Wesfarmers Limited Financial Analysis

This assignment analyzes the financial performance of Wesfarmers Limited using its annual report. It examines key financial ratios like return on equity, working capital ratio, and dividend payout. The analysis covers aspects such as net income, shareholder's equity, earnings per share, and corporate governance practices. It also provides a recommendation to an individual considering investing in the company.

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

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Table of Contents
Question 1........................................................................................................................................2
Naming cells in spreadsheets...........................................................................................................2
Question 2........................................................................................................................................2
Negative numbers............................................................................................................................2
Question 3........................................................................................................................................3
Separation of data and report areas..................................................................................................3
Question 4........................................................................................................................................4
IF Functions.....................................................................................................................................4
Question 5........................................................................................................................................5
Periodic systems..............................................................................................................................5
Question 6........................................................................................................................................6
Worksheet and financial reports......................................................................................................6
Question 7......................................................................................................................................12
Application of inventory flow assumptions...................................................................................12
Question 8......................................................................................................................................17
Bank Reconciliation.......................................................................................................................17
Question 9......................................................................................................................................18
Journalizing accounts receivable entries.......................................................................................18

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Question 10....................................................................................................................................19
Estimating bad debts......................................................................................................................19
Question 11....................................................................................................................................20
Evaluation of firm’s financial position..........................................................................................20
Question 12....................................................................................................................................21
Dishonor of a note receivable........................................................................................................21
Question 13....................................................................................................................................21
Work Integrated Assessment case study........................................................................................21
Reference List................................................................................................................................25

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Question 1
Naming cells in spreadsheets
A cell reference means a cell or a range of cells that is present on a spreadsheet as well as
can be used in a formula so that Microsoft Office Excel can be found values or data where
formula is calculated. It is important to discuss naming cells in spreadsheets. Cell references can
be replaced by names for the purpose of correlating the calculation (Zhang & Ni, 2016).
Calculation of Gross Profit:-
Particulars Amount
Sales Revenue $17000
Less: Cost of Goods Sold $5000
GROSS PROFIT $22000
Question 2
Negative numbers
Negative numbers can be represented by using minus sign or by highlighting it with red
color (Reimers, 2013). The first step is selecting the cell or range of cells that need to be

5ACCOUNTING SYSTEMS AND PROCESSES
formatted with a negative number style. The next step is pressing Ctrl+1 and then clicks on
number or currency. To that, under negative number, it is required to select an option for
negative numbers.
Question 3
Separation of data and report areas
Accountants design spreadsheets as it help in analyzing data as well as tracking
information for performing calculations for financial reporting purposes. Use of spreadsheet
provides flexibility needed for people for performing their job duties effectively. Spreadsheets
lack the imbedded data as well as logical security controls that are found in other applications.
For example, in a typical small or mid-sized business enterprise, hundreds of spreadsheets may
be incorporated into planning as well as reporting process. Spreadsheets support journal entries,
balances, transaction amounts as well as disclosures and other financial reporting elements. It

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supports key financial reporting controls for assessing risk potential (Odar, Kavčič & Jerman,
2015).
Question 4
IF Functions
IF Function is considered as one of the popular function of Microsoft Excel as it allows
individuals to make logical comparisons between values as well as what other expect. IF
function can have two results where the first result is if the comparison is true, then the second
result is false (Nobles, Mattison & Matsumura, 2013).
PERIOD Particulars Amount Remarks
Jan'16
Sales Revenue, less,
Total Expenses 22000
=IF(C7>0,"NET
PROFIT","NET LOSS")
Feb'16 Sales Revenue, less, -10000 =IF(C8>0,"NET

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Total Expenses PROFIT","NET LOSS")
Question 5
Periodic systems
Periodic inventory system is one of the inventory systems that updates inventory at the
end of each period of time. This inventory system helps in keeping track of inventory on periodic
basic. No effort is actually needed for keeping updated data records of either inventory or cost of
goods sold. This inventory system records the journal entries at the end of accounting period
(Klychova, Faskhutdinova & Sadrieva, 2014).

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Question 6
Worksheet and financial reports
Normal View

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Formula view

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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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Question 7
Application of inventory flow assumptions
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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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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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
Revised data

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Workings

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Question 8
Bank Reconciliation
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

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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
Revised
Question 9
Journalizing accounts receivable entries
In the Books of…
Journal Entries
Dr. Cr.
Date Particulars Amount Amount

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12/4/2017 Accounts Receivable A/c. Dr. $50,000
To, Sales A/c. $50,000
30/4/2017 Cash A/c. Dr. $25,000
To, Accounts Receivable A/c. $25,000
5/30/2017 Bad Debts Expenses A/c. Dr. $25,000
To, Accounts Receivable A/c. $25,000
15/6/2017 Cash A/c. Dr. $25,000
To, Bad Debt Recoveree A/c. $25,000
Question 10
Estimating bad debts
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. $12,500
To, Accounts Receivable A/c. $12,500
30/6/2017 Profit & Loss A/c. Dr. $12,500
To, Bad Debts Expenses A/c. $12,500
5/7/2017 Cash A/c. Dr. $12,500
To, Bad Debt Recoveree A/c. $12,500
Allowance method

