Wesfarmers Limited: Analysis and Investment Advice

Wesfarmers Limited is a diversified company with operations in office improvements, departmental stores, industries, and safety. The comprehensive income statement shows a loss of $78 million for the period. Dividends were paid to shareholders, totaling $2.6 million. The return on equity (ROE) was 1.8%, indicating that the company is not earning well on its equity. Earnings per share (EPS) were calculated as $36.2%. To mitigate risk, Wesfarmers Limited does not guarantee the accuracy of financial information and follows the AASB conceptual framework. The company prioritizes sustainability and corporate governance, complying with ASX recommendations. Finally, it is advised that Vikram can invest his $50,000 in Wesfarmers Group due to its stable position and increasing net profit over five years.

Running head: ACCOUNTING SYSTEMS AND PROCESSES
Accounting systems and Processes
Name of the Student:
Name of the University:
Author Note:

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ACCOUNTING SYSTEMS AND PROCESSES
Table of Contents
Question 1........................................................................................................................................3
Question 2........................................................................................................................................3
Question 3........................................................................................................................................4
Question 4........................................................................................................................................5
Question 5........................................................................................................................................6
Question 6........................................................................................................................................7
Formula View:...............................................................................................................................10
Question 7......................................................................................................................................13
Question 8......................................................................................................................................18
Revised Data:.................................................................................................................................19
Question 9:.....................................................................................................................................19
Question 10....................................................................................................................................20
Question 11....................................................................................................................................21
Question 12....................................................................................................................................21
Question 13....................................................................................................................................22
Reference List................................................................................................................................26

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ACCOUNTING SYSTEMS AND PROCESSES

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ACCOUNTING SYSTEMS AND PROCESSES
Question 1
Naming cells in spreadsheets
In this question, it is required to discuss naming cells in spreadsheets. Here, cell
references are often replaced by names so that it is easy for understanding purpose as well as
correlating with the statement or in those case calculations (Zhang & Ni, 2016). Below is the
example of how to name cells in spreadsheets with proper justification:
Calculation of Gross Profit:-
Particulars Amount
Sales Revenue $15000
Less: Cost of Goods Sold $2000
GROSS PROFIT $13000
Question 2
Negative numbers
In this question, it is required to explain about negative numbers and how it is presented
in a spreadsheet (Song & Joo, 2015). The negative numbers are presented in bracket and
highlighted by red as shown in the below example:

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ACCOUNTING SYSTEMS AND PROCESSES
Question 3
Separation of data and report areas
It is important for an accountant to design spreadsheets with completely separate data
entry area and separate report area for minimize errors in the financial study. The design of
structure of spreadsheet can be termed as one of the significant mechanisms to ensure its success
both in terms of short-term and long-term. Spreadsheets help in providing unparalleled flexibility
as well as power for analyzing, enhancing, optimizing level of performance and decision-making
process in and across business enterprise. Spreadsheets can pose tremendous risks if it generates
incorrect information and leads to poor decisions. These risks can be eliminated by following
significant design as well as developmental practices (Reimers, 2013). Spreadsheet is an
important tool that makes the work easier to enter entries in systematic way under separate
columns and this is done at the time of recording of stocks.

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ACCOUNTING SYSTEMS AND PROCESSES
Question 4
IF functions
In this particular question, it is required to understand IF Statement or IF function that is
also known as logical function. By using this function, the user can set a command for
identifying whether any conditions are properly met or not. In that case, if the condition matches
with the command, then outcome would be as per the logical value. On the contrary, if the
condition fails to match with the command, then the outcomes would be different from the
logical value (Odar, Kavčič & Jerman, 2015).
PERIOD Particulars Amount Remarks
Jan'16
Sales Revenue, less,
Total Expenses 22000
=IF(C7>0,"NET
PROFIT","NET LOSS")
Feb'16
Sales Revenue, less,
Total Expenses -10000
=IF(C8>0,"NET
PROFIT","NET LOSS")

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ACCOUNTING SYSTEMS AND PROCESSES
Question 5
Periodic systems
Periodic inventory systems are one of the systems of inventory in which updates are
made on a periodic basis. In this particular inventory system, no effort is made for keeping
updated records of either the inventory or the cost of goods sold (Klychova, Faskhutdinova &
Sadrieva, 2014). In this particular system, inventories are updated at the end of each period rather
than each of the transaction of purchase or sales. To that, goods are made available for the
purpose of sale as well as calculated by adding the purchases with opening balances and the
closing balances.

