Financial Analysis Assignment: Journal Entries, Inventory, and SAP

This financial analysis assignment provides detailed solutions to several accounting problems. It includes journal entries for Jassal Music Inc., covering prepaid expenses, rental income, cash transactions, and asset exchanges. An inventory schedule for Allegro Music is presented, with cost, net realizable value, and LCNRV calculations. The assignment also addresses bad debt expense calculations for Sensational Aqua sports Corp., including the allowance for doubtful accounts. Additionally, journal entries for Gidget's Development Corp. are provided for multiple years, along with an accounts payable reconciliation. Lastly, the assignment includes sales journal entries and warranty obligation calculations for Luke's Car Crop, and discusses the implementation of SAP systems for Serenity Spa Vacation Inc., highlighting the importance of aligning operations and policies for effective financial management. All calculations are presented in tables with clear explanations.

FINANCIAL ANALYSIS

Introduction
Question 1:
Calculation for Journal entry in Jassal Music Inc in 31 December 20X4
Particulars Amount (Dr.) Amount (Cr.)
Prepaid Expenses A/c …………………………Dr. $ 25,500.00
To Insurance A/c $ 25,500.00
(Being business insurance paid was recorded as prepaid
expenses, now rectified)
Prepaid Rent Income A/c …………………………Dr. $ 80,000.00
To Rental Income A/c $ 80,000.00
(Being company rented instrument to school with
approprate contract from (September to June). Advance
was paid that was recorded as only rental income, now
rectified)
Cash A/c …………………………………………Dr. $ 6,300.00
To Installment from Ryan A/c $ 6,000.00
To Interest received A/c $ 300.00
(Being goods sold in installment whose first installment
was due, now paid with the addition installment as per the
market rate)
Computer System A/c …………………………..Dr. $ 1,800.00
To Sales A/c $ 1,650.00
To Profit and loss A/c $ 150.00
(Being violin was sold by Jassal and in exchange computer
system was obtained)
Total $ 113,600.00 $ 113,600.00
Table 1: Calculation for Journal entry in Jassal Music Inc in 31 December 20X4
(Source: Created by author)
Question 2:

Calculation for inventory schedule in Allegro Music
Inventory items
Number
of units-
year end Cost Per unit Total cost
NRV per
unit Total NRV LCNRV
Chime Set 3
$
750.00
$
2,250.00
$
790.00
$
2,370.00
$
2,250.00
Cymbals 4
$
70.00
$
280.00
$
85.00
$
340.00
$
280.00
Drum sets 3
$
450.00
$
1,350.00
$
525.00
$
1,575.00
$
1,350.00
Flutes 5
$
650.00
$
3,250.00
$
775.00
$
3,875.00
$
3,250.00
Violins 3
$
1,500.00
$
4,500.00
$
1,650.00
$
4,950.00
$
4,500.00
Guitars 7
$
62.00
$
434.00
$
45.00
$
315.00
$
315.00
Guitars - acoustic 9
$
125.00
$
1,125.00
$
132.00
$
1,188.00
$
1,125.00
Guitars - electric 12
$
190.00
$
2,280.00
$
225.00
$
2,700.00
$
2,280.00
Keyboard 4
$
2,200.00
$
8,800.00
$
2,100.00
$
8,400.00
$
8,400.00
Piano - entry 3
$
2,300.00
$
6,900.00
$
2,500.00
$
7,500.00
$
6,900.00
Piano -
introductory 5
$
4,500.00
$
22,500.00
$
4,900.00
$
24,500.00
$
22,500.00
Piano -
intermediate 2
$
12,000.00
$
24,000.00
$
14,200.00
$
28,400.00
$
24,000.00
Piano -
professional 1
$
22,500.00
$
22,500.00
$
25,000.00
$
25,000.00
$
22,500.00
Piano - uprights 2 $ $ $ $ $

