ACC5FAS - September Financial Statements and Analysis Report

This document presents a complete solution to an ACC5FAS financial accounting assignment, focusing on a toy distribution, sales, and repair business for the month of September 2019. It includes a detailed trial balance as of September 29, 2019, showcasing revenue, expenses, assets, liabilities, an...Read More

Running head: ACC5FAS
ACC5FAS
Name of the Student:
Name of the University:
Author’s Note

1
ACC5FAS
Table of Contents
1. Trial Balance:...............................................................................................................................2
2. Journal Report 30th September:....................................................................................................3
3. Profit and Loss report 1st September 2019 to 30th September 2019:............................................9
4. Balance Sheet Report 30th September:.......................................................................................10
5. Financial performance factors:..................................................................................................12
References:....................................................................................................................................16

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ACC5FAS
1. Trial Balance:
Trial Balance
20445520 BALA KEERTHI AVINASH PENTAREDDY
As at 29 September 2019
Account Debit Credit YTD Debit YTD
Credit
Revenue
Sales (200) $73,232.9
5
$1,56,442.
95
Expenses
Advertising (400) $8,850.00 $8,850.00
Bank Fees (404) $9.68 $9.68
Cost of Goods Sold (310) $33,728.5
2 $33,728.52
Fire Insurance expense (433) $0.00 $4,000.00
Freight & Courier (425) $116.42 $116.42
Fuel expense for the delivery van
(431) $880.00 $880.00
Insurance expense (434) $5,000.00 $5,000.00
Interest Expense (437) $0.00 $3,677.50
Miscellaneous office supplies
(430) $680.00 $680.00
Salaries expense (477) $0.00 $50,160.00
telecommunication expense (489) $0.00 $1,100.00
Warehouse rent expense (469) $0.00 $4,200.00
Warranty claims (401) $1,408.00 $1,408.00
Assets
Accounts Receivable (610) $8,176.36 $99,707.36
Allowance for Doubtful Debts
(611) $0.00 $8,321.00
Cash at bank (609) $25,575.8
6
$1,08,615.
35
Computer Equipment (720) $2,830.00 $2,830.00
Delivery Van (724) $0.00 $69,300.00
Interest-bearing account@2.5%
(622)
$50,000.0
0 $50,000.00
Inventory (630) $27,827.5
9 $82,593.51
Less Accumulated Depreciation -
Delivery Van (725) $0.00 $35,805.00

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ACC5FAS
Less Accumulated Depreciation -
Store Building (723) $0.00 $2,72,250.
00
Plastic welding machinery (726) $38,000.0
0 $38,000.00
Prepaid Fire Insurance (620) $0.00 $20,000.00
Store Building (722) $0.00 $5,40,000.
00
Liabilities
Accounts Payable (800) $2,573.83 $59,555.13
GST (820) $3,842.79 $60,468.32
Loan payable - Building Head Office (900) $0.00 $2,75,812.
40
Northern Bank on a short-term loan (803) $40,000.0
0 $40,000.00
Provision for warranty (878) $0.00 $4,160.50
Texaco Petrol businesses debit card (802) $977.68 $977.68
Unearned delivery revenue (824) $26,800.0
0 $45,500.00
Equity
Owner A Share Capital (970) $0.00 $2,86,500.
00
Total $1,75,254.
84
$1,75,254.
84
$11,85,324
.66
$11,85,324
.66
2. Journal Report 30th September:
Journal Report
20445520 BALA KEERTHI AVINASH PENTAREDDY
From 30 Sep 2019 to 30 Sep 2019
ID 162 Insurance expense, Fire insurance (Manual Journal: Posted by bala
keerthi avinash pentareddy on 2 Oct 2019)
30 Sep
2019
Account Debit Credit
Fire Insurance expense (433) $2,200.00
Prepaid Fire Insurance (620) $2,200.00
$2,200.00 $2,200.00
ID 161 Telecommunication accrued for September (Manual Journal: Posted
by bala keerthi avinash pentareddy on 2 Oct 2019)
30 Sep
2019

