Wesfarmers Group Financial Analysis and Recommendations

The assignment content provides information about Wesfarmers Group's financial statements and ratios. The content includes journal entries for determining bad debt, calculation of turnover ratio, and analysis of the company's profitability and sustainability. It also covers the statement of comprehensive income, dividend, per share earnings, return on equity, risk and risk alleviation, and sustainability. Additionally, the content provides information about Wesfarmers Group's business operations and financial statements, including the balance sheet, income statement, and working capital ratio.

Running head: ACCOUNTING SYSTEM AND PROCESS
Accounting system and process
Name of the University
Subject code and name ‘
Student Name and ID
Assignment Task Number
Author Note

1ACCOUNTING SYSTEM AND PROCESS
Table of Contents
Answer 1:................................................................................................................................................3
Answer 2:................................................................................................................................................3
Answer 3:................................................................................................................................................4
Answer 4:................................................................................................................................................4
Answer 5:................................................................................................................................................5
Answer 6:................................................................................................................................................5
Answer 7:................................................................................................................................................7
Answer 8:................................................................................................................................................9
Answer 9:..............................................................................................................................................10
Answer 10:............................................................................................................................................10
Answer 11:............................................................................................................................................10
Answer 12:............................................................................................................................................11
Answer 13:............................................................................................................................................11
References:............................................................................................................................................14

2ACCOUNTING SYSTEM AND PROCESS
Answer 1:
Though the names, the user can make the formulas much easier to maintain and understand.
The names can be used for function, cell range, table or constant (Brigham & Ehrhardt, 2013). Once
the cells are named, it can be used for audit, manage and update these cells.
Answer 2:
Negative numbers can be displayed through parentheses, minus sign or application of red
color. To present the negative numbers the range of cells or the particular cell must be selected first
and after that through pressing the CTRL+1, the currency or number shall be selected and finally
under the negative numbers, the negative number option shall be selected (Arnold, 2013). The
negative numbers are represented under bracket rather than with minus sign to represent it more
clearly.

3ACCOUNTING SYSTEM AND PROCESS
Answer 3:
It becomes simpler for the user of the spreadsheet to to enter the data appropriately under
different columns particularly for recording the inventory (Brigham, 2014). Further, the data area and
report area make the user able to differentiate the processed and unprocessed data through
differentiation of report area and data area.

4ACCOUNTING SYSTEM AND PROCESS
Answer 4:
Under excel, the IF function is utilized for analyzing some functions and establishing the fact
that whether the specified fact is fulfilled or not. It is regarded as the logical function under the
spreadsheet and that logical function may either be ‘FALSE’ or ‘TRUE’. It is TRUE when the
condition is fulfilled and vice versa (Bryce, 2017).
The following spreadsheet shows the example of an IF function under the normal view:
The IF function under the formula view can be shown as follows:
Answer 5:
Periodic systems of the inventory:

5ACCOUNTING SYSTEM AND PROCESS
It is the system of maintaining the inventories. Under the periodic inventory system, the
inventory level and the cost of goods sold details are not updated on continuous basis. Instead, the
sales and purchases transactions are recorded through the single journal entry at the closing of the
period (Baños-Caballero, García-Teruel & Martínez-Solano, 2014).
The example is given as follows:
Answer 6:
Fancy Footwear- 10 column-adjusted worksheet in the normal view:

6ACCOUNTING SYSTEM AND PROCESS
Fancy Footwear- 10 column-adjusted worksheet in the formula view:
Statement of Income as a normal view:

7ACCOUNTING SYSTEM AND PROCESS
Statement of Income as a formula view:

8ACCOUNTING SYSTEM AND PROCESS
Balance Sheet in normal view:

9ACCOUNTING SYSTEM AND PROCESS
Balance Sheet in formula view:

10ACCOUNTING SYSTEM AND PROCESS
The uses of the spreadsheet as an accounting tool:
 The user can make various calculation and solve different equations through the spreadsheet
formula
 Graphs and charts can be used to determine the trends
 Data for various financial statement can be compared
 The data can be formatted, hidden or edited through the spreadsheet (DRURY, 2013).
Answer 7:
Inventory in the normal view:

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The calculation of Gross Profit as a normal view:
Inventory as the formula view:
The calculation of the Gross Profit as the formula view:

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After making the changes in the data:
Inventory
Gross Profit
Answer 8:
The reconciliation of the bank in normal view:

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The reconciliation of bank as formula view:
After making the changes in the data:
Normal view:

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Answer 9:
The journal entries for the account receivables:
Date Particulars Debit ($) Credit ($)
1st April John account
To sales
5000
5000
1st April Account receivable
To John account
5000
5000
15th May Cash account
To accounts receivable
3000
3000
31st May Receivable allowance
To John
2000
2000
Answer 10:
Determination of bad-debt
The Write-off approach – as per this, the uncollectible amount of debt is adjusted against receivable’s
amount (Petty et al., 2015).
The journal entry for write-off of $ 5,000 can be shown as follows:
The Allowance approach – under this, the expected amount of uncollectible are forecasted at each
closing period.
In this approach, the journal entry prepared as follows:

15ACCOUNTING SYSTEM AND PROCESS
Answer 11:
If the company’s turnover ratio for account receivable is high, it indicates that the company’s
management is efficient with regard to collection of the amount from the debtors quickly, which it
turn represent a strong and healthy financial position.
Answer 12:
Entry of journals

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Answer 13:
1) Some of the businesses carried out by Wesfarmers group are -
 Retail stores related products
 Liquor and food business
 Commodities related to safety
 Commodities related to home improvement
 Commodities elated to Office improvement
 Energy products and commodities in relation to chemicals
2) Statement of comprehensive income:
The statement represents the profit that is to be contributed to the holding company. The
company; loss amounted to $ 78 million for the closing of the year dated 20th June 2016. The
statement presented that the amount related the foreign exchange transaction amounted to $ 15
million.
3) Items from the financial statement:
Dividend-
Dividend is accounted for only after the right to receive the dividend is formed. The company
is quite regular in paying the dividend. And for the year closing dated 30th June 2016 the payment of
dividend was $ 2600 million.
Per share earnings –
The diluted earnings and basic earnings per share of the company valued for the year ended
2016 was 36.2 cents. EPS is calculated by dividing the company’ profits by the weighted average
number of shares

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Return to equity-
Return on the equity is calculated as $407/$22949 = 0.018, which is considered as very poor
as compared to the industry average. The ratio also reveals that the company not efficient in creating
returns on the shareholder’s wealth (Drury, 2013).
Risk and risk’s alleviation-
Risk exists in the reliability, accuracy, completeness of the financial statement of the
company. Further, the company does not ensure that the statement is free from material misstatement,
error or fraud. To minimize the risk the company follows the interpretation of IFRS and conceptual
framework issued by AASB in the financial statement preparation.
Sustainability-
As the company is able to earn generate positive income consistently for past years and have
competitive advantages over the competitors, they are regarded as sustainable for long-run
(Wesfarmers.com.au, 2017).
Income statement-
the operating expenses are from the revenue to get EBIT figures and after that the interest and
tax expenses are deducted for getting the net profit
Balance sheet is divided in:
 Assets- non-current and current assets
 Liabilities- non-current and current liabilities
 Owner’s equity
4) Working Capital Ratio:
5) Profit after tax

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Advice for Vikram:

19ACCOUNTING SYSTEM AND PROCESS
Vikram can consider to invest in Wesfarmers Group as the company’s profitability and
sustainability is considered to be good.