ACCY801 Business Accounting Report Oz Assignments

ACCY801 Business Accounting Report Oz Assignments

ACCY801 Business Accounting Report Oz Assignments

Introduction

A report has been prepared on the financial accounting cycle for Paul services as on 30 June 2016. It includes all the business concepts and all the steps for preparation and finalization of the books of accounts including the posting of the journal entries, posting them to the respective ledger accounts, preparing the unadjusted trial balance on the basis of the same, posting the adjustment entries at the end of the accounting period and preparing the adjusted trial balance. Post all this done the income thesis statement is being prepared and the closing journal entries is being passed for closing the books of accounts. Post all this, the balance sheet and the statement of changes in equity is being prepared at the end of the period and that marks the closure of books for an accounting period. Towards the end, the reason for preparing each of the reports and passing journal entries has been mentioned[ CITATION Gre17 \l 1033 ].

 Analysis and Calculation

The initial unadjusted trial balance of the given company as on 30th June has been shown below

Paul services Trial Balance As At 30 June 2016

Acc
No

Account Name

Unadjusted

Debit

Credit

101

Cash at Bank

48,100

 

105

Accounts Receivable

16,030

 

115

Supplies

1,480

 

120

Prepaid Insurance

2,960

 

135

Office Furniture

37,000

 

137

Acc. Depreciation. - Furniture

 

-

140

Office Equipment

74,000

 

141

Acc. Depreciation - Equipment

 

-

145

Store Equipment

111,000

 

146

Acc. Depreciation - Equipment

 

-

170

Automobile

148,000

 

171

Acc. Depreciation - Automobile

 

-

201

Accounts Payable

 

32,060

201

Interest Payable

 

48,090

201

Unearned revenue

 

18,500

201

Loan Payable

 

7,400

201

Mortgage Payable

 

148,000

201

Paul's Capital

 

48,898

201

Paul's Drawings

148

 

201

Revenue

 

148,000

201

Advertising Expense

1,000

 

201

Automobile Expense

5,775

 

201

Depreciation Expense - Furniture

-

 

201

Depreciation Expense - Equipment

-

 

201

Depreciation Expense - Store Equipment

-

 

201

Depreciation Expense - Automobile

-

 

201

Insurance Expense

800

 

201

Maintenance Expense

3,500

 

201

Miscellaneous Expense

1,155

 

201

Rent Expense

-

 

201

Supplies Expense

-

 

201

Utilities Expense

-

 

201

Interest Expense

-

 

Total

450,948

450,948

For the given year, the adjustment journal entries have been shown below:

Paul Services

Adjustment Journal Entries

Date

Particulars

Dr./Cr.

Amt

Amt

30-Jun

Interest Expense

Dr.

14,800

 

 

To Accrued Interest

 

Cr.

 

14,800

 

 

 

 

 

30-Jun

Insurance Expense

Dr.

2,368

 

 

To Prepaid Insurance

Cr.

 

2,368

 

 

 

 

 

30-Jun

Depreciation Expense - Furniture

Dr.

2,219

 

 

To Acc. Depreciation. - Furniture

Cr.

 

2,219

 

 

 

 

 

30-Jun

Depreciation Expense - Equipment

Dr.

5,370

 

 

To Acc. Depreciation - Office Equipment

Cr.

 

5,370

 

 

 

 

 

30-Jun

Depreciation Expense - Store Equipment

Dr.

4,370

 

 

To Acc. Depreciation - Store Equipment

Cr.

 

4,370

 

 

 

 

 

30-Jun

Depreciation Expense - Automobile

Dr.

6,521

 

 

To Acc. Depreciation - Automobile

Cr.

 

6,521

 

 

 

 

 

30-Jun

Revenue

Dr.

9,250

 

 

To Unearned Revenue

Cr.

