Your task is to create a company, make changes as necessary to the chart of accounts, enter opening balances, record transactions over a one month period and print reports.
PART 1 – Creating the business
The business is a furniture wholesaler, located in or near Sydney. You stock indoor and/or outdoor furniture. You buy your stock from manufacturers and importers, and sell it to department stores and other retailers throughout NSW. You also sell directly to hotels and other businesses (e.g. offices).
Most sales are made on credit but there are a few smaller businesses or new customers that will pay cash. The business does not sell direct to the public.
When creating your business, use the following information:
Company name: Your name Furnishings (You can use just one name here. Your English name is okay if you prefer)
ABN: Your student number0000 (11 digits in all)
Address: Line 1 Your full enrolled name
Line 2 Your Student number and your tutor’s initials
e.g. Business name James Furnishings
Address James Le
Current financial year: 2014
Last month of financial year: June
Conversion month: March 2014 (This is the month in which the business converts to MYOB)
Number of accounting periods: 12
Chart of accounts: Start with one of the lists provided by MYOB from the Retail list.
PART 2 – Making changes to the chart of accounts and entering opening balances
Go to the Command Centre and from Accounts module, make changes as required to the chart of accounts. (Look at the trial balance on page 2 for required asset, liability and equity accounts).
Some points to note:
You need only 1 Sales Revenue account.
The business uses a perpetual inventory system.
GST is collected on all sales and paid when stock and other assets are purchased and also on most expenses. GST is not paid on wages, depreciation, bank fees or interest.
GST payable is calculated by MYOB as GST collected less GST paid. (Liability and contra liability).
The post closing Trial Balance on February 28 is below. These are the opening balances of the accounts on March 1.
|Cash at Bank||34,800|
|Accounts Receivable Control||54,560|
|Furniture and Fittings at Cost||10,300|
|Furniture and Fittings Accum Dep||3,800|
|Equipment at Cost||33,400|
|Equipment Accum Dep||14,020|
|Delivery Vehicles at cost||94,000|
|Delivery Vehicles Accum Dep||31,870|
|Accounts Payable Control||31,900|
|PAYG Withholding Payable||5,200|
Back up regularly using a logical sequence of file names. (E.g. CS1, CS2 etc).
PART 3 – Setting up suppliers, customers and inventory items
Setting up your Suppliers
Set up purchase defaults as follows:
Invoice type: Item (But remember, it is only the suppliers of inventory who will use this type of invoice. For others, use Miscellaneous.)
Expense account: Inventory (This is an asset account . Again, remember not all suppliers supply inventory. The expense account should relate to what is supplied).
You are to set up your suppliers with realistic names that reflect the type of business they are engaged in. These names are to be unique to your business. Addresses are not necessary but each is to have an 11 digit ABN.
The name and ABN of each of your suppliers must be entered onto the form provided at the end of the case study and the form must be submitted to Turnitin. It is recommended that you submit the form to Turnitin BEFORE you start recording transactions. The full 3 page Turnitin report is to be included with your hard copy submission.
Without the Turnitin report, your assignment will not be marked.
The business has 7 suppliers of goods and services on credit.
Suppliers 1 to 4 sell inventory items (furniture).
Supplier 5 provides telephone and and internet service .
Supplier 6 is an electricity company.
Supplier 7 is a computer service company. (They install and repair the office equipment as well as maintaining the business website. The expense is Equip & Software Maintenance).
The Accounts Payable balance on March 1 comprises the business’s historical purchases (purchases made before March 1).
The table below shows the amount owing to each supplier and the invoice date.
Note: Not all suppliers are owed money at March 1, but all 7 suppliers must be set up.
S07 is owed for 2 invoices and no money is owed to S02 .
Suppliers – Historical purchases
|Supplier code||Invoice date||Amount|
Setting up your Customers
There are 5 credit customers. You are to set up your customers with realistic names that reflect the type of business they are engaged in. These names are to be unique to your business. Addresses are not necessary but each is to have an 11 digit ABN.
The name and ABN of each of your customers must be entered onto the form provided at the end of the case study and the form must be submitted to Turnitin. It is recommended that you submit the form to Turnitin BEFORE you start recording transactions. A copy of the form and the Turnitin report are to be included with your hard copy submission.
Set up sales defaults as follows:
Invoice type: Item
Income account: Sales
Credit customers are retailers of furniture and others as mentioned in the introduction to this case study. Balances owed by credit customers are in the list of historical sales below.
Note: Not all customers owe for unpaid accounts but all 5 customers must be set up.
