Reference no: EM132298799

Question 1

Retail operations and retail inventory

Spottie Ltd began business on 1 January 2018. The business will sell ‘Spot the dog' soft toys via an online store. The business is not registered for GST. The following transactions occurred during January 2018:

Date:	Details:
1 Jan	Spottie Ltd issued 10,000 x $2 shares to Mr Spot and Mrs Spot. $20,000 received from the share issue was deposited into the business bank account.
3 Jan	Inventory purchase (400 soft toys) from Plush Toys Ltd on account for $2,400 on terms of n/30.
6 Jan	Sale of inventory (160 soft toys) to Rainbow Preschool on account for $1,600 on terms of n/30.
9 Jan	Inventory purchase (300 soft toys) from Plush Toys Ltd via EFT for $2,100.
12 Jan	Paid Plush Toys Ltd for purchases made on 3 January, via EFT.
15 Jan	Received $1,600 from Rainbow Preschool in payment of their account.
20 Jan	Sale of inventory (200 soft toys) to Sydney Children's Hospital for $2,000 on terms of n/30.
22 Jan	Inventory purchase (150 soft toys) from Plush Toys Ltd on account for $1,050 on terms of 2/10, n/30.
24 Jan	Paid Plush Toys Ltd for purchases made on 22 January, via EFT.

25 Jan	Sale of inventory (200 soft toys) for $2,400 to online customers, with customers paying via EFT.
31 Jan	Mr & Mrs Spot completed a stocktake, and the number of soft toys on hand was 290.

Required:

i) Mr and Mrs Spot have heard of the two inventory methods - periodic and perpetual methods, and they have also heard of the terms ‘First-in-first-out' and ‘Weighted average cost', but don't really know anything more about them. Prepare a memo to Mr and Mrs Spot explaining each of these methods/terms.

ii) After Mr and Mrs Spot received your memo above, they both agree that the ‘First-in-first-out' method suits their business. They are still undecided about which inventory method should be used (either the perpetual or periodic methods), and have asked you to prepare journal entries for all of the company's transactions for January using the two different methods (using the ‘First-in-first-out' basis), so that they can see how the journal entries differ. Show workings where necessary.

Question 2

Retail operations

This question continues on from question 1 above.

It is now January 2019, and Mr and Mrs Spot have been very busy growing the business of Spottie Ltd over the last year. The business now stocks 20 inventory lines, and employs three full-time staff.

After using a manual accounting system in Excel for Spottie Ltd's business, Mr and Mrs Spot have come to you for advice as they consider moving to a computerised accounting system. They believe that they have been spending too much time preparing the accounting records, and a friend recommended that they make the move to ‘Xero' - an online accounting system.

Undertake some research into cloud-based accounting systems, and the ‘Xero' cloud- based accounting system.

Required:

Prepare a business report (for the directors of Spottie Ltd) on cloud-based accounting systems (explaining what they are and how they work), and the suitability of the Xero cloud-based accounting system to Spottie Ltd's business. In your discussion, explain how a computerised system like Xero can help the business track and account for inventory. Also highlight three other useful features of Xero that will be beneficial to Mr and Mrs Spot as they seek to save time preparing their accounting records, and monitor and grow their business further.

Note: You must reference using the APA referencing format, and include a reference list at the end of your report.

(Word count: 1000-1500 words)

Question 3

Internal controls - cash

This question continues on from question 1 and question 2 above.

It is now January 2020, and Mr and Mrs Spot have been very successful in growing the business of Spottie Ltd over the last 2 years. The business now stocks over 200 inventory lines, and employs six full-time staff.

As the business continues to grow, you strongly encourage Mr and Mrs Spot to review internal controls over cash receipts and cash payments in the business, to safeguard the business's money.

Mr and Mrs Spot are not overly concerned, as they have never had any issues with cash going missing or being stolen in the past.

Required:
Undertake some research online, looking at cases of employee fraud and/or supplier fraud in Australia. Prepare a letter to Mr and Mrs Spot - discussing the importance of internal controls, and addressing the following:

• Provide a brief overview of 2 recent cases of employee and/or supplier fraud in Australia, explaining how money was stolen from the business. Explain what internal controls could have been implemented to reduce the risk of the fraud occurring. Include a copy of an article relating each case with your letter (or provide website links to the articles in your letter) for Mr & Mrs Spot to review;

• To help Mr & Mrs Spot as they consider reviewing internal controls, outline three internal controls over cash receipts and three internal controls over cash payments that can be implemented in their business immediately. In your discussion, explain how each of these controls helps to reduce the risk of fraud or theft.

Question 4

Bank reconciliations and cash

The bank reconciliation for Party Supplies at 31 July 2018 is shown below:

Party Supplies Ltd
Bank reconcilition as at 31 July 2018
Cash balance as per bank statement		$17,900.00
Add: outstanding deposits		$100.00
		$18,000.00
Less: Unpresented cheques	Cheque amount
- Chq 126	$55.00
- Chq 130	$200.00
- Chq 131	$500.00	$755.00
Cash balance as per ledger		$17,245.00

The August 2018 bank statement appeared as follows:

