Transaction Analysis Scenario

Introduction: Miss Samantha Webster, sole owner of Sams Kids Care (SKC)

Samantha Webster holds a Bachelor of Education in Early Childhood Education degree and has considerable experience as an Educator in various childcare centres across Melbourne. Samantha decided to launch her own childcare business Sams Kids Care and provided the following snapshot of her current arrangements and some recent financial transactions.

Samantha (Sam) has already attended a short course on financial management for small businesses, and has sought the help of an accountant, who advised her to use accrual accounting and to prepare monthly statements. Sam has willingly accepted this advice, and at this stage, she will undertake all administrative functions for the business, including managing all payments and keeping financial records.

The following information provides details of some of the activities of the business Sams Kids Care for the months of Dec 2021 and Jan - 2022. SKC will formally start on 1st Feb 2022 and her financial year is from July-June each year.

Your task is to identify and record the relevant business transactions in the workbook format using the accounting equation for the two months. You must create meaningful account names as you proceed to record these transactions. Provide your assumptions if you make any.

1. On 1st Dec 2021, Sam set up a bank account for SKC with the State Bank of Victoria (SBV) and deposited $50,000 into this account. She had $30,000 in savings and the remaining amount is an interest-free loan from her parents. Her parents expect her to pay back this loan in four equal instalments over the next two years with the first instalment due on 1st June 2022.

2. Sam had been preparing to start this business for several months and had done some preparatory work. In particular, she had identified premises where she could set up this business. On 1st Dec 2021, she signed a rental contract for a year and received the keys to the property. The agreed rent is $4,000 per month to be paid on the first business day each month in advance.

3. On 2nd Dec, she visited the Harvey Norman store and purchased office equipment and furniture for her business worth $8,000. As she has not yet received the Debit Card associated with her business account with SBV, she used her personal Credit Card for the purchase on this occasion.

4. On 7th Dec, she contracted with GloWorld Energy, a utility company, to activate both, the Electricity and Gas connection at the premises as a bundled service. GloWorld will issue a combined bill on the last Friday of each month and must be paid within the next 15 business days. No advance is required.

5. On the same day, she also contracted with TConnect for an NBN internet connection, a landline phone connection and a mobile connection. She negotiated a business bundle deal for $250 a month. Like GloWorld, TConnect will also issue a monthly bill on the last Friday of the month, to be paid within the next 15 business days. No advance is required.

6. On 8th Dec, Sam received the Debit Card linked to the Bank Account.

7. On 10th Dec - 21, she started minor repair work which was completed just before Christmas. The repairers issued a bill of $6,500 on 29th Dec to be paid within the next 10 business days.

8. On 30th Dec, she contracted with a Marketing company VSell to advertise SKC services via the local newspapers, pamphlets and radio advertisements for an ongoing contract for the first year of $500 each month starting from 4th January 2022. VSell invoices at the end of the month with terms requiring payment in the next 10 business days.

9. In the last week of December 2021, SKC received the invoice from GloWorld for utilities of $300 and from TConnect as per the plan. Sam will pay all the bills on time.

10. On 4th Jan-22, the Customer Relationship Manager at SBV extended an offer of a pre-approved Credit Card with a limit of $30,000 to SKC. This offer was accepted.

11. On 10th Jan, Sam ordered playground equipment and toys for the premises. The total cost for these items was $5,000. She paid a deposit of 20% using the debit card provided by the SBV. The remaining amount must be paid within seven business days of the delivery.

12. On 14th Jan, she contracted a Lead Educator as a member of staff for $40 an hour and two Room Assistants for $30/hour each on a casual basis. They will all start on 24th Jan and are expected to work for 20 hours that week and help SKC prepare for Orientation on 28th Jan and set up the business for its launch the following week. She is now looking for a qualified Chef. Till then food will be provided by a catering company.

13. On 17th Jan, the equipment and toys ordered on 10th Jan were delivered. Sam was quick to set up the equipment in the playground and arrange toys in the kids rooms. On 24th Jan, the outstanding amount for the purchase of these items was paid using the business credit card.

14. On 28th Jan, she received a bill of $500 from GloWorld for utilities and a bill from TConnect for the month of January.

15. On 31st Jan, after Orientation, she successfully converted a few enquiries into enrolment for 10 kids and received a deposit of $2,000 from them via electronic transfers to the business account. Kids will start attending the childcare from 1st Feb when SKC formally opens up for business.

16. At the month-end, she paid wages to her staff and ensured all other regular invoices/payments (based on the information above) are duly recorded/paid if due for the month.

. Date	Assets		=	Liabilities		=	Equity			Notes
	Current	Non-Current		Current	Non-current		Capital /Reserve	Income	Expenses