Financial Analysis of Wesfarmers

This assignment focuses on a financial analysis of Wesfarmers, a large Australian conglomerate. It examines the company's statement of comprehensive income, including key metrics like ROE, EPS, and before-tax earnings. The analysis also calculates the working capital ratio and provides investment advice to Vikram based on Wesfarmers' financial performance.

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
Question 9:.....................................................................................................................................19
Question 10....................................................................................................................................20
Question 11....................................................................................................................................21
Question 12....................................................................................................................................21
Question 13....................................................................................................................................21
References:....................................................................................................................................25

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ACCOUNTING SYSTEMS AND PROCESSES
Question 1
The procedure of identifying the spreadsheet cells:
The process of replacing cell referencing with the help of names aid in creating formulas
that are understandable and can be maintained. The utilization of names would definitely support
users in up gradation, audit and management of the items. The primary purpose of referencing
cells could be very easily understood by using the names. Identification of the place or location
that aids in the realization of name without qualification refers to the scope of location (Fullerton
et al., 2014). The management of defined names in workbook can be done by using dialog box.
Gross Profit Computation:-
Particulars Amount
Revenue generated from sales $50000
Less: Goods sold cost $35000
GROSS PROFIT $20000
Question 2
The popular method of displaying negative numbers must be done in brackets by using minus
sign or by the process of red color highlight or by coloring it. Accountants highlighting negative

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ACCOUNTING SYSTEMS AND PROCESSES
numbers inside brackets very directly indicate credit entries and in times variables which are
unfavorable in organization are also used inside brackets.

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ACCOUNTING SYSTEMS AND PROCESSES
Question 3
In the process of creating a spreadsheet with an entirely different area for report and an
area for data entry, an accountant would definitely minimize or reduce the errors that are a
common happening in the case of financial reporting. Right management of data entry would
definitely be facilitated by this. Report and data entry area if done in separate areas then it would
help in removing mistakes and discrepancies. Incorrect and with error information that is
incorporated within spreadsheets will lead to tremendous risks in business. By creating a
spreadsheet the entry system would become more systematic in nature and the recording of data
would become much easy.
Question 4
IF function is a very popular function that is used in Excel and leads to a logical
comparison between expectations out of users and value.

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ACCOUNTING SYSTEMS AND PROCESSES
The advantages of using an IF function is that it provides a clear view of the information
and also performing function, that is why it can be put under the category of conditional
functioning. An user can very easily claim whether the conditions are met or not with the help of
the IF function. It is possible for a statement to have more than one result and the first result is of
a truthful comparison and the second result is about false comparisons. One of the major
advantages of IF function are valuation of errors and along with numbers and text. Utilizing
multiple functions of IF enable an user to make the comparison in a wider way.
PERIOD Particulars Amount Remarks
September'17
Sales Revenue, less,
Total Expenses 15600
=IF(C7>0,"NET
PROFIT","NET LOSS")
September'17
Sales Revenue, less,
Total Expenses -18700
=IF(C8>0,"NET
PROFIT","NET LOSS")
Question 5
Book keeping of inventory done on a periodic basis is called periodic inventory system. The
number of inventories when physically counted, in such an event the general ledger is updated
with the final balance of the inventories with the help of such inventory system. In purchase
account all the purchases are recorded that are done in between the counts of physical inventory
under periodic inventory system. The final cost of inventory is adjusted with the balance of the
purchase account. Under the provision of periodic inventory cost, the formula for calculating

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ACCOUNTING SYSTEMS AND PROCESSES
cost of goods sold is calculated by adding purchase and the starting inventory balance. The
formula for calculating the cost sold goods sold under the period inventory system are
Cost of goods sold= Opening inventory balance – closing inventory balance +
Purchase
For example the opening or starting balance of ABC Corporation is $98000 and the final
physical inventory count is recorded at $70000 and also a purchase of $120000 is done.
Opening balance= $ 25000
Purchase= $ 175000
Closing balance= $ 30000
COGS= ($ 25000 + $ 175000 - $ 30000) = $ 170000
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

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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
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:-
Formula View:

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ACCOUNTING SYSTEMS AND PROCESSES
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 $4,140 $4,140 $4,140
Net Purchases $6,150 $6,150 $6,150
Cost of Goods Available $10,290 $10,290 $10,290
Ending Inventory $6,995 $6,495 $7,320
Cost of Goods Sold $3,295 $3,795 $2,970
Calculation of Cost of Goods Sold:-
Particulars
Average
Cost FIFO LIFO
Sales Revenue $25,000 $25,000 $25,000
Less: Cost of Goods Sold $3,345 $3,795 $2,970
GROSS PROFIT $21,655 $21,205 $22,030
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 $69 $4,140
3-Oct 10.00 $63 $630 60 $69 $4,140
10 $68 $680
70 $69 $4,820
12-Oct 30 $58 $1,740 70 $69 $4,820
30 $58 $1,740
100 $66 $6,560
18-Oct 70 $54 $3,780 100 $66 $6,560
70 $54 $3,780
170 $61 $10,340
31-Oct 55 $61 $3,345 115 $61 $6,995
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 $69 $4,140
3-Oct 10 $63 $630 60 $69 $4,140
10 $63 $630
12-Oct 30 $58 $1,740 60 $69 $4,140
10 $63 $630
30 $58 $1,740
18-Oct 70 $54 $3,780 60 $69 $4,140
10 $63 $630
30 $58 $1,740
70 $54 $3,780
31-Oct 55 $69 $3,795 5 $69 $345
10 $63 $630
30 $58 $1,740
70 $54 $3,780
31-Oct 55 $3,795 115 $6,495
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 $69 $4,140
3-Oct 10 $63 $630 60 $69 $4,140
10 $63 $630
12-Oct 30 $58 $1,740 60 $69 $4,140
10 $63 $630
30 $58 $1,740
18-Oct 70 $54 $3,780 60 $69 $4,140
10 $63 $630
30 $58 $1,740
70 $54 $3,780
31-Oct 55 $54 $2,970 60 $69 $4,140
10 $63 $630
30 $58 $1,740
15 $54 $810
31-Oct 55 $2,970 115 $7,320
Purchase Cost of Goods Sold Balance Inventory
Inventory Ledger (LIFO Method):

