Accounting System Assessment 2: Financial Accounting Concepts

This document is an assessment solution that covers various aspects of financial accounting. It begins by explaining cell naming conventions in spreadsheets and how they facilitate formula usage. It then addresses the representation of negative numbers in financial reports, including different formatting options. The solution emphasizes the importance of separating data and report areas for clear financial statement presentation, illustrated with examples. The role of IF functions in spreadsheet calculations is explained with examples. The differences between perpetual and periodic inventory systems are discussed, along with related spreadsheet applications. The assessment also explores the creation of worksheets and financial reports, including an executive summary, introduction, body context, and conclusion. Additionally, the solution covers inventory flow assumptions, bank reconciliation processes, journalizing accounts receivable entries, estimating bad debts, evaluating a firm's financial position, and the handling of dishonored notes receivable. Finally, a work-integrated assessment is included. The solution is a comprehensive guide to financial accounting concepts and practices.

RUNNING HEAD: Accounting system 1
Accounting System
Assessment 2
[Pick the date]
Student’s Name

Accounting system 2
Contents
Que 1..........................................................................................................................................4
Naming cells in spreadsheet...................................................................................................4
Spreadsheet.............................................................................................................................4
Que 2:.........................................................................................................................................4
Negative numbers.......................................................................................................................4
Spreadshee..............................................................................................................................5
Que 3..........................................................................................................................................5
Separation of data and report areas............................................................................................5
Que 4..........................................................................................................................................7
IF functions................................................................................................................................7
Spreadsheet:............................................................................................................................7
Que 5:.......................................................................................................................................13
Perpetual versus periodic system.............................................................................................13
Spreadsheet:..........................................................................................................................13
Perpetual inventory system......................................................................................................13
Periodic Inventory system:.......................................................................................................14
Que 6:.......................................................................................................................................14
Worksheet and financial reports:.............................................................................................14
Introduction..........................................................................................................................14
Body context.........................................................................................................................14
Conclusion:...........................................................................................................................14
Que 7:.......................................................................................................................................19
Application of inventory flow assumptions:............................................................................19
Que 8:.......................................................................................................................................26
Bank Reconciliation:................................................................................................................26

Accounting system 3
Changes................................................................................................................................27
Que 9:.......................................................................................................................................28
Journalizing accounts receivable entries:.................................................................................28
Que 10:.....................................................................................................................................29
Estimating Bad debts:..............................................................................................................29
Que 11:.....................................................................................................................................30
Evaluation of firm’s financial position:...................................................................................30
Que 12:.....................................................................................................................................30
Dishonor of a note receivable:.................................................................................................30
Que 13:.....................................................................................................................................31
Work integrated assessment:....................................................................................................31
References:...............................................................................................................................32

Accounting system 4
Que 1:
Naming cells in spreadsheet:
In case of spreadsheet, a tool is there to make change in the cell references. The cell
references could be changed by any name. It depends on the user that what name s easier and
suitable for the spreadsheet. On the basis of this naming tool, it is easier for the user to use
formulas and calculate the figures (Stratton, SAS Institute Inc., 2009). Naming tools assist the
user to reduce the level of error. This tool could be used in auditing, administrating, updating
etc the figures and the calculations in good manner. It also assists in calculating the normal
values and accounting values easily. Few examples have been given below of naming cells
on the basis of which naming cells could be understood:
Example Type Example with no name Example with a name
Table C4:G25 =TopSales06
Constant =Product(C5, 10.4) =Product(Price,
WASalesTax)
Spreadsheet:
Normal view:
Statement of profit
(Amt in
$)
Sales 1000
Expenses 500
Profit 500
Formula view:
3
4
5
6
7
B C
(Amt in $)
Sales 1000
Expenses 500
Profit =(Sales-Expenses)
Statement of profit