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ACCOUNTING SYSTEMS AND PROCESSES
Question 6
Normal View:

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ACCOUNTING SYSTEMS AND PROCESSES

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ACCOUNTING SYSTEMS AND PROCESSES

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ACCOUNTING SYSTEMS AND PROCESSES
Formula View:

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ACCOUNTING SYSTEMS AND PROCESSES

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ACCOUNTING SYSTEMS AND PROCESSES
Particulars Amount Amount
Current Assets:
Cash =J8
Accounts Receivable =J9
Closing Inventory =F40
Supplies =J11
TOTAL CURRENT ASSETS =SUM(C95:C98)
Non-Current Assets:
Building =J12
Less: Accumulated Depreciation =-K13 =B102+B103
Furniture =J14
Less: Accumulated Depreciation =-K15 =B104+B105
TOTAL NON-CURRENT ASSETS =SUM(C103:C105)
TOTAL ASSETS =C99+C106
Current Liabilities:
Accounts Payable =K16
Salary Payable =K17
Interest Payable =K18
Unearned Sales Revenue =K19
TOTAL CURRENT LIABILITIES =SUM(C111:C114)
Non-Current Liabilities:
Notes Payable, Long Term =K20
TOTAL NON-CURRENT LIABILITIES =SUM(C116:C118)
TOTAL LIABILITIES =C119+C115
NET ASSETS =C108-C121
Equities:
Capital =K21
Add: Net Profit =K41
=B126+B127
Less: Drawings =-J22 =B128+B129
TOTAL EQUITIES =SUM(C125:C129)
for the period ended….
In the Books of Fancy Footwear
Balance Sheet

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ACCOUNTING SYSTEMS AND PROCESSES
Worksheet and financial reports
Spreadsheet is one of the accounting tools that help in making the calculation simple by
using appropriate and relevant formula. The cells can be made visible or hidden depends upon
the requirements of the user. In addition, the sheet can be formatted by using different font size,
texts and numbers based on the initial requirement. There are different graphs and charts that are
prepared under spreadsheet report by using data (Drury, 2013).
Question 7
Original Data:
Normal View:
Particulars
Average
Cost FIFO LIFO
Beginning Inventory $3,420 $3,420 $3,420
Net Purchases $7,790 $7,790 $7,790
Cost of Goods Available $11,210 $11,210 $11,210
Ending Inventory $7,583 $8,075 $7,250
Cost of Goods Sold $3,627 $3,135 $3,960
Calculation of Gross Profit:-
Particulars
Average
Cost FIFO LIFO
Sales Revenue $25,000 $25,000 $25,000
Less: Cost of Goods Sold $3,627 $3,135 $3,960
GROSS PROFIT $21,373 $21,865 $21,040
Calculation of Gross Profit:-

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ACCOUNTING SYSTEMS AND PROCESSES
Formula View:
Particulars Average Cost FIFO LIFO
Sales Revenue 25000 =B6 =C6
Less: Cost of Goods Sold 3627 3135 3960
GROSS PROFIT =B6-B7 =C6-C7 =D6-D7
Particulars Average Cost FIFO LIFO
Beginning Inventory 3420 3420 3420
Net Purchases 7790 7790 7790
Cost of Goods Available =B17+B18 =C17+C18 =D17+D18
Ending Inventory 7583 8075 7250
Cost of Goods Sold =B19-B20 =C19-C20 =D19-D20
Calculation of Gross Profit:-
Calculation of Gross Profit:-
Workings:
Date Unit
Cost per
Unit
Total
Amount Unit
Cost per
Unit
Total
Amount Unit
Cost per
Unit
Total
Amount
1-Oct 60 $57 $3,420
3-Oct 10.00 $65 $650 60 $57 $3,420
10 $65 $650
70 $58 $4,070
12-Oct 30 $70 $2,100 70 $58 $4,070
30 $70 $2,100
100 $62 $6,170
18-Oct 70 $72 $5,040 100 $62 $6,170
70 $72 $5,040
170 $66 $11,210
31-Oct 55 $66 $3,627 115 $66 $7,583
Inventory Ledger (Average Method):
Purchase Cost of Goods Sold Balance Inventory

