AC400 Agribusiness Accounting Report 2 Sample
Assessment-2 Instructions
• Assessment-2 is a group assignment, and each group consists of not more than 3 students.
• Nominate just one group member to submit the assignment however the name of all group member names must be on the cover sheet.
• Cover page information: Need to provide the following details on the first page of your Excel file.
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• All group members are responsible for their groups submission as no exceptions will be provided for late or incomplete submission.
• Please ensure the academic integrity of your submission.
• If a student in a group has not contributed, other group members have the right to inform the lecturer.
• Failure to submit your assessment by the due date constitutes non-submission and late penalties will apply.
• Name the worksheet tag(s) at the bottom of the Excel screen with the question number. Use a separate excel worksheet page for each question that needs to be completed in Excel.
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Question
Preparation of accounting records – using spreadsheets White Cleaning Services commenced operations on 1 July 2022. The company opened a cleaning business – providing cleaning services to local schools, preschools and childcare centres. During its first month of operations, the following transactions occurred:
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Additional information as at 31 July 2022:
• White Cleaning Services owes wages of $2,200 to employees, for services to 31 July.
• White 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 2022 amount to $2,100.
• White Cleaning Services provided cleaning services to ABC Public School on 28 July 2022, earning $500 of the $5,500 that was paid to White Cleaning Services on 25 July 2022.
Required:
1. Prepare the journal entries for the twelve transactions listed above that occurred during July 2022. (12 marks)
2. Prepare 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. (13 marks)
3. Based on the balances in the T-accounts above, prepare the ‘Unadjusted Trial Balance’ in an Excel spreadsheet. (3 marks)
4. Explain what the five types of adjusting entries are. Prepare all of the adjusting entries for Flash Cleaning Services as at 31 July 2022. (12 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 2022 (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. (20 marks)
6. Using the ten-column worksheet prepared above as your ‘data’, prepare the income statement, statement of changes in equity and classified balance sheet in Excel. Use formulas to generate all of the figures in the financial statements. (15 marks)
7. Calculate and evaluate the business’s current ratio and debt ratio. If White Cleaning Services repays the bank loan, how would these ratios change? Do you recommend that the bank loan is repaid? Why or why not. (9 marks)
Please also refer to the 'Requirements' section below for additional submission and spreadsheet requirements.
Spreadsheet requirements
For spreadsheet (EXCEL) questions, ensure that you adhere to the spreadsheet requirements.
- For good spreadsheet design, it is very important that you separate data from solution areas. A good spreadsheet solution allows the solution to be completely formula driven. There should be no data in the solution area.
- Where appropriate, use the 'IF function' to provide built in checks of balances, net profit/net loss etc.
Some excel tips:
To see the formula view in excel press: control + Tilde button (ctrl + `) Tilde button is the key below Esc key and above Tab key.
Additional marks (6 marks)
Overall presentation of work (Structure, adhering to the spreadsheet requirements, formatting, text boxes, and appropriate application of formulas).
Solution
Introduction
Financial specification and bookkeeping are proposed as the most useful thing for measuring the organizational performance. University assignment help, White Cleaning Services has commenced a business which is mainly provided cleaning services to school childcare centers during this month. Using the transaction, it can be proposed the journal entry, and other financial specifications within the period. The main aim of this study is to present bookkeeping for the company that can be useful for conducting the overall analysis within the period.
Q1: Journal entries
The presentation of journal entries is usually journalized by the transaction that has occurred within the business. Consideration of transactions has presented the inflow and also the outflow of cash and bank. It has provided the transaction for activities that happen in business operations. Analyzing the financial response, it can be presented the overall business activities for the time period (Gofwan, 2022). The cornerstone of the entire accounting process, journal entries enable the accurate categorization and recording of transactions into certain accounts. The equivalent credit to the capital account establishes the owner's ownership stake by acknowledging their capital investment in the company.
[Refer to appendix 1]
On the same day, a different transaction occurred in which $20,000 was deducted from the bank account and credited to the bank loan payable account. This item shows that the business took out a bank loan. Due to the loan amounts received, the bank account was debited, increasing the company's cash balance. On July 1, 2023, the corporation also made insurance-related payments. By deducting $3,600 from the Cash Account and crediting it to the Cash Account, this transaction is recorded. The rise in expenses brought on by the insurance payment is shown by the debit to the Insurance Expenses Account. The reduction in the company's cash balance as a result of the payment made is shown in the credit to the cash account. The company's operations officially begin with these initial transactions in the month of July 2023, which include the owner's investment, a bank loan, the purchase of a motor van, an insurance payment, and the buying of cleaning supplies. Each entry provides a financial snapshot of the business's early operations by reflecting changes in the company's assets, liabilities, and equity.
