of July. Before the write-off, profit is $275,300.00. You will write off the debt owed by JZ House and Garden and complete the required tables. Journal entry for the bad debt write-off Date Account Ref Debit 31-Jul-XX Bad debt expense JZ345 $5,700 31-Jul-XX Debtors account Debtors Ledger - JZ House and Garden JZ345 Credit $5,700 Date Description Ref Debit Credit Balance 1-Jul-XX Opening balance JZ345 5,700 $5,700 31-July-XX Bad debt right off JZ345 Bad Debts account Date Description 31-Jul-XX bad debt expense $5,700 SO Ref Debit Credit Balance JZ345 Profit and Loss account (updated to reflect the bad debt expense) Date Description Ref $5,700 $5,700 Debit Credit Balance 1-Jul-XX Opening balance JZ345 $5,700 31-july-XX Bad debt expense JZ345 $269,600.00 $5,700 $275,300.00 Bad debt expense account updated to reflect the transfer to the profit and loss account Date Description Ref Debit 31-Jul-XX Transfer to profit and loss account JZ345 $5,700 31-Jul-XX Bad debt expense JZ345 Credit Balance $269,600.00 $5,700 $275,300.00 Evidence Required Five completed tables 1. The general journal entry to write off the bad debt. 2. The general ledger bad debt expense account showing the bad debt written off. 3. The debtors ledger account for JZ House and Garden. 4. The profit and loss account showing the bad debt has been transferred 5. A second bad debt account to show the bad debt has been transferred to profit and loss. STEP 4: Cost of Goods Sold and Periodic Inventory Instructions XYZcom, being a startup, had a zero beginning inventory. The company spent $425,000 on inventory items, receiving $12,000 for prompt payment and paying $10,000 for freight. The closing inventory is $84,000. Determine the cost of goods sold and the closing entries for a periodic inventory. Determine the cost of goods sold and the closing entries for XYZcom's periodic inventory system and prepare the Periodic Inventory. Hint Review the learning material in Part 2 pages 21 and 22. Then complete the tables. Periodic Inventory - Calculate the Cost of Goods Sold Cost of Goods Sold Less: Plus: Less: Periodic Inventory: Closing Entry Account $ Debit Credit Debit Credit Evidence Required Cost of goods sold (COGS) calculation Periodic Inventory Closing Entry Two completed tables STEP 5: Income Statement Instructions Prepare an Income Statement for XYZcom using your calculations. Show gross profit and net income. You will need the following information: Sales: $1,375,000.00 The cost of goods sold figure you calculated in step 4 Administrative and sales expenses: $225,000.00 Interest on debt: $97,000.00 Depreciation expense: $49,000. Tax paid at 30% Income Statement for XYZcom For the period ended XX/XX/XXXX Account Sales Cost of goods sold (COGS) Gross profit Amount $1,375,000.00 $341,000.00 $1,034,000.00 Admin and sales expenses $225,000.00 Interest on debt $97,000.00 Depreciation expense $49,000.00 Proft before tax Income tax expense Net profit Evidence Required A complete Income Statement, including: Sales Cost of Goods Sold (COGS) Gross Profit Administrative and Sales Expenses Interest on Debt Depreciation expense Profit Before Tax Income Tax Expense Net Profit $663,000.00 $198,900.00 $464,100.00 STEP 6: Trial Balance Instructions At the end of the period, XYZcom has the following account balances: Cash: $550,000 Accounts Receivable: $117,000 Inventory: $84,000 Prepaid Expenses: $4,800 Equipment: $245,000 Accumulated Depreciation: $49,000 Accounts Payable: $125,000 Loans Payable: $361,300 Net Profit: $465,500 Prepare a Trial Balance using these amounts by completing the table below. Hint The assessment instruction includes a net profit figure you do not need to split out all the expense and revenue items. Please note that the debits are on the left and the credits are on the right side. Trial Balance for XYZcom For the period ended XX/XX/XXXX Account Cash Accounts receivable Inventory Debit $550,000 $117,000 $84,000 Prepaid expenses $4,800 Equipment Accumulated depreciation Accounts payable $245,000 Credit $49,000 $125,000 PA-P1 PA-P2 Evidence Required Completed Trial Balance Submitted answer: Unsure how to complete step 4. Not satisfactory Marked on 18/04/2024 06:32 PM by L. Danos Trainer feedback Question 2 - Insurance - Journal entry 1 - Debit Prepaid Insurance $4,800 - Credit Bank account $4,800. Journal entry 2 - Debit insurance expense $400, credit prepaid insurance $400. Question 3 - 1st bad debt account -- $5,700 should be debited. Profit & Loss - Remove $5,700 from the top row. Opening balance should be $275,300. $5,700 should be debited. Closing balance should be $269,600. 2nd bad debt account. Top row balance should be $5,700. 2nd row - Closing balance should be nil. Question 4 - Has not been attempted. You need to calculate the cost of sales. Purchases less discount for prompt payment plus transport and delivery costs less ending inventory = Cost of goods sold. You also need to submit a closing general journal entry. Debit cost of good sold, ending inventory and discount for prompt payment. Credit purchases and transport and delivery. Question 5 - Cost of sales should be $339,000. Please amend ongoing errors. Your end result on the income statement should agree with the net profit figure on the trial balance. Question 6 - Net profit figure should be credited. You must total your report and make sure it is balanced. Attachments

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting in an Economic Context

Authors: Jamie Pratt

8th Edition

9781118139424, 9781118139431, 470635290, 1118139429, 1118139437, 978-0470635292

More Books

Students also viewed these Accounting questions