Accounting system 5
Que 2:
Negative numbers:
Negative numbers explains about the numbers which have values in minus. Negative
numbers could be presented in various manners in a spreadsheet such as in brackets, in red
color and with minus mark. Negative numbers basically explains about the credit amount of
an organization. To represent the negative numbers in the report, accountant normally prefers
to use “ ()” (brackets) form as it makes the report attractive as well as it makes the report
more competitive (Snyder and Davenport, 2013). Though, red color also reflects about the
better financial report. In red color transition, it becomes easy to find the negative number.
Spreadsheet:
Negative values in minus sign
(amt in
$)
Sales 10000
Less: expenses -5000
gross Profit 5000
Less: operating
expenses -2000
Operating profit 3000
Less: interest -500
Net profit 2500
Negative values in ()
(amt in
$)
Sales 10000
Less: expenses (5,000)
gross Profit 5000
Less: operating
expenses (2,000)
Operating profit 3000
Less: interest (500)
Net profit 2500
Que 3:
Separation of data and report areas:

Accounting system 6
Report and spreadsheet, both are essential files and tool for an auditor and the
accountant of an organization. Both the files offer different information to the related parties
and the usefulness of both the files are also different. Spreadsheets are mainly prepared by the
accountants to calculate the accounting figure and prepare the financial data of the company
whereas the report part analyzes the financial statement and briefs about the performance of
the company. Spreadsheet is used by the accountant to reduce the level of errors and present
better financial reports (Hoque, 2002).
A report and spreadsheet file must be prepared separately as it is quite helpful for all
the internal and external stakeholders to evaluate the financial statement or analyze the
statements in a better way.
Tendulkar Manufacturing Company
Manufacturing Account
For the year ended 30 September, 2017
Particular
Amount
($) Particular
Amount
($)
Direct Material Closing Stock:
Opening Stock: Raw Material 16000
Raw Material 110000 Work in Progress 7000
Work in Progress 15000
Purchases:
Cost of Goods
Sold 1026000
Raw material 500000
Carriage Inward 22000
Direct labour 130000
Direct Expenses
Depreciation 9000
Factory Insurance 3000
Manufacturing overhead
Manufacturing Expense 60000
Factory Salary 200000
1049000 1049000
Tendulkar Manufacturing Company
Income Statement

Accounting system 7
For the year ended 30 September, 2017
Particular
Amount
($) Total
Revenues
Sales 1696000
Other Income 0
Total Income (A) 1696000
Expenses
Cost of goods sold 1026000
Salary 100000
Accrued Salary 700
General expenses 23000
Audit Fee 3000
Advertisement 12000
Light and Power 12000
Cartage Outwards 5000
Insurance 750
Rates 2250
Sales Commission 40000
Tax 50000
Discount 6000
Total operating expenses
(B) 128000
Net Income (A-B) 415300
Formula view:

Accounting system 8
Particular Amount ($) Particular Amount ($)
Direct Material Closing Stock:
Opening Stock: Raw Material 16000
Raw Material 110000 Work in Progress 7000
Work in Progress 15000
Purchases: Cost of Goods Sold =D21-(D7+D8)
Raw material 500000
Carriage Inward 22000
Direct labour 130000
Direct Expenses
Depreciation =12000*0.75
Factory Insurance =4000*0.75
Manufacturing overhead
Manufacturing Expense 60000
Factory Salary 200000
=SUM(B8:B20) =B21
Tendulkar Manufacturing Company
Manufacturing Account
For the year ended 30 September, 2017

Accounting system 9
24
25
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27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
A B C
Particular Amount ($) Total
Revenues
Sales =1700000-4000
Other Income 0
Total Income (A) =B31+B32
Expenses
Cost of goods sold =D10
Salary 100000
Accrued Salary 700
General expenses 23000
Audit Fee 3000
Advertisement 12000
Light and Power 12000
Cartage Outwards 5000
Insurance =(4000*0.25)-(1000*0.25)
Rates =9000*0.25
Sales Commission 40000
Tax 50000
Discount 6000
Total operating expenses (B) =SUM(B36:B48)
Net Income (A-B) =IF(C33=C49,"no profit no loss",IF(C33>C49,
For the year ended 30 September, 2017
Tendulkar Manufacturing Company
Income Statement
Que 4:
IF functions:
“IF”, function is a spreadsheet’s tool that is used to identify and calculate some
logical calculations in spreadsheet. This function assists a user to use own logics and put it in
formula. This function makes it easier for the user to get different results in different
situation. “IF”, function could be generated on the basis of an individual, below is an example
of the function:
IF (Something is False, then do this, otherwise do something else).