Q2: T-accountants
The implementation of the ledger has been implemented with the sources. The ledger is essential for logging and compiling financial activity from the journal. It offers a thorough account of every transaction, enabling a thorough examination of the business's financial operations. Information is arranged and classified into distinct accounts, such as assets, liabilities, equity, income, and expenses, by publishing journal entries to the ledger (Saidat et al. 2019). It starts with an opening balance of $0 for the Capital A/C. A debit entry for $30,000 is made on July 1 to reflect the owner's initial investment in the company. The capital raise for both the business and the owner is shown in this entry. There are no more transactions in the Capital A/C, thus the account closes with a balance of $30,000. [Refer to appendix 2]
The Bank Loan Payable A/C also has a zero opening balance which it has started the business. A debit entry of $20,000 is made on July 1 to reflect the company's bank loan. Additionally, there are credit entries for separate sales deposits of $500 and $5,500. The Sales Account closes with a $6,000 closing amount. The initial debit entry in the Motor Vehicle A/C is $18,000, which represents the cost of a motor van. There are no additional transactions, leaving a closing balance of $18,000. The initial debit entry for the Interest Paid A/C is $300, which represents the interest paid. There are no further transactions, leaving a $300 closing balance. Last but not least, the Advertising Cost A/C begins with a debit entry for $1,600, which represents the advertising payment. There are no additional transactions, leaving a closing balance of $1,600. Based on the provided journal entries, the T-account ledger clearly displays the various ledger accounts and their balances. It aids in comprehending financial activities and the effects they have on various accounts (Devie et al. 2020). The ledger analysis enables a thorough understanding of the business's financial status and supports the creation of accurate financial statements and the ability to make wise business decisions.
Q3: Unadjusted Trial Balance
The ledger accounts and their balances, both credit and debit, for a given period, are listed in the trial balance. Ensuring that the total debits and total credits balance out, it acts as a tool for confirming the accuracy of the accounting data. It has made an “unadjusted trial balance” with the help of the ledger account. Before creating the financial statements, the trial balance aids in finding any mistakes or anomalies in the ledger accounts. Summarizing the balances of all accounts, including assets, liabilities, equity, revenues, and expenses, it gives a quick overview of the company's financial situation. When the trial balance is examined, it can be seen that the Capital account has a debit amount of $30,000, which represents the owner's investment in the company. The amount borrowed from the bank is represented by a debit balance of $20,000 in the Bank Loan Payable account. The $3,600 debit amount in the Insurance Expenses account reflects the cost of insurance. The bank account's debit balance of $24,900 represents the amount of cash that the business has on hand. The available cash for the business is represented by the Cash Account's negative balance of $800.
The credit balance in the Account Payable account, which represents the sum owing to suppliers, is $2,400. The $1,600 debit balance in the Wages Account reflects the wages that have been paid to employees. The $400 debit amount in the bank interest account reflects the interest that was paid to the bank. A credit amount of $6,000 in the Sales Account represents the proceeds from sales. The cost of the cleaning supplies was paid for with a debit balance of $4,800 in the cleaning equipment account. The $2,400 debit amount in the supply account reflects the price of the supplies that were bought. The company's accounts and their corresponding balances are listed in the trial balance (Cho et al. 2019). It ensures that the debits and credits are equal as the first stage in the accounting process. Accountants and auditors can ensure the accuracy and dependability of the financial accounts by analyzing the trial balance to find any imbalances or mistakes in the financial records.
Q4: Adjusting Entries
The adjustment entries have been proposed in developing the overall sources. Considering the entries, it has presented the adjustment with the five entries.
Expenses that have been incurred but not yet paid or recorded are included under accrued expenses. Wages owing to workers for services rendered up until July 31 are included in the accrued expenditures in the case of White Cleaning Services. In order to recognize the cost of wages and the accompanying liabilities, an adjustment entry would be created. Recording of revenues that have been earned but not yet received or documented, these entries are made (Shakil et al. 2019). Invoices for cleaning services rendered in July have been sent out by White Cleaning Services, however, they have not yet been paid. The accrued service income would be recorded through an adjustment entry.
These entries are created to list expenses that have already been paid for but have not yet been incurred or utilized. Prepaid charges for White Cleaning Services are not mentioned in this scenario. In order to keep track of income that has been received in advance but have not yet been earned, these entries are made (Putra, 2019). Unearned income for White Cleaning Services is not mentioned in this case.
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Figure 1: Calculation
Q5: Ten-column worksheet
It has further intended to focus on preparing the worksheet explanation within this factor. Adopting the responses, it has applied the formula for which it has measured the expenses whether it will be profitable or loss-making (Pratt and Peters, 2020). In order to do so, it has considered the Excel function to perform the analysis. Consideration of the value has been defined as the current fluctuation within the expenses. A profit is also indicated by the bank loan payable account's credit balance of $20,000. However, a number of expense accounts, including those for insurance costs, bank accounts, cash, accounts payable, wages, bank interest, sales, cleaning equipment, supplies, interest paid, advertising costs, and motor vehicles, have negative balances, which denote losses. The sums debited in the corresponding expense accounts serve as a representation of these losses (Palepu et al. 2020). Overall, the data shows a mix of gains and losses, emphasizing the entity's financial condition and performance.
Q6: Financial statement
The financial statement is commonly prepared for exploring the current financial performance of a firm. Using the financial responses, it can be defined the income, and also a financial statement which has proposed the overall scenario within the business (Okafor et al. 2021). The statement has defined the overall financial value for the period.
