ACC566 - Accounting Systems: Assessment 2 Solution, June 2019

This document provides a comprehensive solution to ACC566 Assessment 2, focusing on accounting systems and processes. The solution covers multiple aspects of financial accounting, including the application of the FIFO (First-In, First-Out) method for inventory valuation with detailed calculations for small and large bicycles. It includes journal entries, ledger postings (Purchase A/c, Bank A/c, Capital A/c, Red bike rock ltd A/c, Fast freight ltd A/c, Delivery cost A/c, Stall fees A/c, Discount received A/c, Local childcare center A/c, Sales A/c), and an adjusted trial balance. Furthermore, the solution addresses bank reconciliation, providing a detailed bank reconciliation statement, adjusting entries, and a bank account ledger. The document aims to assist students in understanding and solving complex accounting problems related to inventory, journal entries, ledger accounts, trial balance, and bank reconciliation, offering a complete and practical guide to enhance their learning experience in financial accounting.

ACC 566

Table of Contents
Assessment 2..............................................................................................................................3
Question 1..................................................................................................................................3
i).............................................................................................................................................3
ii)............................................................................................................................................5
iii)...........................................................................................................................................7
iv).........................................................................................................................................11
v)..........................................................................................................................................12
Question 2................................................................................................................................13
i)...........................................................................................................................................13
ii)..........................................................................................................................................13
iii).........................................................................................................................................15
iv).........................................................................................................................................15
Question 3................................................................................................................................17
Introduction..........................................................................................................................17
Internal control and its importance......................................................................................17
Risk of employee theft.........................................................................................................18
Ways by which bicycles would have stolen.........................................................................19
Procedure to prevent employee theft....................................................................................19
Conclusion............................................................................................................................20
Question 4................................................................................................................................21
References................................................................................................................................23

Assessment 2
Question 1
i)
FIFO
method
Small
bicycles
Date Transaction Uni
ts
Purch
ase
cost
Total
Purchase
cost
Sale
valu
e
Closin
g
units
value of
closing
inventory
02-06-2019 Purchase 100 50 5000 0 100 5000
06-06-2019 Sale 20 0 0 2000 80 4000
13-06-2019 Sale 10 0 0 1000 70 3500
22-06-2019 Purchase 30 55 1650 0 100 5150
24-06-2019 Returned -20 55 -1100 0 80 4050
28-06-2019 Sale 25 0 0 2500 55 2800
30-06-2019 closing
balance
55 5550 5500 2800
Total
purchases
110
Bicycles sold
or returned
55
COGS 275
0
Gross profit 275
0
Formula view:
FIFO
metho
d
Small
bicycle
s
Date Transacti
on
Units Purcha
se cost
Total
Purchase
cost
Sale
value
Closin
g units
value of
closing
inventory
43618 Purchase 100 50 =C4*D4 0 =C4 =E4-F4
43622 Sale 20 0 0 =C5*1
00
=G4-
C5
=G5*D4
43629 Sale 10 0 0 =C6*1 =G5- =G6*D4

00 C6
43638 Purchase 30 55 =C7*D7 0 =G6+C
7
=H6+E7
43640 Returned -20 55 =C8*D8 =0 =G7+C
8
=H7+E8
43644 Sale 25 0 0 =C9*1
00
=G8-
C9
=(45*50)+
(10*55)
43646 closing
balance
=C4-C5-
C6+C7+
C8-C9
=E4+E7+E8 =SUM(
F4:F10
)
=H9
Total
purchases
=C4+C7+
C8
Bicycles
sold or
returned
=C5+C6+
C9
COGS =0+E10-
H10
Gross
profit
=5500-
C13
large bicycles
Date Transaction Unit
s
Purchas
e cost
Total
Purchase
cost
Sale
valu
e
Closin
g units
value of closing
inventory
02-
06-
2019
Purchase 100 50 5000 0 100 5000
06-
06-
2019
Sale 10 0 0 1000 90 4500
22-
06-
2019
Purchase 10 55 550 0 100 5050
28-
06-
2019
Sale 15 0 0 1500 85 4300
30-
06-
2019
closing balance 85 5550 2500 4300
Total
purchases
110
Bicycles sold
or returned
25
COGS 1250
Gross profit 1250