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ACC5FAS
Account Debit Credit
telecommunication expense (489) $605.00
Telecommunication payable (829) $605.00
$605.00 $605.00
ID 160 40% of deliveries are performed during September. (Manual Journal:
Posted by bala keerthi avinash pentareddy on 1 Oct 2019)
30 Sep
2019
Account Debit Credit
Unearned delivery revenue (824) $7,480.00
Sales (200) $7,480.00
$7,480.00 $7,480.00
ID 159 Interest expense accrued on the loan for Building of the Head Office
(Manual Journal: Posted by bala keerthi avinash pentareddy on 1 Oct 2019)
30 Sep
2019
Account Debit Credit
Interest Expense (437) $1,838.75
Interest payable (828) $1,838.75
$1,838.75 $1,838.75
ID 158 Depreciation expense Store Building, using the straight-line method
(Manual Journal: Posted by bala keerthi avinash pentareddy on 1 Oct 2019)
30 Sep
2019
Account Debit Credit
Depreciation (416) $2,250.00
Less Accumulated Depreciation - Store Building (723) $2,250.00
$2,250.00 $2,250.00
ID 157 Depreciation expense Delivery Van, using the straight-line method
(Manual Journal: Posted by bala keerthi avinash pentareddy on 1 Oct 2019)
30 Sep
2019
Account Debit Credit
Depreciation (416) $577.50
Less Accumulated Depreciation - Delivery Van (725) $577.50
$577.50 $577.50
ID 156 Warehouse rent expense accrued for September (Manual Journal:
Posted by bala keerthi avinash pentareddy on 1 Oct 2019)
30 Sep
2019
Account Debit Credit
Warehouse rent expense (469) $2,100.00
Warehouse rent payable (827) $2,100.00

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ACC5FAS
$2,100.00 $2,100.00
ID 155 Salaries expense accrued for September (Manual Journal: Posted by
bala keerthi avinash pentareddy on 1 Oct 2019)
30 Sep
2019
Account Debit Credit
Salaries expense (477) $25,080.00
Wages Payable - Payroll (804) $25,080.0
0
$25,080.00 $25,080.0
0
ID 154 Estimate of doubtful debts is 10% of Accounts Receivable as at 30th
September (Manual Journal: Posted by bala keerthi avinash pentareddy on 1
Oct 2019)
30 Sep
2019
Account Debit Credit
Doubtful debts (415) $1,994.15
Allowance for Doubtful Debts (611) $1,994.15
$1,994.15 $1,994.15
ID 153 Provision for warranties (Manual Journal: Posted by bala keerthi
avinash pentareddy on 1 Oct 2019)
30 Sep
2019
Account Debit Credit
Warranty claims (401) $1,464.57
Provision for warranty (878) $1,464.57
$1,464.57 $1,464.57
ID 152 Advertising expense amount adjustment (Manual Journal: Posted by
bala keerthi avinash pentareddy on 1 Oct 2019)
30 Sep
2019
Account Debit Credit
Prepaid advertising (623) $8,112.50
Advertising (400) $7,375.00
GST (820) $737.50
$8,112.50 $8,112.50
ID 151 Invoice for a week’s (27 September to 29 September) fuel bill of $385
incl. GST from Texaco Petrol (Manual Journal: Posted by bala keerthi
avinash pentareddy on 1 Oct 2019)
30 Sep
2019
Account Debit Credit

6
ACC5FAS
Fuel expense for the delivery van (431) $350.00
Texaco Petrol businesses debit card (802) $350.00
$350.00 $350.00
ID 150 Reversed: Invoice for a week’s (27 September to 29 September) fuel
bill of $385 incl. GST from Texaco Petrol (Manual Journal: Posted by bala
keerthi avinash pentareddy on 1 Oct 2019) Reversal of #149
30 Sep
2019
Account Debit Credit
Fuel expense for the delivery van (431) $350.00
Texaco Petrol businesses debit card (802) $385.00
GST (820) $35.00
$385.00 $385.00
ID 149 Invoice for a week’s (27 September to 29 September) fuel bill of $385
incl. GST from Texaco Petrol (Manual Journal: Posted by bala keerthi
avinash pentareddy on 1 Oct 2019)
30 Sep
2019
Account Debit Credit
Fuel expense for the delivery van (431) $350.00
Texaco Petrol businesses debit card (802) $385.00
GST (820) $35.00
$385.00 $385.00
ID 148 Interest earned at month end (Manual Journal: Posted by bala keerthi
avinash pentareddy on 1 Oct 2019)
30 Sep
2019
Account Debit Credit
Interest receivable (614) $104.17
Interest Income (270) $104.17
$104.17 $104.17
ID 147 Reversed: Interest earned at month end (Manual Journal: Posted by
bala keerthi avinash pentareddy on 1 Oct 2019) Reversal of #146
30 Sep
2019
Account Debit Credit
Interest Income (270) $104.17
Interest receivable (614) $104.17
$104.17 $104.17
ID 146 Interest earned at month end (Manual Journal: Posted by bala keerthi
avinash pentareddy on 1 Oct 2019)
30 Sep
2019