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Figure 2: Calculation
White Cleaning Services' income statement can be examined to find out that the business earned $13,600 in revenue. The company's net income is $5,510 after different costs are subtracted, such as $300 in interest charges, $1,600 in advertising expenses, $190 in gasoline expenses, $3,800 in salary expenses, $100 in telephone expenses, and $2,100 in supply expenses. This shows that White Cleaning Services has generated a profit after deducting all necessary expenses, indicating its profitability.
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Figure 3: Calculation
White Cleaning Services' balance sheet as of July 31, 2022, provides a snapshot of the company's financial situation. The worth of the current assets as a whole is $37,700, which is made up of $27,900 in cash and cash equivalents, $5,000 in accounts receivable, $2,100 in supplies, and $2,700 in prepaid insurance. A motor vehicle with a value of $18,000 and cleaning equipment of $4,800 make up the non-current assets, which have a combined value of $22,800. White Cleaning Services's total asset value is $60,500. On the liabilities side, current liabilities total $2,500 and are made up of $300 in accounts payable and $2,200 in wages payable. A balance sheet for White Cleaning Services as of July 31, 2022, shows total assets worth $60,500 and total liabilities of $22,500. The business exhibits financial stability and the capacity to fulfill its immediate obligations thanks to its $38,000 in positive working capital. White Cleaning Services' financial performance is favourable overall.
Q7: Ratio calculation and analysis
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Figure 4: Calculation
The analysis of ratio is proposed as an indicator that is involved in analyzing the overall performance within the business. It is clear from examining White Cleaning Services' current ratio and debt ratio that the business demonstrates solid liquidity and a favorable debt situation (Uyar et al. 2020). The current ratio is calculated as the difference between current obligations ($2,500) and current assets ($37,700), which yields a ratio of 15.08. This shows that White Cleaning Services has a significant current asset cushion to meet its immediate obligations. With a current ratio of 15.08, the company demonstrates high liquidity and can readily fulfil short-term obligations. Furthermore, the debt ratio of 0.37 indicates that the company has an acceptable amount of debt in relation to its total assets. These ratios demonstrate responsible money management and a sound ratio of assets, liabilities, and equity. White Cleaning Services exhibits financial stability and a strong foundation for future growth and success in the cleaning services sector with a positive working capital of $38,000 and a stable debt position. Additionally, a debt ratio of 0.37 is obtained by subtracting total debt ($22,500) from total assets ($60,500). This shows that 37% of the company's total assets are in the form of debt. Overall, these statistics show that White Cleaning Services has a strong cash position and a manageable level of debt, indicating financial stability and a responsible approach to managing its obligations.
Conclusion
It can be concluded that financial performance of White Cleaning Services is higher from the trademark position. Financial variability has been defined within the business that are computed based on the financial data available within the business. Performing the financial responses, it can be proposed that the financial performance is better than the threshold point. It has prepared the financial statement and journal, ledger which has defined the daily activities within the business. Analyzing the daily activities, it can be considered the overall business performance based financial scenario presented.
Reference
Cho, S.J., Chung, C.Y. and Young, J., 2019. Study on the Relationship between CSR and Financial Performance. Sustainability, 11(2), p.343.
Devie, D., Liman, L.P., Tarigan, J. and Jie, F., 2020. Corporate social responsibility, financial performance and risk in Indonesian natural resources industry. Social Responsibility Journal, 16(1), pp.73-90.
Gofwan, H., 2022. Effect of accounting information system on financial performance of firms: A review of literature. DEPARTMENT OF ACCOUNTING (BINGHAM UNIVERSITY)-2nd Departmental Seminar Series with the Theme–History of Accounting Thoughts: A Methodological Approach. Vol. 2, No. 1.
Okafor, A., Adeleye, B.N. and Adusei, M., 2021. Corporate social responsibility and financial performance: Evidence from US tech firms. Journal of Cleaner Production, 292, p.126078.
Palepu, K.G., Healy, P.M., Wright, S., Bradbury, M. and Coulton, J., 2020. Business analysis and valuation: Using financial statements. Cengage AU.
Pratt, J. and Peters, M.F., 2020. Financial Accounting. John Wiley & Sons.
Putra, Y.M., 2019. Analysis of factors affecting the interests of SMEs using accounting applications. Journal of Economics and Business, 2(3).
Saidat, Z., Silva, M. and Seaman, C., 2019. The relationship between corporate governance and financial performance: Evidence from Jordanian family and nonfamily firms. Journal of Family Business Management, 9(1), pp.54-78.
Shakil, M.H., Mahmood, N., Tasnia, M. and Munim, Z.H., 2019. Do environmental, social and governance performance affect the financial performance of banks? A cross-country study of emerging market banks. Management of Environmental Quality: An International Journal.
Uyar, A., Kilic, M., Koseoglu, M.A., Kuzey, C. and Karaman, A.S., 2020. The link among board characteristics, corporate social responsibility performance, and financial performance: Evidence from the hospitality and tourism industry. Tourism Management Perspectives, 35, p.100714.
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