Formula view:
large
bicycle
s
Date Transaction Units Purch
ase
cost
Total
Purchase
cost
Sale
value
Closin
g units
value of
closing
inventory
43618 Purchase 100 50 =N4*O4 0 =N4 =P4-Q4
43622 Sale 10 0 0 =N5*10
0
=R4-
N5
=R5*O4
43638 Purchase 10 55 =N6*O6 0 =R5+
N6
=S5+P6
43644 Sale 15 0 0 =N7*10
0
=R6-
N7
=(75*O4)+(1
0*O6)
43646 closing
balance
=N4-
N5+N6-
N7
=SUM(P4
:P7)
=SUM(
Q4:Q7)
=S7
Total
purchases
=N4+N
6
Biclycles
sold or
returned
=N5+N
7
COGS =0+P8-
S8
Gross profit =Q8-
N11
ii)
Date Particulars Amoun
t (Dr)
Amount
(Cr)
01-Jun Bank A/c
To Capital
(Capital introduced in business)
30000
30000
02-Jun Purchases A/c
To Red bike rock ltd.
(Purchase of 100 small bicycles and 100 large
bicycles on credit)
10000
10000
04-Jun Delivery cost A/c
To Fast freight ltd
300
300

(Invoice received for delivery charges)
05-Jun Stall fees A/c
To Bank
(Cheque sent for the stall fees)
300
300
06-Jun Bank A/c
To sales
(Sale of 20 small and 10 large bicycles for
cash)
3000
3000
10-Jun Red bike rock ltd
To bank
To discount received
(Payment made to red bike rock ltd after
availing the discount)
10000
9800
200
13-Jun Local childcare center A/c
To sales
(Sale of 10 small bicycles on credit)
1000
1000
15-Jun Fast freight A/c
To bank
(cheque sent for invoice received earlier)
300
300
22-Jun Purchases A/c
To Red bike rock ltd.
(Purchase of 30 small bicycles and 10 large
bicycles on credit)
2200
2200
23-Jun Delivery cost A/c
To Fast freight ltd
(Invoice received for delivery charges)
180
180
24-Jun Red bike rock ltd A/c
To purchases
(Returned 20 small bicycles due to damages)
1100
1100
28-Jun Bank A/c 4000

To sales
(Sale of 25 small and 15 large bicycles for
cash)
4000
iii)
Ledger posting
Purchase A/c
Date Particulars Amount Date Particulars Amount
02-Jun To Red bike rock ltd 10000 24-Jun by Red bike rock
ltd
1100
22-Jun To Red bike rock ltd 2200
30-Jun By closing balance 11100
12200 12200
Bank A/c
Date Particulars Amount Date Particulars Amount
01-Jun To capital 30000 05-Jun By stall fees 300
06-Jun To sales 3000 10-Jun By red bike rock ltd 9800
28-Jun To sales 4000 15-Jun By fast freight ltd 300
30-Jun By closing balance 26600
37000 37000
Capital
A/c
Date Particulars Amount Date Particulars Amount
01-Jun By bank 30000
30-Jun To closing balance 30000
30000 30000
Red bike rock ltd A/c
Date Particulars Amount Date Particulars Amount
10-Jun To bank 9800 02-Jun By purchases 10000
10-Jun To discount received 200 22-Jun By purchases 2200
24-Jun To purchases 1100
30-Jun To closing balance 1100

12200 12200
Fast freight ltd A/c
Date Particulars Amount Date Particulars Amount
15-Jun To bank 300 04-Jun By delivery cost 300
30-Jun To closing balance 180 23-Jun By delivery cost 180
480 480
Delivery cost A/c
Date Particulars Amount Date Particulars Amount
04-Jun To Fast freight ltd 300
23-Jun To Fast freight ltd 180 30-Jun By closing balance 480
480 480
Stall fees A/c
Date Particulars Amount Date Particulars Amount
05-Jun To bank 300
30-Jun By closing balance 300
300 300
Discount received A/c
Date Particulars Amount Date Particulars Amount
10-Jun By red bike rock ltd 200
30-Jun To closing balance 200
200 200
Local childcare center A/c
Date Particulars Amount Date Particulars Amount
13-Jun To sales 1000
30-Jun By closing balance 1000
1000 1000
Sales A/c
Date Particulars Amount Date Particulars Amount
06-Jun By bank 3000
13-Jun by local childcare
center
1000
28-Jun By bank 4000
30-Jun To closing balance 8000

