T2, 2017 MPA 701 – Accounting
Assessment Task 3 (Part A) – Computerised and

Manual Practical Case Studies

DUE DATE AND TIME: Week 9, Friday 15 September 2017, 10pm (AEST)

PERCENTAGE OF FINAL GRADE: 15% + (5% part B, self-reflection task)

Learning Outcome Details
Unit Learning Outcome (ULO) Graduate Learning Outcome (GLO)
ULO 2_ Recognise financial transactions DGLO 1_ Discipline knowledge and capabilities:
and encode them using computer software appropriate to the level of study related to a
discipline or profession.
ULO 3_ Construct elementary financial DGLO 3_ Digital Literacy: using technologies to
reports via the recording of transactions find, use and disseminate information.
and the application of accrual methods.
DGLO 5_ Problem Solving: creating solutions to
authentic (real world and ill-defined) problems.
DGLO 6_Self-management: working and
learning independently, and taking
responsibility for personal actions

Assessment Feedback:

Students who submit their work by the due date will receive their marks and feedback on CloudDeakin within 15 working days.



Assessment 3 Case Study Data

Zen Drop Ltd is a company operating in the Homewares Retail and Wholesale sector. It exclusively distributes three varieties of essential oils in Australia: Tree Peace, Rain Wellness, and Dream Infusion. It imports its products from two foreign suppliers. All transactions are denominated in Australian dollars.

Rain Wellness and Dream Infusion are the best sellers, both were out of stocks at 30 June 2017. The inventory balance at 30 June 2017 reported below is for Tree Peace. The business uses the perpetual inventory method.

You have been recently appointed as an Accounts Assistant by Zen Drop Ltd. You are required to help the company set up a computerised accounting system using Xero, and produce the monthly financial statements for July 2017.

• Company details:

Address: 123 Deakin Lane, Burwood, VIC 3125

Financial Year End: June

• Bank details:

Account Name: Cash at Bank – Zen Drop Ltd

Banker: Deakin Bank

BSB: 555-666

Account Number: 54321

• The following shows the company’s Balance Sheet as at 30 June 2017:
Zen Drop Ltd
Balance Sheet as at 30 June 2017
Current Assets $ $ $
Cash at Bank 2,628,070
Accounts Receivable 3,222,010
Less Allowance for Doubtful Debt (600,000) 2,622,010
Inventory 200,000 5,450,080
Non-current assets
Office Building 5,500,000
Less Accumulated Depreciation – Office Building (300,000) 5,200,000
Equipment 290,000
Less Accumulated Depreciation- Equipment (56,000) 234,000 5,434,000
Total Assets 10,884,080
Current Liabilities
Accounts Payable 77,000
PAYG Withholdings Payable 40,000
GST 37,500 154,500


Zen Drop Ltd
Balance Sheet as at 30 June 2017 (Continued)
$ $ $
Non-current Liabilities
Loan 3,500,000
Equity
Issued Shares 4,129,500
Retained Earnings 3,100,080 7,229,580
Total Liabilities and Equity 10,884,080


• The details for the closing inventory at 30 June 2017 are as follow:

Item code Item name Quantity on Unit   Cost Amount Unit selling
Hand (excluding excluding GST price including
GST) GST
E1TP Tree Peace 100,000 $2 $200,000 $22.00

• Schedule of Accounts Receivable at 30 June 2017

Debtor Amount   (including Transaction Details
GST)
Dharmari Inc. $506,000 15  April,  n/30,  23,000  bottles  of
E1TP*$22
Tara Retail $1,770,010 28 June, n/60, 80,455 bottles of E1TP*$22
Malindo Therapy $946,000 30 June, n/60, 43,000 bottles of E1TP*$22
•   Schedule of Accounts Payable at 30 June 2017
Creditor Amount (including GST) Transaction Details
Jamila Supplies $77,000 28 June, n/60, 35,000 bottles of E1TP*$2.2
•   Transactions for the month of July 2017:
1. On 1 July, the company paid PAYG and GST outstanding to the Australian
Taxation Office.
2. On 1 July, the company purchased a motor vehicle from Fina Motors for
$55,000 (GST inclusive).
3. On 2 July, the company received cash from Tara Retail in full settlement of
the outstanding balance.
4. On 3 July, 24,000 bottles of E1TP were sold to Eason Pty Ltd on terms n/30.
5. On 4 July, the company paid for August advertising $11,000 (GST inclusive)
to Tomasi Marketing, and paid for three month insurance $13,200 (GST
inclusive) to Jasmine Insurance. The prepaid advertising and insurance
were initially recorded as an asset.
6. On 5 July, the company paid Jamila Supplies in full settlement of the
outstanding balance.