Accounting system 10
Spreadsheet:
Profit:
Normal view:
Tendulkar Manufacturing Company
Income Statement
For the year ended 30 September, 2017
Particular
Amount
($) Total
Revenues
Sales 1696000
Other Income 0
Total Income (A) 1696000
Expenses
Cost of goods sold 1026000
Salary 100000
Accrued Salary 700
General expenses 23000
Audit Fee 3000
Advertisement 12000
Light and Power 12000
Cartage Outwards 5000
Insurance 750
Rates 2250
Sales Commission 40000
Tax 50000
Discount 6000
Total operating expenses
(B) 1280700
Net Income (A-B) Profit/415300
Formula view:

Accounting system 11
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
A B C
Particular Amount ($) Total
Revenues
Sales =1700000-4000
Other Income 0
Total Income (A) =B31+B32
Expenses
Cost of goods sold =D10
Salary 100000
Accrued Salary 700
General expenses 23000
Audit Fee 3000
Advertisement 12000
Light and Power 12000
Cartage Outwards 5000
Insurance =(4000*0.25)-(1000*0.25)
Rates =9000*0.25
Sales Commission 40000
Tax 50000
Discount 6000
Total operating expenses (B) =SUM(B36:B48)
Net Income (A-B) =IF(C33=C49,"no profit no loss",IF(C33>C49,
For the year ended 30 September, 2017
Tendulkar Manufacturing Company
Income Statement
Loss:
Normal view:
Tendulkar Manufacturing Company
Income Statement
For the year ended 30 September, 2017
Particular
Amount
($) Total
Revenues
Sales 140000

Accounting system 12
Other Income 0
Total Income (A) 140000
Expenses
Cost of goods sold 0
Salary 100000
Accrued Salary 700
General expenses 23000
Audit Fee 3000
Advertisement 12000
Light and Power 12000
Cartage Outwards 5000
Insurance 750
Rates 2250
Sales Commission 40000
Tax 50000
Discount 6000
Total operating expenses
(B) 254700
Net Income (A-B)
loss-
114700
Formula view:

Accounting system 13
24
25
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27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
E F G
Particular Amount ($) Total
Revenues
Sales 140000
Other Income 0
Total Income (A) =F31+F32
Expenses
Cost of goods sold =H10
Salary 100000
Accrued Salary 700
General expenses 23000
Audit Fee 3000
Advertisement 12000
Light and Power 12000
Cartage Outwards 5000
Insurance =(4000*0.25)-(1000*0.25)
Rates =9000*0.25
Sales Commission 40000
Tax 50000
Discount 6000
Total operating expenses (B) =SUM(F36:F48)
Net Income (A-B) =IF(G33=G49,"no profit no loss",IF(G33>G49
Tendulkar Manufacturing Company
Income Statement
For the year ended 30 September, 2017
No profit no loss:
Normal view:
Tendulkar Manufacturing Company
Income Statement
For the year ended 30 September, 2017
Particular
Amount
($) Total
Revenues
Sales 254700

Accounting system 14
Other Income 0
Total Income (A) 254700
Expenses
Cost of goods sold 0
Salary 100000
Accrued Salary 700
General expenses 23000
Audit Fee 3000
Advertisement 12000
Light and Power 12000
Cartage Outwards 5000
Insurance 750
Rates 2250
Sales Commission 40000
Tax 50000
Discount 6000
Total operating expenses
(B) 254700
Net Income (A-B)
no profit no
loss
Formula view:
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
I J K
Particular Amount ($) Total
Revenues
Sales 254700
Other Income 0
Total Income (A) =J31+J32
Expenses
Cost of goods sold =L10
Salary 100000
Accrued Salary 700
General expenses 23000
Audit Fee 3000
Advertisement 12000
Light and Power 12000
Cartage Outwards 5000
Insurance =(4000*0.25)-(1000*0.25)
Rates =9000*0.25
Sales Commission 40000
Tax 50000
Discount 6000
Total operating expenses (B) =SUM(J36:J48)
Net Income (A-B) =IF(K33=K49,"no profit no loss",IF(K33>K49,"Profit",IF(K33<K49,"loss")))
Tendulkar Manufacturing Company
Income Statement
For the year ended 30 September, 2017