7
ACC5FAS
Account Debit Credit
Interest Income (270) $104.17
Interest receivable (614) $104.17
$104.17 $104.17
ID 145 Depreciation expense – computer (Manual Journal: Posted by bala
keerthi avinash pentareddy on 1 Oct 2019)
30 Sep
2019
Account Debit Credit
Depreciation (416) $1,379.50
Less Accumulated Depreciation on Computer Equipment (721) $1,379.50
$1,379.50 $1,379.50
ID 144 Depreciation expense – plastic welding machinery (Manual Journal:
Posted by bala keerthi avinash pentareddy on 1 Oct 2019)
30 Sep
2019
Account Debit Credit
Depreciation (416) $669.09
Less Accumulated Depreciation - Plastic welding machinery (727) $669.09
$669.09 $669.09
ID 143 Office supplies on hand (Manual Journal: Posted by bala keerthi
avinash pentareddy on 1 Oct 2019)
30 Sep
2019
Account Debit Credit
Office supplies on hand (613) $310.00
Miscellaneous office supplies (430) $310.00
$310.00 $310.00
ID 142 Reversed: Office supplies on hand (Manual Journal: Posted by bala
keerthi avinash pentareddy on 1 Oct 2019) Reversal of #141
30 Sep
2019
Account Debit Credit
Office supplies on hand (613) $370.00
Miscellaneous office supplies (430) $370.00
$370.00 $370.00
ID 141 Office supplies on hand (Manual Journal: Posted by bala keerthi
avinash pentareddy on 1 Oct 2019)
30 Sep
2019
Account Debit Credit
Office supplies on hand (613) $370.00
Miscellaneous office supplies (430) $370.00

8
ACC5FAS
$370.00 $370.00
ID 140 Completed 30% of Toy repairs for ThinkFun Toys during September
(Manual Journal: Posted by bala keerthi avinash pentareddy on 1 Oct 2019)
30 Sep
2019
Account Debit Credit
Unearned delivery revenue (824) $3,600.00
Other Revenue (260) $3,600.00
$3,600.00 $3,600.00
ID 139 First month of subscription revenue earned from the company
featured magazine, “Humpty Dumpty” (Manual Journal: Posted by bala
keerthi avinash pentareddy on 1 Oct 2019)
30 Sep
2019
Account Debit Credit
Unearned delivery revenue (824) $2,466.66
Other Revenue (260) $2,466.66
$2,466.66 $2,466.66
ID 138 Insurance expense – product liability insurance policy (Manual
Journal: Posted by bala keerthi avinash pentareddy on 1 Oct 2019)
30 Sep
2019
Account Debit Credit
Product liability insurance policy (612) $3,333.34
Insurance expense (434) $3,333.34
$3,333.34 $3,333.34
ID 137 Reversed: Insurance expense – product liability insurance policy
(Manual Journal: Posted by bala keerthi avinash pentareddy on 1 Oct 2019)
Reversal of #136
30 Sep
2019
Account Debit Credit
Product liability insurance policy (612) $3,667.00
Insurance expense (434) $3,667.00
$3,667.00 $3,667.00
ID 136 Insurance expense – product liability insurance policy (Manual
Journal: Posted by bala keerthi avinash pentareddy on 1 Oct 2019)
30 Sep
2019
Account Debit Credit
Product liability insurance policy (612) $3,667.00
Insurance expense (434) $3,667.00
$3,667.00 $3,667.00