5,000.00 10,000.00 7,500.00 15,000.00 10,000.00
Recorder 25
$
7.00
$
175.00
$
10.00
$
250.00
$
175.00
Saxophones 3
$
575.00
$
1,725.00
$
675.00
$
2,025.00
$
1,725.00
Triangles 5
$
55.00
$
275.00
$
65.00
$
325.00
$
275.00
Xylophones 4
$
245.00
$
980.00
$
300.00
$
1,200.00
$
980.00
Total
$
113,324.00
$
129,913.00
$
112,805.00
Table 2: Calculation for inventory schedule in Allegro Music
(Source: Created by author)
Question 3:
Calculation for journal entry for Sensational Aqua sports Corp.
Particulars Amount (Dr.) Amount (Cr.)
Allowance for Doubtful Account A/c ……...Dr. $ 1,895.00
To Account Receivables A/c $ 1,895.00
(Being recovery of account receivables was written off
in 20X3)
Bad Debt Expenses A/c ……………………Dr. $ 13,100.00
To Account receivables A/c $ 12,100.00
To Provision for bad debt A/c $ 1,000.00
(Being provision for estimated bad debt expenses was
made based on credit sales)
Allowance for Doubtful Account A/c ……...Dr. $ 31,304.00
To Account Receivables A/c $ 31,304.00
(Being written off balance for Allowance for doubtful

account)
Total $ 46,299.00 $ 46,299.00
Table 3: Calculation for journal entry for Sensational Aqua sports Corp.
(Source: Created by author)
Calculation for Allowance for doubtful account in Sensational Aqua sports
Corp.
Particulars
Summary aged at
31/12/20X3
% of
allowance
provided Total allowance
1-30 days $ 985,900.00 1% $ 9,859.00
31-60 days $ 352,500.00 5% $ 17,625.00
61-90 days $ 25,700.00 10% $ 2,570.00
> 90 days $ 5,000.00 25% $ 1,250.00
Total $ 31,304.00
Table 4: Calculation for Allowance for doubtful account in Sensational Aqua sports Corp.
(Source: Created by author)
Question 4:
Calculation for Journal entries in Gidget's Development Corp. in 20X5
Particulars Amount (Dr.) Amount (Cr.)
Expense A/c ………………………………….Dr. $ 7,000.00
To Account payable A/c $ 7,000.00
(Being cost incurred during the year in Gidget's
Development Corp. in 20X5)
Progress Billing A/c ……………………..……Dr. $ 8,500.00
To Account payable A/c $ 8,500.00
(Being Progress billing made during 20X5 in Gidget's
Development Corp.
Cash A/c …………………………………….Dr. $ 6,900.00

To Account payable A/c $ 6,900.00
(Being cash collection was made in 20X5 for Gidget's
Development Corp.)
Total $ 22,400.00 $ 22,400.00
Table 5: Calculation for Journal entries in Gidget's Development Corp. in 20X5
(Source: Created by author)
Calculation for Journal entries in Gidget's Development Corp. in 20X6
Particulars Amount (Dr.)
Amount
(Cr.)
Expense A/c ………………………………….Dr. $ 12,000.00
To Account payable A/c $ 12,000.00
(Being cost incurred during the year in Gidget's
Development Corp. in 20X6)
Progress Billing A/c ……………………..……Dr. $ 13,500.00
To Account payable A/c $ 13,500.00
(Being Progress billing made during 20X6 in Gidget's
Development Corp.
Cash A/c …………………………………….Dr. $ 12,600.00
To Account payable A/c $ 12,600.00
(Being cash collection was made in 20X6 for Gidget's
Development Corp.)
Total $ 38,100.00 $ 38,100.00
Table 6: Calculation for Journal entries in Gidget's Development Corp. in 20X6
(Source: Created by author)