Bank statement for August 2018:
Date            Description                  Deposit          Withdrawal           Balance
1/08/2018	Opening balance			$17,900.00
1/08/2018	Deposit	100.00		$18,000.00
2/08/2018	Deposit	300.00		$18,300.00
2/08/2018	Cheque 126		55.00	$18,245.00
2/08/2018	Cheque 131		500.00	$17,745.00
3/08/2018	Deposit	2,180.00		$19,925.00
3/08/2018	Cheque 133		430.00	$19,495.00
6/08/2018	Cheque 134		3,800.00	$15,695.00
9/08/2018	Deposit	5,800.00		$21,495.00
9/08/2018	Cheque 136		660.00	$20,835.00
12/08/2018	Deposit	1,332.00		$22,167.00
14/08/2018	Deposit	2,136.00		$24,303.00
14/08/2018	Cheque 137		500.00	$23,803.00
16/08/2018	Deposit	3,200.00		$27,003.00
19/08/2018	Deposit	550.00		$27,553.00
25/08/2018	Deposit	3,200.00		$30,753.00
25/08/2018	Cheque 139		3,140.00	$27,613.00
28/08/2018	Deposit	1,065.00		$28,678.00
29/08/2018	Cheque 140		200.00	$28,478.00
30/08/2018	Deposit	1,200.00		$29,678.00
31/08/2018	Bank fees		25.00	$29,653.00
31/08/2018	Interest	14.68		$29,667.68
31/08/2018	Closing balance			$29,667.68

Party Supplies Ltd's accounting records for August 2018 showed the following:

Cash payments journal:				Cash receipts journal:
					Amount
Date	Chq number	Amount		Date	banked
1/08/2018	132	$195.00
2/08/2018	133	$340.00		1/08/2018	$300.00
2/08/2018	134	$3,800.00		2/08/2018	$2,180.00
4/08/2018	135	$511.00		8/08/2018	$5,880.00
8/08/2018	136	$660.00		11/08/2018	$1,322.00
10/08/2018	137	$5,000.00		13/08/2018	$2,136.00
17/08/2018	138	$870.50		24/08/2018	$3,200.00
22/08/2018	139	$3,140.00		27/08/2018	$1,056.00
24/08/2018	141	$1,266.00		29/08/2018	$1,200.00
31/08/2018	142	$972.00		31/08/2018	$1,600.00
		$16,754.50			$18,874.00

The current balance in the ‘bank' ledger account (after the above receipts and payments have been entered) is: $17,245.00 + $18,874 deposits - $16,754.50 withdrawals = $19,364.50.

The company's bookkeeper has come to you for help, as she is having trouble reconciling the bank account at 31 August 2018.
The bank did not make any errors.

Required:
i) Prepare the bank reconciliation for Party Supplies Ltd at 31 August 2018.
ii) Prepare the journal entries to correct any errors made by Party Supplies Ltd, and to record transactions that have not yet been entered into the company's accounting records. (Note: The correction of any errors relating to the recording of cheques should be made to ‘Accounts payable'. The correction of any errors relating to deposits (other than interest received) should be made to ‘Accounts receivable'.)
iii) Prepare the ‘bank' ledger account (using the T-Account format) for August 2018, in order to determine the balance in the account after the above journal entries have been recorded and posted.

Question 5

Property, plant and equipment

Storm Ltd acquired an item of equipment on 1 July 2016 at a cost of $800,000. On 30 June 2017, Storm's directors decide to continue using the cost model for equipment. They elect to depreciate the equipment acquired on 1 July 2016 using the straight-line method, over its useful life of five years. The estimated residual value is $40,000.

The remaining useful life is revised on 1 July 2018 - estimated to be six years from 1 July 2018. The estimated residual value is also revised on this date - to $50,000.

The item of equipment is sold on 31 December 2019 for $500,000.

Required:

Prepare journal entries to account for all transactions that took place during the period 1 July 2016 to 31 December 2019, including entries for the acquisition of the equipment, depreciation for each year, and its disposal. Show all relevant dates, narrations and workings.

Rationale

This assessment task will assess the following learning outcome/s:

• be able to apply conceptual and technical aspects of accounting and prepare relevant business financial statements.
• be able to appraise the use of information technology including spreadsheet software in accounting problem solving, and evaluate the Internet as a professional resource.
• be able to demonstrate relevant business communication skills including report writing.
• be able to contextualise and evaluate accounting information for decision making purposes.

Assessment task 2 is designed to give you further opportunity to demonstrate knowledge and skills in more in-depth aspects of accounting and information systems including bank reconciliations, inventory systems, financial reports, accounting for non- current assets, as well as concepts and the application of spreadsheet software to the presentation and solution of accounting problems.

Requirements

Your assignment submission will consist of two files: a Word file and an Excel file. Paste the spreadsheet solutions and a formula view of each spreadsheet in the Word file, displaying row and column headings. Thus, your Word file will provide a complete answer to every question. The separate Excel file will provide a clear demonstration of correct spreadsheet structures. The pasted formula view may need to have adjusted column widths to display formulas correctly. Use portrait orientation wherever possible.

Spreadsheet requirements:

1. For good spreadsheet design, it is very important that you have completely separate data and solution/report areas. A good spreadsheet solution format is to key in the question in a structure which allows the solution to be completely formula driven. There should be no data in the report/solution area.

2. Name the worksheet tag(s) at the bottom of the Excel screen with the question number. Use a separate worksheet for each question that needs to be completed in Excel. See examples in the 'Spreadsheet Advice' PDF in the 'Resources' folder on Interact.

3. Where appropriate, use the 'IF function' to provide built in checks of balances, net profit/net loss etc.

4. We have provided spreadsheet examples to guide you in the 'Spreadsheet Advice' PDF document in Interact. Also consider using the spreadsheet templates available with your text and other online spreadsheet advice, but note that the text templates do not comply with all of the assignment spreadsheet requirements above.

Attachment:- Acc Systems and Processes.rar