9
ACC5FAS
ID 135 Reversed: Insurance expense – product liability insurance policy
(Manual Journal: Posted by bala keerthi avinash pentareddy on 1 Oct 2019)
Reversal of #134
30 Sep
2019
Account Debit Credit
Product liability insurance policy (612) $1,833.00
Insurance expense (434) $1,833.00
$1,833.00 $1,833.00
ID 134 Insurance expense – product liability insurance policy (Manual
Journal: Posted by bala keerthi avinash pentareddy on 1 Oct 2019)
30 Sep
2019
Account Debit Credit
Product liability insurance policy (612) $1,833.00
Insurance expense (434) $1,833.00
$1,833.00 $1,833.00
ID 133 Interest expense – short-term loan (Northern Bank) (Manual Journal:
Posted by bala keerthi avinash pentareddy on 1 Oct 2019)
30 Sep
2019
Account Debit Credit
Interest Expense (437) $266.67
Northern Bank on a short-term loan (803) $266.67
$266.67 $266.67
3. Profit and Loss report 1st September 2019 to 30th September 2019:
Profit and Loss
20445520 BALA KEERTHI AVINASH
PENTAREDDY
1 September 2019 to 30 September 2019
30 Sep 19
Income
Interest Income $104.17
Other Revenue $6,066.66
Sales $80,712.9
5
Total Income $86,883.7
8

10
ACC5FAS
Less Cost of Sales
Cost of Goods Sold $33,728.5
2
Total Cost of Sales $33,728.5
2
Gross Profit $53,155.2
6
Less Operating Expenses
Advertising $1,475.00
Bank Fees $9.68
Depreciation $4,876.09
Doubtful debts $1,994.15
Fire Insurance expense $2,200.00
Freight & Courier $116.42
Fuel expense for the delivery van $1,230.00
Insurance expense $1,666.66
Interest Expense $2,105.42
Miscellaneous office supplies $370.00
Salaries expense $25,080.0
0
telecommunication expense $605.00
Warehouse rent expense $2,100.00
Warranty claims $2,872.57
Total Operating Expenses $46,700.9
9
Net Profit $6,454.27
4. Balance Sheet Report 30th September:
Balance Sheet
20445520 BALA KEERTHI AVINASH PENTAREDDY
As at 30 September 2019
30 Sep
2019
Assets
Current Assets
Accounts Receivable $99,707.36
Allowance for Doubtful Debts -$10,315.15

11
ACC5FAS
Cash at bank $1,08,615.3
5
Interest receivable $104.17
Interest-bearing account@2.5% $50,000.00
Inventory $82,593.51
Office supplies on hand $310.00
Prepaid advertising $8,112.50
Prepaid Fire Insurance $17,800.00
Product liability insurance policy $3,333.34
Total Current Assets $3,60,261.0
8
Fixed Assets
Computer Equipment $2,830.00
Less Accumulated Depreciation on
Computer Equipment -$1,379.50
Delivery Van $69,300.00
Less Accumulated Depreciation - Delivery
Van -$36,382.50
Less Accumulated Depreciation - Plastic
welding machinery -$669.09
Less Accumulated Depreciation - Store
Building
-
$2,74,500.0
0
Plastic welding machinery $38,000.00
Store Building $5,40,000.0
0
Total Fixed Assets $3,37,198.9
1
Total Assets $6,97,459.9
9
Liabilities
Current Liabilities
Accounts Payable $59,555.13
GST -$59,730.82
Interest payable $1,838.75
Northern Bank on a short-term loan $40,266.67
Provision for warranty $5,625.07
Telecommunication payable $605.00
Texaco Petrol businesses debit card $1,327.68
Unearned delivery revenue $31,953.34
Wages Payable - Payroll $25,080.00
Warehouse rent payable $2,100.00
Total Current Liabilities $1,08,620.8

12
ACC5FAS
2
Non-Current Liabilities
Loan payable - Building Head Office $2,75,812.4
0
Total Non-Current Liabilities $2,75,812.4
0
Total Liabilities $3,84,433.2
2
Net Assets $3,13,026.7
7
Equity
Current Year Earnings $26,526.77
Owner A Share Capital $2,86,500.0
0
Total Equity $3,13,026.7
7
5. Financial performance factors:
The financial performance of the organization is relatively evaluated by analyzing profit
and loss statement, balance sheet and ratios. The derivations of the ratios would eventually help
to understanding the actual financial achievement that has been obtained by the organization
over the period of one month. Furthermore, the ratios are directly evaluated on the basis of the
benchmark, which is effectively used for understanding the benefits that has been obtained by
the organization during the one month transaction period. The factors to analyses the financial
performance of the company are financial position, financial ratios, Noncurrent assets &
Liabilities and Current assets & liabilities.
Ratios Value
Cost of sales/turnover 50%-63%
Average cost of sales 41.79%
Total expenses/turnover 77%-88%
Average total expenses 92.57%