Customers – Historical sales
|Customer code||Invoice date||Amount|
You will also need to set up Cash Sales as a customer. There is no ABN as cash sales are made to a variety of customers. Remember: Cash is received when the sale is made.
Setting up your Inventory items
There are 6 inventory items. Each inventory item has a code (see the table below). You are to make up names for your inventory items and enter them into the items list.
The inventory items can be varied or of a single type. E.g. you may supply furniture for the whole house or you may specialise in outdoor furniture or in bedroom furniture or office furniture etc.
Do not use names of well known brands. Make them up. Be imaginative. The names you create are to be your own individual and unique names. Do not call a chair simply Chair. It must have a name to differentiate it from others. E.g. Nelson Rocker or Flame Garden Seat.
The name of each of your inventory items must be entered onto the form provided at the end of the case study and the form must be submitted to Turnitin. It is recommended that you submit the form to Turnitin BEFORE you start recording transactions. The full 3 page Turnitin report is to be included with your hard copy submission.
When setting up your inventory items, for the first item, you must tick:
I buy this item
I sell this item
I inventory this item
And specify accounts for each
Cost of sales account (Prefix 5)
Income account for tracking sales (Prefix 4)
Asset account for item inventory (Prefix 1).
After the first item, you don’t need to enter the account names again. Just tick the boxes.
Important: Enter the selling prices for each item as you set it up.
Other defaults you can set up on this screen:
GST is the tax code when sold (Selling details tab).
Prices are not tax inclusive. So in Selling details, ensure the Inclusive/exclusive box is not ticked.
GST is the tax code when bought (Buying details tab).
These also only need to be set up once. (Just for the first inventory item).
Enter the selling price for each inventory item as you set it up (Selling details tab). The selling prices do not include GST.
To enter opening balances of inventory items, use Inventory, Adjust inventory. The account for every item is Inventory Control. When you enter the Item number, Quantity and Unit cost, TAB past the amount as it calculates automatically and enter the Account code. (It is faster to enter the number here than using the drop down menu. When all opening balances are entered, the total must be the same as the Inventory Control balance in the trial balance on page 2.
Information relating to the inventory items and their opening balances at March 1 are in the table following.
|Cost price||Selling price|
PART 4 – Recording transactions
Now that the company is using MYOB, interim financial reports will be prepared every month, with full reports being published every 6 months, on June 30 and December 31. The first interim report will be prepared at the end of this month, on March 31.
Transactions for March follow.
GST applies to all sales and purchases of inventory. The cost of a purchase of inventory is GST inclusive. It also applies to most expenses. Exceptions are wages, depreciation, bank charges, interest received and interest paid. When a long lived asset (e.g. property, plant and equipment) is purchased, the code CAP (for capital acquisition) is used.
All payments are made by cheque. The next cheque number is 36111.
|Mar 1||Paid rent of $8,250 for the month. This includes GST.|
|Mar 1||Sold an old van for $18,000. The van originally cost $40,000 and had accumulated depreciation of $15,500.|
|Mar 2||Bought a new delivery van for $48,000. (This includes CAP tax of 10%. CAP is a GST code for capital asset purchases.)|
|Mar 2||Paid $105 for petrol. ( Motor Vehicle Expenses)|
|Mar 2||Paid $297 for a month’s advertising in the local trade journal. (Advertising expense)|
|Mar 3||Purchase from S02: 200 x P02 for $16,500 and 200 x P03 for $10,560.|
|Mar 4||Sale to C04: 20 x P03 and 30 x P05.|
|Mar 4||Purchase from S01: 50 x P01 for $11,550 and 300 x P05 for $16,500.|
|Mar 4||Cash sale: 5 x P01, 5 x P02 and 20 x P03.|
|Mar 4||Sale to C03: 20 x P03 and 20 x P05|
|Mar 5||Purchase from S04: 50 x P04 for $57,750|
|Mar 5||Sale to C05: 10 x P04|
|Mar 5||Received from C01 $4,488.|
|Mar 6||Purchase from S03: 50 x P06 for $23,650.|
|Mar 6||Sale to C03: 20 x P02, 10 x P04, 20 x P05 and 10 x P06.|
|Mar 7||Paid $264 for stationery. All stationery is expensed when purchased.|
|Mar 8||Paid S03 and S07 the amount owing at March 1.|