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ACCOUNTING SYSTEMS AND PROCESSES
Date Unit
Cost per
Unit
Total
Amount Unit
Cost per
Unit
Total
Amount Unit
Cost per
Unit
Total
Amount
1-Oct 60 $57 $3,420
3-Oct 10 $65 $650 60 $57 $3,420
10 $65 $650
12-Oct 30 $70 $2,100 60 $57 $3,420
10 $65 $650
30 $70 $2,100
18-Oct 70 $72 $5,040 60 $57 $3,420
10 $65 $650
30 $70 $2,100
70 $72 $5,040
31-Oct 55 $57 $3,135 5 $57 $285
10 $65 $650
30 $70 $2,100
70 $72 $5,040
31-Oct 55 $3,135 115 $8,075
Inventory Ledger (FIFO Method):
Purchase Cost of Goods Sold Balance Inventory
Date Unit
Cost per
Unit
Total
Amount Unit
Cost per
Unit
Total
Amount Unit
Cost per
Unit
Total
Amount
1-Oct 60 $57 $3,420
3-Oct 10 $65 $650 60 $57 $3,420
10 $65 $650
12-Oct 30 $70 $2,100 60 $57 $3,420
10 $65 $650
30 $70 $2,100
18-Oct 70 $72 $5,040 60 $57 $3,420
10 $65 $650
30 $70 $2,100
70 $72 $5,040
31-Oct 55 $72 $3,960 60 $57 $3,420
10 $65 $650
30 $70 $2,100
15 $72 $1,080
31-Oct 55 $3,960 115 $7,250
Inventory Ledger (LIFO Method):
Purchase Cost of Goods Sold Balance Inventory

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ACCOUNTING SYSTEMS AND PROCESSES
Revised Data:
Particulars
Average
Cost FIFO LIFO
Beginning Inventory $4,320 $4,320 $4,320
Net Purchases $6,830 $6,830 $6,830
Cost of Goods Available $11,150 $11,150 $11,150
Ending Inventory $7,543 $7,190 $7,850
Cost of Goods Sold $3,607 $3,960 $3,300
Calculation of Gross Profit:-
Particulars
Average
Cost FIFO LIFO
Sales Revenue $25,000 $25,000 $25,000
Less: Cost of Goods Sold $3,607 $3,960 $3,300
GROSS PROFIT $21,393 $21,040 $21,700
Calculation of Gross Profit:-
Workings:
Date Unit
Cost per
Unit
Total
Amount Unit
Cost per
Unit
Total
Amount Unit
Cost per
Unit
Total
Amount
1-Oct 60 $72 $4,320
3-Oct 10.00 $68 $680 60 $72 $4,320
10 $68 $680
70 $71 $5,000
12-Oct 30 $65 $1,950 70 $71 $5,000
30 $65 $1,950
100 $70 $6,950
18-Oct 70 $60 $4,200 100 $70 $6,950
70 $60 $4,200
170 $66 $11,150
31-Oct 55 $66 $3,607 115 $66 $7,543
Inventory Ledger (Average Method):
Purchase Cost of Goods Sold Balance Inventory

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ACCOUNTING SYSTEMS AND PROCESSES
Date Unit
Cost per
Unit
Total
Amount Unit
Cost per
Unit
Total
Amount Unit
Cost per
Unit
Total
Amount
1-Oct 60 $72 $4,320
3-Oct 10 $68 $680 60 $72 $4,320
10 $68 $680
12-Oct 30 $65 $1,950 60 $72 $4,320
10 $68 $680
30 $65 $1,950
18-Oct 70 $60 $4,200 60 $72 $4,320
10 $68 $680
30 $65 $1,950
70 $60 $4,200
31-Oct 55 $72 $3,960 5 $72 $360
10 $68 $680
30 $65 $1,950
70 $60 $4,200
31-Oct 55 $3,960 115 $7,190
Inventory Ledger (FIFO Method):
Purchase Cost of Goods Sold Balance Inventory
Date Unit
Cost per
Unit
Total
Amount Unit
Cost per
Unit
Total
Amount Unit
Cost per
Unit
Total
Amount
1-Oct 60 $72 $4,320
3-Oct 10 $68 $680 60 $72 $4,320
10 $68 $680
12-Oct 30 $65 $1,950 60 $72 $4,320
10 $68 $680
30 $65 $1,950
18-Oct 70 $60 $4,200 60 $72 $4,320
10 $68 $680
30 $65 $1,950
70 $60 $4,200
31-Oct 55 $60 $3,300 60 $72 $4,320
10 $68 $680
30 $65 $1,950
15 $60 $900
31-Oct 55 $3,300 115 $7,850
Inventory Ledger (LIFO Method):
Purchase Cost of Goods Sold Balance Inventory