Calculation for Journal entries in Gidget's Development Corp. in 20X7
Particulars Amount (Dr.) Amount (Cr.)
Expense A/c ………………………………….Dr. $ 6,500.00
To Account payable A/c $ 6,500.00
(Being cost incurred during the year in Gidget's
Development Corp. in 20X7)
Progress Billing A/c ……………………..……Dr. $ 3,000.00
To Account payable A/c $ 3,000.00
(Being Progress billing made during 20X7 in Gidget's
Development Corp.
Cash A/c …………………………………….Dr. $ 5,500.00
To Account payable A/c $ 5,500.00
(Being cash collection was made in 20X7 for Gidget's
Development Corp.)
Total $ 15,000.00 $ 15,000.00
Table 7: Calculation for Journal entries in Gidget's Development Corp. in 20X7
(Source: Created by author)
Dr. Accounts Payable A/c Cr.
Date Particulars Amount Date Particulars Amount
20X5 20X5
By Expense A/c
$
7,000.00
By Progress Billing A/c
$
8,500.00
To Balance c/d $22,400.00 By Cash A/c
$
6,900.00
Total $22,400.00 Total
$
22,400.00
20X6 20X6

By Balance b/d
$
22,400.00
By Expense A/c
$
12,000.00
By Progress Billing A/c
$
13,500.00
To Balance c/d $60,500.00 By Cash A/c
$
12,600.00
Total $60,500.00 Total
$
60,500.00
20X7 20X7
By Balance b/d
$
60,500.00
By Expense A/c
$
6,500.00
By Progress Billing A/c
$
3,000.00
To Balance c/d $75,500.00 By Cash A/c
$
5,500.00
Total $75,500.00 Total
$
75,500.00
Table 7: Calculation for Accounts Payable A/c in Gidget's Development Corp
(Source: Created by author)
Question 5:
Calculation for Sales journal entries in Luke's Car Crop (LCC)
Particulars Amount (Dr.) Amount (Cr.)
Cash A/c ……………………………..Dr $ 1,000,000.00
Warranty A/c………………………….Dr $ 35,000.00
To Sales A/c $ 1,035,000.00

(Being five cars were sold to the wealth family
by Luke's Car Crop)
Table 8: Calculation for Sales journal entries in Luke's Car Crop (LCC)
(Source: Created by author)
Calculation for warranty obligation journal entries in Luke's Car Crop (LCC)
Particulars Amount (Dr.) Amount (Cr.)
Warranty A/c………………………….Dr $ 75,000.00
To Sales A/c $ 75,000.00
(Being warranty amount that can be purchased,
while buying car)
Warranty A/c………………………….Dr $ 35,000.00
To Sales A/c $ 35,000.00
(Being actual amount that to be purchased, while
buying car)
Table 9: Calculation for warranty obligation journal entries in Luke's Car Crop (LCC)
(Source: Created by author)
Question 6:
Serenity Spa Vacation Inc. is an organisation related top tour plan of luxury health and wellness
spa. However, it has been analysed that accounting system that is used in Serenity Spa Vacation
Inc. is old and are not updated. In the recent days vice president of Serenity Spa Vacation Inc.
divided that accounting information system that leads in analysing operation made within
particular time period. Therefore, it has been decided that SAP (System Accounting and Product)
process can be used that leads in reporting daily operations made in Serenity Spa Vacation Inc.
Based on the knowledge of (), it can be assessed that insufficiency is found in the information
system architecture. Data those are transferred between sub-systems that leads a business to
handle the operations effectively. SAP ERP systems can be integrated in Serenity Spa Vacation
Inc. system that assist in synchronizing systems and have effective communication in the
different departments. It has been often evident in the words of (), SAP procedure leads an

organisation to have modern and extremely efficient operation. SAP rules leads in setting cross-
functional dealing processes that leads in having effective operations. In SAP system there are
important points that are essential to be kept in mind:
 Align operations and policies
Detailed analysis is required to be made before execution of SAP system. On the other hand, the
analysis is ‘As-Is’ analysis that provides brief of organisational policies. The main step is to
know the information system in precise form.
 Enhance output and insight
Productivity of Serenity Spa Vacation Inc. can develop with the use of SAP system. In reference
to the words of (), it can be opined that in SAP system there is not subsystem required to be
made to validate data. On the other hand, in Serenity Spa Vacation Inc. organisational staff can
continue with different dealings including with the terminals.
Conclusion