22ACCOUNTING SYSTEMS AND PROCESSES
In the Books of…
Journal Entries
Dr. Cr.
Date Particulars Amount Amount
10/5/2017 Bad Debts Expenses A/c. Dr. $12,500
To,
Provision for Doubtful
Debts A/c. $12,500
10/5/2017
Provision for Doubtful
Debts A/c. Dr. $12,500
To, Accounts Receivable A/c. $12,500
30/6/2017 Profit & Loss A/c. Dr. $12,500
To, Bad Debts Expenses A/c. $12,500
5/7/2017 Accounts Receivable A/c. Dr. $12,500
To,
Provision for Doubtful
Debts A/c. $12,500
5/7/2017 Cash A/c. Dr. $12,500
To, Accounts Receivable A/c. $12,500
Question 11
Evaluation of firm’s financial position
Before investing in any company, the investors need to gather proper information about
the financial position of the company. There are different financial statement that is unique to
each other such as Income Statement, Balance Sheet and Cash flow statement. Here, income
statement explains about expenses and income that are incurred by companies. Balance sheet
shows financial position of a company. Cash flow statement explains cash inflows and outflows
of a particular business enterprise (Grabinskia, Kedziora & Krasodomska, 2014).

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Question 12
Dishonor of a note receivable
In the Books of…
Journal Entries
Dr. Cr.
Date Particulars Amount Amount
5/7/2017 Accounts Receivable A/c. Dr. $15,000
To, Sales A/c. $15,000
28/7/2017 Notes Receivables A/c. Dr. $15,000
To, Accounts Receivable A/c. $15,000
27/9/2017 Accounts Receivable A/c. Dr. $15,000
To, Notes Receivables A/c. $15,000
5/10/2017 Cash A/c. Dr. $15,000
To, Accounts Receivable A/c. $15,000
Question 13
Work Integrated Assessment case study
In this particular question, proper explanation is given about the Australian retail
company named as Wesfarmers Limited. This company is listed in Australian Stock Exchange
and operates in diversified areas such as retail, industries and safety, office improvements,
energy and chemicals (Gomes, Fernandes & Carvalho, 2015).
Information is gathered from the annual report of Wesfarmers Limited as it shows profit
attributable to the parent member. The company uses foreign currency that amounts $15 million

24ACCOUNTING SYSTEMS AND PROCESSES
and indicate cash flow from hedge reserve. Therefore, it is understood that the company is
incurring loss amounting to $78 million.
In case of dividend, the company paid around $2600 million of dividend for the financial
year 2016.
Return on Equity
Net Income $407
Shareholder’s Equity $22949
Return on Equity 0.018
From the annual report of Wesfarmers Limited, it is understood that the company is
earning only $0.018 on the equity that is not at all good for long run.
Wesfarmers Limited has earnings per share at 36.2% through use of weighted average
numbers for the ordinary share.
In case of risk and mitigation management, the company will never disclose that their
financial statement contains material misstated figures. The company had not yet given
responsibility to any individual to prepare financial statement that compiles with AASB
conceptual framework (Drury, 2013).
In case of Corporate Governance, the company actually compiles with the
recommendations in accordance to third edition of ASX Corporate Governance.

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Working capital ratio
Net profit after tax

26ACCOUNTING SYSTEMS AND PROCESSES
It is suggested to Vikram that he should invest his money worth of $50,000 in
Wesfarmers Limited as the company is in stable position as well as net profit increased over past
5 years. It is noted that Wesfarmers Limited has the ability to generate profits in the next
financial year.

27ACCOUNTING SYSTEMS AND PROCESSES
Reference List
Drury, C. M. (2013). Management and cost accounting. Springer.
Gomes, P. S., Fernandes, M. J., & Carvalho, J. B. D. C. (2015). The international harmonization
process of public sector accounting in Portugal: the perspective of different
stakeholders. International Journal of Public Administration, 38(4), 268-281.
Grabinskia, K., Kedziora, M., & Krasodomska, J. (2014). The Polish accounting system and
IFRS implementation process in the view of empirical research. Accounting and
Management Information Systems, 13(2), 281.
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.
Nobles, T. L., Mattison, B. L., & Matsumura, E. M. (2013). Horngren's Financial & Managerial
Accounting: Pearson New International Edition. Pearson Higher Ed.
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.
Zhang, L., & Ni, G. A. (2016). Research on Accounting Information System Based on Business
Process. International Journal of Simulation--Systems, Science & Technology, 17(7).

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