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ACCOUNTING SYSTEMS AND PROCESSES
Question 8
Original Data:
Normal View:
Date Particulars Amount
30/4 Bank Balance as per Pass Book $19,670
Add:
Deposit in Transit $1,543
EFT Insurance Payment $300
Book Error Cheque 1419 $340
NSF Cheque from Customer $1,700
Bank Service Charge $40 $3,923
$23,593
Less:
Outstanding Cheques 2462
EFT Rent Receipt 600
Note Receivable $1,500
$4,562
30/04 Cash Account Balance as of 30th April $19,031
Bank Reconcilaition Statement
As on 30th April
Formula View:
Date Particulars Amount
30/4 Bank Balance as per Pass Book 19670
Add:
Deposit in Transit 1543
EFT Insurance Payment 300
Book Error Cheque 1419 340
NSF Cheque from Customer 1700
Bank Service Charge 40 =SUM(D8:D12)
=E6+E12
Less:
Outstanding Cheques =1532+700+230
EFT Rent Receipt 600
Note Receivable 1500
=SUM(D15:D18)
30/04 =IF(E20>0,"Cash Account Balance as of 30th April","Bank Overdraft Balance as of 30th April") =E13-E18
Bank Reconcilaition Statement
As on 30th April

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ACCOUNTING SYSTEMS AND PROCESSES
Revised Data:
Date Particulars Amount
30/4 Bank Balance as per Pass Book $19,670
Add:
Deposit in Transit $1,882
EFT Insurance Payment $455
Book Error Cheque 1419 $325
NSF Cheque from Customer $2,021
Bank Service Charge $15 $4,698
$24,368
Less:
Outstanding Cheques 3373
EFT Rent Receipt 750
Note Receivable $1,214
$5,337
30/04 Cash Account Balance as of 30th April $19,031
Bank Reconcilaition Statement
As on 30th April
Question 9:
Dr. Cr.
Date Amount Amount
12/4/2017 Accounts Receivable A/c. Dr. $12,000
To, Sales A/c. $12,000
30/4/2017 Cash A/c. Dr. $6,000
To, Accounts Receivable A/c. $6,000
5/30/2017 Bad Debts Expenses A/c. Dr. $6,000
To, Accounts Receivable A/c. $6,000
15/6/2017 Cash A/c. Dr. $6,000
To, Bad Debt Recoveree A/c. $6,000
Particulars
In the Books of…
Journal Entries

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ACCOUNTING SYSTEMS AND PROCESSES
Question 10
Direct Write-Off Method:
In the Books of…
Journal Entries
Dr. Cr.
Date Particulars Amount Amount
10/5/2017 Bad Debts Expenses A/c. Dr. $8,500
To, Accounts Receivable A/c. $8,500
30/6/2017 Profit & Loss A/c. Dr. $8,500
To, Bad Debts Expenses A/c. $8,500
5/7/2017 Cash A/c. Dr. $8,500
To, Bad Debt Recoveree A/c. $8,500
Allowance Method:
In the Books of…
Journal Entries
Dr. Cr.
Date Particulars Amount Amount
10/5/2017 Bad Debts Expenses A/c. Dr. $8,500
To,
Provision for Doubtful
Debts A/c. $8,500
10/5/2017
Provision for Doubtful
Debts A/c. Dr. $8,500
To, Accounts Receivable A/c. $8,500
30/6/2017 Profit & Loss A/c. Dr. $8,500
To, Bad Debts Expenses A/c. $8,500
5/7/2017 Accounts Receivable A/c. Dr. $8,500
To,
Provision for Doubtful
Debts A/c. $8,500

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ACCOUNTING SYSTEMS AND PROCESSES
5/7/2017 Cash A/c. Dr. $8,500
To, Accounts Receivable A/c. $8,500
Question 11
Evaluation of a firm’s financial position
In order to understand the value of the company, it is important for the investors to look
at its financial position. The financial position of a company informs investors about the general
well-being. Financial statement analysis helps in providing information to the users. Analytical
measures help in assessing solvency as well as profitability. There is different type of analytical
measure that is dependent on the several factors such as size of the company, capital structure as
well as business activity types. These measures are useful for evaluating the financial results of
business as well as performance of management activities for predicting future performance.
Question 12
In the Books of…
Journal Entries
Dr. Cr.
Date Particulars Amount Amount
5/7/2017 Accounts Receivable A/c. Dr. $20,000
To, Sales A/c. $20,000
28/7/2017 Notes Receivables A/c. Dr. $20,000
To, Accounts Receivable A/c. $20,000
27/9/2017 Accounts Receivable A/c. Dr. $20,000
To, Notes Receivables A/c. $20,000
5/10/2017 Cash A/c. Dr. $20,000
To, Accounts Receivable A/c. $20,000