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ACC5FAS
Motor vehicle expenses/turnover 10%-14%
Motor vehicle expenses/turnover 1.42%
Rent/turnover 2%-4%
Rent/turnover 2.42%
The above table provides information about the four specific ratios, which helps in
analyzing the performance of the organization. The first financial ratio is the overall average cost
of sales that is obtained by the organization during September. The ratio indicates a value of
41.79%, which is lower than the estimated benchmark, which indicates that the performance of
the organization is not adequate for the month of September. The further analysis is conducted
on the average total expense of the company for the month of September, which is considered to
be higher in comparison to the industry average. The industry average for total expenses mainly
ranges from 77% to 88% of the overall turnover, whereas the company has obtained a total
average expense of 92.57% during the period of one month (Ato.gov.au 2019). This directly
states about the high level of expenses that is incurred by the organization while maintaining the
required sales.
The third financial ratio that is evaluated for the organization is the motor vehicle
expense that is conducted during the period. The expenses mainly needs to be between 10% of
14% of the overall turnover of the organization, where the company has obtained a value of
1.42% of the overall expenses in motor vehicles, which indicates that the organization does not
have adequate delivery services. The evaluation is based on the rent/turnover of the organization,
which is at the appropriate level and in lieu with the industry average. The turnover ratio is at the
levels of 2.42%, which falls under the industry average of 2% to 4% (Ato.gov.au 2019).
Therefore, it could be understood that the overall rent expenses of the organization is at
appropriate industry levels.

14
ACC5FAS
Analysis of the non-current liabilities and asset has relatively indicated overall loans and
assets that have been maintained by the organization for commencing it operations. The long
term loan payable for the building head office is maintained by the company to support its
operation. On the other hand, essential assets such as computer, store building, delivery van, and
plastic welding machinery are used by the organization to support it operations. Furthermore, the
depreciation levels have been evaluated to identify the actual book value of the assets. The
current assets and liabilities of the company are also appropriate, as the current ratio is at the
levels of 3.32, which is higher than the average that needs to be maintained by companies.
Particulars Xero Company Harvey Norman
Current ratio 3.32 1.62
Debt ratio 0.40 0.33
Net profit margin 7.43% 18.31%
Gross profit margin 65.86% 32.38%
The debt ratio has been calculated to identify the overall loans that have been used to fuel
the total assets of the organization. From the analysis, it is detected that the debt ratio is at the
levels of 0.40, while the competitor’s company’s value is at 0.33. The debt ratio directly helps in
identifying whether the organization is in the pathway of insolvency, as a higher debt ratio would
eventually increase interest payments and hamper profit generation capability of the
organization. The current ratio and gross profit margin of the organization is also higher than
Harvey Norman, which indicates about the high financial capability of the company. However,
the net profit margin is not appropriate for the organization, due to the high level of
administrative expenses, which is making its net profit margin to 7.43%, while Harvey Norman
value is at 18.31% (Harveynormanholdings.com.au 2019).

15
ACC5FAS
Net profit margin Gross profit margin
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
Profitability Ratios
Current ratio Debt ratio
-
0.50
1.00
1.50
2.00
2.50
3.00
3.50
Financial Ratios
Recommendation:
The analysis of the overall financial performance of the organization has helped in
understanding its current financial position and its trajectory. The annual report evaluation has
indicated problems in its profit and loss segment, whereas the balance sheet has provided a stable
and concrete valuation for its assets and liabilities. The company has maintained its cash balance
and invested in high interest earning deposits to generate adequate level of returns from their
investment. The analysis further indicated that the net profit margin of the company is at the

16
ACC5FAS
levels of 7.43% where is the gross profit margin is at 65.86%. This mail indicates that the overall
administrative expenses of the organization are relatively high, which is eroding maximum office
revenues. Thus, reduction in the operating expenses needs to be conducted for securing higher
profits in future. Moreover, inventory balance of the organization is high, which needs to be
curbed and reduced for ensuring the effective management of working capital.

17
ACC5FAS
References:
Ato.gov.au. 2019. Toy and game retailing. [online] Available at:
https://www.ato.gov.au/Business/Small-business-benchmarks/In-detail/Benchmarks-A-Z/R-Z/
Toy-and-game-retailing/ [Accessed 1 Oct. 2019].
Harveynormanholdings.com.au. 2019. Reports & Announcements — Harvey Norman Holdings.
[online] Available at: http://www.harveynormanholdings.com.au/reports-announcements-1
[Accessed 3 Oct. 2019].