 

9,250

 

 

 

 

 

The Trial balance post all the adjustments has been shown below:

Paul services Trial Balance As At 30 June 2016

Acc
No

Account Name

Unadjusted

Adjustments

Adjusted

Debit

Credit

Debit

Credit

Debit

Credit

101

Cash at Bank

48,100

 

 

 

48,100

 

105

Accounts Receivable

16,030

 

 

 

16,030

 

115

Supplies

1,480

 

 

 

1,480

 

120

Prepaid Insurance

2,960

 

 

2,368

592

 

135

Office Furniture

37,000

 

 

 

37,000

 

137

Acc. Depreciation. - Furniture

 

-

 

2,219

 

2,219

140

Office Equipment

74,000

 

 

 

74,000

 

141

Acc. Depreciation - Equipment

 

-

 

5,370

 

5,370

145

Store Equipment

111,000

 

 

 

111,000

 

146

Acc. Depreciation - Equipment

 

-

 

4,370

 

4,370

170

Automobile

148,000

 

 

 

148,000

 

171

Acc. Depreciation - Automobile

 

-

 

6,521

 

6,521

201

Accounts Payable

 

32,060

 

 

 

32,060

201

Interest Payable

 

48,090

 

14,800

 

62,890

201

Unearned revenue

 

18,500

 

9,250

 

27,750

201

Loan Payable

 

7,400

 

 

 

7,400

201

Mortgage Payable

 

148,000

 

 

 

148,000

201

Paul's Capital

 

48,898

 

 

 

48,898

201

Paul's Drawings

148

 

 

 

148

 

201

Revenue

 

148,000

9,250

 

 

138,750

201

Advertising Expense

1,000

 

 

 

1,000

 

201

Automobile Expense

5,775

 

 

 

5,775

 

201

Depreciation Expense - Furniture

-

 

2,219

 

2,219

 

201

Depreciation Expense - Equipment

-

 

5,370

 

5,370

 

201

Depreciation Expense - Store Equipment

-

 

4,370

 

4,370

 

201

Depreciation Expense - Automobile

-

 

6,521

 

6,521

 

201

Insurance Expense

800

 

2,368

 

3,168

 

201

Maintenance Expense

3,500

 

 

 

3,500

 

201

Miscellaneous Expense

1,155

 

 

 

1,155

 

201

Rent Expense

-

 

 

 

-

 

201

Supplies Expense

-

 

 

 

-

 

201

Utilities Expense

-

 

 

 

-

 

201

Interest Expense

-

 

14,800

 

14,800

 

Total

450,948

450,948

44,897

44,897

484,227

484,227

Below shown is the income statement for the company for the year ended 30th June 2016:

Paul Services

Income Statement

For the period ended 30th June 2016

Particulars

Amt ($)

Amt ($)

Revenue

 

138,750

Less: Expenses

 

 

Advertising Expense

1,000

 

Automobile Expense

5,775

 

Depreciation Expense - Furniture

2,219

 

Depreciation Expense - Equipment

5,370

 

Depreciation Expense - Store Equipment

4,370

 

Depreciation Expense - Automobile

6,521

 

Insurance Expense

3,168

 

Maintenance Expense

3,500

 

Miscellaneous Expense

1,155

 

Supplies Expense

1,110

 

Interest Expense

14,800

48,987

Net Profit

 

89,763

 

 

 

The journal entries at the time of closing of the books of accounts are mentioned below:

Paul Services

Closing Journal Entries

Date

Particulars

Dr./Cr.

Amt

Amt

30-Jun

Revenue Account

Dr.

138,750

 

 

To Profit and Loss Account

Cr.

 

138,750

 

 

 

 

 

30-Jun

Profit and Loss Account

Dr.

48,987

 

 

To Advertising Expense

Cr.

 

1,000

 

To Automobile Expense

Cr.

 

5,775

 

To Depreciation Expense - Furniture

Cr.

 

2,219

 

To Depreciation Expense - Equipment

Cr.

 

5,370

 

To Depreciation Expense - Store Equipment

Cr.

 

4,370

 

To Depreciation Expense - Automobile

Cr.

 

6,521

 

To Insurance Expense

Cr.

 

3,168

 

To Maintenance Expense

Cr.

 

3,500

 

To Miscellaneous Expense

Cr.

 

1,155

 

To Supplies Expense

Cr.