7. On 8 July, the company made the following purchase from Saba Ltd on terms n/30.
Item Item name Quantity Unit Cost Gross Unit
code Including Amount selling
GST including price
GST including
GST
E2RW Rain Wellness 100,000 $6.60 $660,000 $45.00
E3DI Dream Infusion 100,000 $4.40 $440,000 $38.00

8. On 13 July, the company returned 5,000 faulty bottles of E2RW to Saba Ltd and received a credit note.

9. On 14 July, the company paid two weeks wages to employees. Gross wages were $40,000 inclusive of $8,000 withheld for PAYG.

10. On 15 July, 30,000 bottles of E1TP, 20,000 bottles of E2RW, and 30,000 bottles of E3D1 were sold to Tony Inc., n/30.

11. On 16 July, the company issued $3,000,000 shares.

12. Dharmari Inc. has been declared bankrupt on 19 July.

13. On 21 July, the company received a cheque from Tony Inc. in full settlement of the outstanding balance.

14. On 24 July, Eason Pty Ltd returned 800 bottles of E1TP essential oils. A credit note was issued. The essential oils were returned to the Office building.

15. On 28 July, the company paid two weeks wages to employees. Gross wages were $40,000 inclusive of $8,000 withheld for PAYG.

16. On 31 July, the company paid July electricity of $1,440 (inclusive of GST) to Dhanya Electrica, July telephone and internet expense of $330 (inclusive of GST) to Anil Tele, and July warehouse rental of $22,000 (inclusive of GST) to Z-Industrial Properties.

17. On 31 July, the company paid Deakin Bank loan instalment of $60,500 (Principal $57,000 and interest $3,500).

18. On 31 July, the company received the bank statement that shows interest revenue of $4,300 being credited to the company’s account, and bank charges of $300 being debited from the company’s account. The company has not recorded these transactions.

• Additional information:

i. Depreciation is to be charged for motor vehicle at a rate of 20 per cent using the reducing balance method, with a zero residual value.

ii. Office building is depreciated using the straight line method assuming a useful life of 30 years and a residual value of $1,000,000.

iii. Equipment is depreciated using the straight line method assuming a useful life of 5 years and a residual value of $10,000.

iv. On 31 July wages owing, $24,000, of which $4,800 is PAYG Withholdings Payable.




v. Given the increasing market uncertainty, the company sets the July balance of Allowance for Doubtful Debt as $800,000.

Note: You are required to perform adjusting entries for this case. However closing entries are not required.

Requirements

Assessment Task 3 – Part A is in two sections.


PART A Section 1 (8%)

You are required to set up the computerised accounting system and record transactions using Xero software. You are required to submit the PDF file of an adjusted trial balance generated by XERO (i.e. the trial balance after you have conducted the
necessary adjusting entries).

• A Xero practice case and manual guide has been uploaded on Cloud Deakin. It is highly recommended that you view the document and go through the practice case before undertaking this section.

• Once you have signed up Xero, set up the company based on the information that

has been supplied in the case. Refer the practice case and manual guide on how to do this. Note that, for this assessment, you MUST enter the company name in the following format: Zen Drop Ltd – Your name (For example Zen Drop Ltd-Edwin Lim). Marks will be heavily penalised if you fail to do so.

• Go to General Settings and select financial settings. Make sure that the tax defaults for both sales and purchases should read “tax inclusive”.


• Click Chart of Accounts. Xero has suggested a range of accounts for your use. The account names may be slightly different to those you need to create when you are recording. This is okay, you do not need to standardise the names. Additional accounts will need to be added. To add new accounts, Click on new accounts and complete the necessary information.

• To generate the trial balance after recording all the transactions, go to Reports àAll Reports àTrial Balance (Under Accounting Section) àChoose date (31 July 2017) and Sort by Account Code àUpdate àSelect Export as PDF (Bottom right corner of the trial balance).

PART A Section 2 (7% )

You are required to submit a manual general journal entry. Record all the relevant July transactions (including adjusting entries) on the PROFORMA general journal provided. Dates and narrations are required. The PROFORMA document is located in
the ‘Assessment Task 3’ folder.