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ACCOUNTING SYSTEMS AND PROCESSES
Question 13
Work Integrated Assessment case study
Background of Wesfarmers Limited- In this particular case study, it is noted that
Wesfarmers Limited diversifies their business operations in areas such as office
improvements, departmental stores, industries and safety, home improvements as well as
energy and chemicals.
Comprehensive income statement- From the annual report of Wesfarmers Limited, it
shows profits as contributed to the parent member. To that, the income statement shows
translation reserve used for foreign currency as well as amount involved were $15 million
and shows cash flow from hedge reserve at the same time. Therefore, the comprehensive
loss of Wesfarmers Limited is for the period that amounts of $78 million.
Dividends are the amount that is treated as revenue where Wesfarmers Limited paid
$2600 million of dividend for the financial year 2016. Return on equity explain the
efficiency of the management by making use of equity financing for the operational fund
activities that are used by Wesfarmers Limited. Return on equity is net income divided by
shareholder’s equity.
Return on Equity
Net Income $407
Shareholder’s Equity $22949
Return on Equity 0.018
From the above table, it is understood that Wesfarmers Limited is earning only $0.018 on the
equity that is not good for the company.

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ACCOUNTING SYSTEMS AND PROCESSES
As far as earnings per share are concerned, both basic EPS and diluted earnings per share
arrive at 36.2% for the year 2016. In that case, basic EPS of Wesfarmers Limited is
calculated by dividing the amount of profits with the parent members by using weighted
average numbers for the ordinary share.
As far as risk and mitigation is concerned, Wesfarmers Limited does not guarantee that the
required information are present in the financial or annual report are free from material
misstated figures. In order to mitigate the risk, Wesfarmers Limited had not yet mentioned
any individual for preparation of financial report in accordance to AASB conceptual
framework.
As far as sustainability is concerned, Wesfarmers Limited is committed towards constantly
performing from past years as well as had some competitive advantages over its competitors
where Wesfarmers Limited can be sustainable for long run.
As far as Corporate Governance is concerned, Wesfarmers Limited complies with the
recommendations that are issued for date 27th of March 2014 as well as third edition of ASX
Corporate Governance.
In the Income statement, figures are mentioned regarding revenues, expenses that are
subtracted to get the figure of EBIT.
Balance sheet
Balance sheet is one of the financial statements that reveal the financial position of any
business enterprise. It has two different sections, assets and liabilities.
 Working capital ratio

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ACCOUNTING SYSTEMS AND PROCESSES
 Net Profit after tax

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ACCOUNTING SYSTEMS AND PROCESSES
 Advise to Vikram for investment- It is advisable to Vikram that he can invest his
$50,000 in Wesfarmers Group as the company is in stable position and net profit had
increased over past 5 years that reveals the fact that the company has the ability
generate more profits in the upcoming financial year.

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ACCOUNTING SYSTEMS AND PROCESSES
Reference List
Drury, C. M. (2013). Management and cost accounting. Springer.
Klychova, G. S., Faskhutdinova, М. S., & Sadrieva, E. R. (2014). Budget efficiency for cost
control purposes in management accounting system. Mediterranean journal of social
sciences, 5(24), 79.
Odar, M., Kavčič, S., & Jerman, M. (2015). The role of a management accounting system in the
decision-making process: evidence from a post-transition economy. Engineering
Economics, 26(1), 84-92.
Reimers, J. L. (2013). Financial Accounting: Pearson New International Edition: A Business
Process Approach. Pearson Higher Ed.
Song, H. N., & Joo, C. A. (2015). A Study on Elementary School Teachers' Awareness about
School Accounting Budget System Operation. Journal of Fisheries and Marine Sciences
Education, 27(1), 83-97.
Zhang, L., & Ni, G. A. (2016). Research on Accounting Information System Based on Business
Process. International Journal of Simulation--Systems, Science & Technology, 17(7).