 

1,110

 

To Interest Expense

Cr.

 

14,800

 

 

 

 

 

30-Jun

Profit and Loss Account

Dr.

89,763

 

 

To Retained Earnings

Cr.

 

89,763

 

 

 

 

 

Below shown is the proft and loss account and the statement of changes in equity for the period 30th June 2016[ CITATION Fay17 \l 1033 ].

Paul Services

Balance Sheet

as on 30th June 2016

Particulars

Amt ($)

Amt ($)

Assets

 

-

Non Current Assets

 

 

Office Furniture

37,000

 

Acc. Depreciation. - Furniture

(2,219)

 

Office Equipment

74,000

 

Acc. Depreciation - Equipment

(5,370)

 

Store Equipment

111,000

 

Acc. Depreciation - Equipment

(4,370)

 

Automobile

148,000

 

Acc. Depreciation - Automobile

(6,521)

351,521

 

 

 

Current Assets

 

 

Cash at Bank

48,100

 

Accounts Receivable

16,030

 

Supplies

370

 

Prepaid Insurance

592

65,092

Total Assets

 

416,613

 

 

 

Equity & Liabilities

 

 

Non Current Liabilities

 

 

Loan Payable

7,400

 

Mortgage Payable

148,000

155,400

 

 

 

Current Liabilities

 

 

Accounts Payable

32,060

 

Interest Payable

62,890

 

Unearned revenue

27,750

122,700

 

 

 

Equity

 

 

Paul's Capital

48,898

 

Paul's Drawings

(148)

 

Proft for the year

89,763

138,513

Total Equity and Liabilities

 

416,613

 

 

 

Paul Services

Statement of Changes in Equity

As on 30th June 2016

Particulars

Amt ($)

Amt ($)

Equity

 

 

Paul's Capital

48,898

 

Less: Paul's Drawings

(148)

 

Add: Profit for the year

89,763

138,513

 

 

 

Total Equity at the end of year

 

138,513

 

 

 

Discussion on the requirements of internal reports

Trial Balance

A trial balance is the list of all the ledger accounts with the debit and credit balances listed alongside. It is prepared to check the arithmetical accuracy of the accounting being done throughout the year and in case the debit and the credit balances are not matching, it indicates that there is an error in accounting and the same needs to be revised. It is a prerequisite to the financial planning statement preparation and helps in the final closing of the books of accounts[ CITATION Vis17 \l 1033 ].

Adjustment Journal Entries

Adjustment journal entries are being passed to accommodate for the accounting, compensating or period errors, which might have occurred in the books of accounts, during the normal accounting, cycle[ CITATION Kuh16 \l 1033 ]. The types of errors, which may be included here, are like prepaid expenses, which might have been paid earlier during the year, but then the adjustment is being done now or the depreciation has not been posted for the different assets and the same is being done now. The common types of transactions include accrual of incomes or accounting for outstanding liabilities or prepaid incomes[ CITATION Lin17 \l 1033 ]. For a business, there are always a few transactions, which may start in a given year, but the same is not completed in current year and may just be carried to New Year. There comes the need of the adjustment entries in the books.

Adjusted Trial balance

Adjusted Trial balance is the final trial balance based on which the financial statements are being prepared[ CITATION Sit17 \l 1033 ]. It is the trial balance post adjustment of all the adjusting entries. It shows the debit and credit balances of all the accounts reconciled and thereby helping in the preparation of financial statements. It is always an internal document of the company and reported nowhere in the annual report, however, the financial statements including balance sheet, profit and loss account and equity statement is prepared based on this[ CITATION Fél17 \l 1033 ].

Closing Journal Entries

Closing journal entries are the ones, which are passed post the final trial balance is ready and are very different from the adjusting journal entries[ CITATION Boc16 \l 1033 ]. These are passed to transfer the balances from the temporary accounts to the permanent accounts, thereby making them zero. Temporary accounts are nothing but the income statement accounts whereas the permanent accounts are the balance sheet accounts that are being carried forward to the next year[ CITATION Das17 \l 1033 ].

References

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