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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 $3,000
EFT Insurance Payment $2,250
Book Error Cheque 1419 $450
NSF Cheque from Customer $4,000
Bank Service Charge $40 $9,740
$29,410
Less:
Outstanding Cheques $2,000
EFT Rent Receipt $1,500
Note Receivable $6,879
$10,379
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. $23,000
To, Sales A/c. $23,000
30/4/2017 Cash A/c. Dr. $11,500
To, Accounts Receivable A/c. $11,500
5/30/2017 Bad Debts Expenses A/c. Dr. $11,500
To, Accounts Receivable A/c. $11,500
15/6/2017 Cash A/c. Dr. $11,500
To, Bad Debt Recoveree A/c. $11,500
Particulars
In the Books of…
Journal Entries

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ACCOUNTING SYSTEMS AND PROCESSES
Question 10
Direct Write-Off Method:
Dr. Cr.
Date Amount Amount
10/5/2017 Bad Debts Expenses A/c. Dr. $8,125
To, Accounts Receivable A/c. $8,125
30/6/2017 Profit & Loss A/c. Dr. $8,125
To, Bad Debts Expenses A/c. $8,125
5/7/2017 Cash A/c. Dr. $8,125
To, Bad Debt Recoveree A/c. $8,125
In the Books of…
Journal Entries
Particulars
Allowance Method:
Dr. Cr.
Date Amount Amount
10/5/2017 Bad Debts Expenses A/c. Dr. $8,125
To,
Provision for Doubtful Debts
A/c. $8,125
10/5/2017
Provision for Doubtful Debts
A/c. Dr. $8,125
To, Accounts Receivable A/c. $8,125
30/6/2017 Profit & Loss A/c. Dr. $8,125
To, Bad Debts Expenses A/c. $8,125
5/7/2017 Accounts Receivable A/c. Dr. $8,125
To,
Provision for Doubtful Debts
A/c. $8,125
5/7/2017 Cash A/c. Dr. $8,125
To, Accounts Receivable A/c. $8,125
Particulars
In the Books of…
Journal Entries

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ACCOUNTING SYSTEMS AND PROCESSES
Question 11
Receivables are a potent option for assessing the financial position of a firm so that the
cash obligations are met. There is a relationship between accounts receivables and annual sales
which is established with the means of a financial ratio tool. Balances of accounts receivable
helps in evaluating the liquidity position of organization and their ability to pay off their
obligations. The ending balance of accounts receivables provide great support in assessing the
extent of liquidity of the firm. The capability of firms to provide necessary cash for meeting its
short-term obligations can be understood by observing the receivable accounts. Efficiency
position of the organization is another criteria that can be clearly understood by observing the
accounts receivables.
Question 12
Dr. Cr.
Date Amount Amount
5/7/2017 Accounts Receivable A/c. Dr. $5,500
To, Sales A/c. $5,500
28/7/2017 Notes Receivables A/c. Dr. $5,500
To, Accounts Receivable A/c. $5,500
27/9/2017 Accounts Receivable A/c. Dr. $5,500
To, Notes Receivables A/c. $5,500
5/10/2017 Cash A/c. Dr. $5,500
To, Accounts Receivable A/c. $5,500
In the Books of…
Journal Entries
Particulars

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ACCOUNTING SYSTEMS AND PROCESSES
Question 13
 Background of Wesfarmers:
Wesfarmers is engaged in a vast range of business activities such as chemicals, coals,
stores, convenience stores, home improvement and other industrial domain.
 Comment on statement of comprehensive income:
The financial year 2016, has revealed the total dividend payable to the shareholders of
Wesfarmers at a recorded amount of $2600 million. The net income when divided by
total shareholder’s equity gives the return on equity. ROE for financial year 2016 is
calculated at 0.018. In the financial year of 2016 the earnings per share of Wesfarmers
stood at 36.2%. The formula for obtaining earnings per share is obtained by dividing the
total amount of revenue with the by the ordinary number of shares. As it can be observed
there has been an increase in the earnings per share. The income statement also suggests
that the before tax earning and interest has decreased from $ 3759 million in 2015 to $
1346 in 2016 (Wesfarmers.com.au, 2017). When the figures are observed in the annual
report the concern regarding mitigation and risk, it has to be checked whether the figures
are materially misstated.
Sustainable maintenance of organization has aided in getting advantage of team
over its competitors. Recommendation of issues in regards to corporate governance
complies with Wesfarmers as far as corporate governance is concerned.
 Working capital ratio:
Current assets = $ 9684

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ACCOUNTING SYSTEMS AND PROCESSES
Current liabilities = $ 10424
Working capital ratio is obtained by dividing current assets by current liabilities and ratio for
year 2016 is recorded at 0.93.
 Net profit tax:
1 2 3 4 5 6
0
500
1000
1500
2000
2500
3000
Net profit after tax
Series1 Series2 Series3
 Advising Vikram for investment decisions:

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ACCOUNTING SYSTEMS AND PROCESSES
From the above study, it can be definitely concluded that organization has experienced an
increase in value of revenue earned and the firm is in stable position. Since the last few years,
organization has been capable of supplying sufficient profits and so it is advisable for Vikram to
invest his $ 50000. Such an amount if invested would surely fetch him sustainable returns.