|Mar 8||Received an invoice from a cleaning company for $1,100. (including GST). This amount is for a thorough cleaning of the outside of the building and the delivery vans. This supplier needs to be set up. It is S08. This supplier does not need to be included on the Turnitin form.|
|Mar 9||Cash sale: 10 x P01, 30 x P02, 5 x P03 and 3 x P06.|
|Mar 9||Invoice from S07 for website maintenance $605.|
Transactions for March continued
|Mar 11||Paid $473 for legal fees.|
|Mar 11||Sale to C01: 50 x P03, 10 x P04 and 10 x P06|
|Mar 13||Paid $255 for petrol and oil for the motor vehicles.|
|Mar 13||Cash sale: 20 x P02, 40 x P05 and 5 x P06.|
|Mar 13||Wages expense recorded was $12,800. Paid $9,900 and recorded PAYG Payable of $2,900.|
|Mar 14||Sale to new customer, C06: 40 x P03 and 40 x P05. This customer needs to be set up but does not need to be included on the Turnitin form.|
|Mar 14||Sale to C05: 10 x P01, 10 x P02, 20 x P03, 20 x P05 and 5 x P06|
|Mar 14||Paid S05 and S06 the amounts owing at March 1.|
|Mar 18||Sale to C01: 10 x P02, 10 x P03, 5 x P04 and 5 x P06.|
|Mar 20||Cash sale: 12 x P03 and 12 x P05|
|Mar 20||Sale to C03: 40 x P02|
|Mar 20||Paid the GST owing as at March 1.|
|Mar 20||Paid the PAYG Withholding payable as at March 1|
|Mar 20||Paid S01 and S04 the amounts owing at March 1.|
|Mar 22||Reimbursed petty cash for the following expenses. GST is included unless otherwise stated. : Staff amenities $95 (No GST), staff amenities $428 (with GST), local travel fares $75.20, postage $88, couriers $77.|
|Mar 22||Cash sale: 2 x P04, 20 x P05, and 5 x P06.|
|Mar 25||Sale to C04: 20 x P01 and 36 x P05.|
|Mar 26||Received an invoice from S08 for $330. Paid $400 towards the amount owing.|
|Mar 26||Cash sale: 5 x P01, 20 x P02 and 20 x P05|
|Mar 27||Bought a photocopier (Equipment) for $1,320. (Tax is CAP).|
|Mar 27||Wages expense recorded was $14,600. Paid $10,400 and recorded PAYG Payable of $4,200|
|Mar 28||Cash sale: 20 x P03.|
|Mar 28||Sale to C02: 20 x P05 and 5 x P06.|
|Mar 29||Paid $820 for security service for March.|
|Mar 30||C05 paid the full amount owing .|
|Mar 31||Received account from S05 in the amount of $528|
|Mar 31||Received account from S06 in the amount of $341.|
PART 5 – Recording adjusting entries
- Depreciation to be charged on assets: (Record 1 month only and round to the nearest whole dollar.)
- Depreciation on equipment (except the new photocopier) is calculated at 40% per annum on the reducing balance.
- Depreciation on motor vehicles is calculated at 30% per annum on the reducing balance.
- Depreciation on furniture and fittings is calculated using the straight line method. The expected life is 10 years with no residual value
- The prepaid insurance at the beginning of March represents 4 months of insurance prepaid. Record insurance expired in March.
PART 6 – Printing reports
Reports to be submitted (in this order) with the cover sheet on top.
- Turnitin report (the one page form is the only thing to submit to Turnitin)
- General journal transaction journal for March (the whole month)
- Trial balance as at March 31.
- Profit and Loss statement (Accrual) for the month ended March 31.
- Standard balance sheet as at March 31.
- Purchases and payables transaction journal for March
- Payables ageing summary as at March 31
- Sales and receivables transaction journal for March
- Receivables ageing summary as at March 31
- Inventory items list summary as at March 31
The Turnitin form is on the next page. It is also included as a separate file in the MYOB folder.
Type the details of your suppliers, customers and inventory items onto this form.
Use these lists to create your suppliers, customers and inventory items in MYOB and for entering transactions..
Ensure the names you use are not recognisable names. Make them up. For the ABNs, do not use 11 111 111 111 or something similar.
The form is to be be submitted to Turnitin. The Turnitin report is 3 pages long. The report is to be the first thing behind your cover sheet.
As you print each report, tick it on the cover sheet. When all are printed, arrange them in the order specified behind the cover sheet and staple them together.
Complete this form in WORD, save it using your name as the file name and submit to Turnitin.
|Your full name|
|Your student number|
Complete this table by entering the name and the 11 digit ABN of each of your suppliers
|Supplier code||Supplier name||ABN|
Complete this table by entering the name and the 11 digit ABN of each of your customers
|Customer code||Customer name||ABN|
Complete this table by entering the name of each of your inventory items
Use the order calculator below and get started! Contact our live support team for any assistance or inquiry.[order_calculator]