8000 8000
Formula view:
Ledger posting
Purchase A/c
Date Particulars Amount Dat
e
Particulars Amount
43618 To Red bike
rock ltd
10000 436
40
by Red bike
rock ltd
1100
43638 To Red bike
rock ltd
2200
436
46
By closing
balance
=C25-F22
=SUM(C22:
C24)
=SUM(F22:
F24)
Bank A/c
Date Particulars Amount Dat
e
Particulars Amount
43617 To capital 30000 436
21
By stall fees 300
43622 To sales 3000 436
26
By red bike rock
ltd
9800
43644 To sales 4000 436
31
By fast freight
ltd
300
436
46
By closing
balance
=C35-F31-
F32-F33
=SUM(C31:
C34)
=SUM(F31:
F34)
Capital A/c
Date Particulars Amount Dat
e
Particulars Amount
436
17
By bank 30000
43646 To closing
balance
=F41
=SUM(C42) =SUM(F41:

F42)
Red bike rock ltd
A/c
Date Particulars Amount Dat
e
Particulars Amount
43626 To bank 9800 436
18
By purchases 10000
43626 To discount
received
200 436
38
By purchases 2200
43640 To purchases 1100
43646 To closing
balance
=F52-C48-
C49-C50
=SUM(C48:
C51)
=SUM(F48:
F51)
Fast freight ltd
A/c
Date Particulars Amount Dat
e
Particulars Amount
43631 To bank 300 436
20
By delivery cost 300
43646 To closing
balance
=F59-C57 436
39
By delivery cost 180
=SUM(C57:
C58)
=SUM(F57:
F58)
Delivery cost A/c
Date Particulars Amount Dat
e
Particulars Amount
43620 To Fast
freight ltd
300
43639 To Fast
freight ltd
180 436
46
By closing
balance
=C66
=SUM(C64:
C65)
=SUM(F65)
Stall fees A/c
Date Particulars Amount Dat
e
Particulars Amount
43621 To bank 300
436
46
By closing
balance
=C74

=SUM(C72:
C73)
=SUM(F73)
Discount received
A/c
Date Particulars Amount Dat
e
Particulars Amount
436
26
By red bike rock
ltd
200
43646 To closing
balance
=F79
=SUM(C80) =SUM(F79:
F80)
Local childcare
center A/c
Date Particulars Amount Dat
e
Particulars Amount
43629 To sales 1000
436
46
By closing
balance
=C86
=SUM(C86:
C87)
=SUM(F87)
Sales A/c
Date Particulars Amount Dat
e
Particulars Amount
436
22
By bank 3000
436
29
by local
childcare center
1000
436
44
By bank 4000
43646 To closing
balance
=F97
=SUM(C96) =SUM(F93:
F96)
iv)
Adjusted trial balance

Particulars Amount
(Dr)
Amount
(Cr)
Purchase A/c 11100
Bank A/c 26600
Capital A/c 30000
Red bike rock ltd A/c 1100
Fast freight ltd A/c 180
Delivery cost A/c 480
Stall fees A/c 300
Discount received A/c 200
Local childcare centre
A/c
1000
Sales A/c 8000
Total 39480 39480
Formula view:
Adjusted trial balance
Particulars Amount (Dr) Amount (Cr)
Purchase A/c =F24
Bank A/c =F34
Capital A/c =C42
Red bike rock ltd A/c =C51
Fast freight ltd A/c =C58
Delivery cost A/c =F65
Stall fees A/c =F73
Discount received A/c =C80
Local childcare centre A/c =F87
Sales A/c =C96
Total =SUM(B103:B112
)
=SUM(C103:C112)
v)
Adjustment entry:
Closing stock A/c Dr. 7100
To Trading A/c 7100