Accounting system 15
Que 5:
Perpetual versus periodic system:
Inventory could be managed by an organization on the basis of 2 inventory system
which is perpetual inventory system and periodic inventory systems. These inventory systems
are used by the company to administer the inventory records. Perpetual inventory system
assists an organization to evaluate and manage the records of inventory at the transaction time
on the other hand periodic inventory system assist an organization to administer the record of
entire inventory at the end particular period (Davies and Crawford, 2011). Normally,
perpetual inventory is used by the companies to track the inventory system.
Spreadsheet:
Transactions:
Beginning
inventory
(1000 units at $ 15
each) 15000
Purchase
(900 units at $ 15
each) 13500
Sales
(1300 units at $ 18
each) 23400
Ending
inventory
(600 units at $ 15
each) 9000
Perpetual inventory system:
Perpetual inventory
system
Increase Decrease Balance
Date
No of
units
Unit
cost
Total
cost
No of
units
Unit
cost
Total
cost
No of
units
Unit
cost
Total
cost
20X
X
Apr-
01 1000 15
$
15000
Apr-
05 900 15
$
13500 1000 15
$
28500
900 15
Apr-
15 1300 18
$
23400 600 15 $ 9000

Accounting system 16
Periodic Inventory system:
Periodic inventory system:
Particular Amount ($) Particular
Amount
($)
Balance
b/d 15000 Sales 23400
Purchase 13500
Closing
stock 9000
Gross
profit 3900
32400 32400
Que 6:
Worksheet and financial reports:
Executive Summary:
The report explains about the spreadsheet advantage. It briefs that how the
spreadsheet assists the users and he organization to maintain the financial statement. Though,
few disadvantages of the file have also been discussed in the report.
Introduction
Spreadsheet is an interactive application of computer for the companies. It evaluates
the data of an organization or other in a tabular form. The advantages and disadvantages of
spreadsheet in an organization have been studied. The report explains that how an
organization could use the spreadsheet for reducing the level of errors.
Body context
Spreadsheet is usually used by the auditors and the accountants of an organization to
measure the accounting and financial position as well as it also helps the user to reduce the
error level. Spreadsheet details the data of an organization and presents them in tabular form
to make the report more representatives (Garrison et al, 2010). There are various formulas
consisted in the spreadsheet which helps the user to solve any issues at earliest. Though, few

Accounting system 17
issues are also involved in the spreadsheet application such as chances of error, changes into
a single cell affect the entire data etc.
Conclusion:
To conclude, spreadsheet is crucial for every business and it helps the companies to
maintain the performance and reach over a conclusion fast and easily.
Fancy Footwear
Data Trial balance Debit Credit
Cash 12450
Accounts receivable 17650
Inventory 56980
Supplies 7560
Buildings 145000
Accumulated depreciation,
building 17600
Furniture 23780
Accumulated dep, furniture 5760
Accounts payable 17400
Salary payable
Interest payable
Unearned sales revenue 7650
Note payable, long terms 34000
Capital 142675
Drawings 4590
Sales revenue 166000
Sales discount 3450
Sales returns and allowances 3430
Purchase 89700
Purchase discount 4015
Purchase return and
allowances 7690
Selling expenses 23700
Supplies expenses
Depreciation on building
Depreciation on furniture
Salaries expenses
General expenses 14500
Supplies expenses
Depreciation on building

Accounting system 18
Depreciation on furniture
Interest expenses
Suspense
Total 402790 402790
Adjustments:
Normal View:
Fancy Footwear
Data Trial balance Debit Credit
Cash 12450
Accounts receivable 17650
Inventory 56980
Supplies 7560
Buildings 145000
Accumulated depreciation,
building 17600
Furniture 23780
Accumulated dep, furniture 5760
Accounts payable 17400
Salary payable 2300
Interest payable 1400
Unearned sales revenue 10550
Note payable, long terms 34000
Capital 142675
Drawings 4590
Sales revenue 166000
Sales discount 3450
Sales returns and allowances 3430
Purchase 89700
Purchase discount 4015
Purchase return and
allowances 7690
Selling expenses 23700
Supplies expenses 1600
Depreciation on building 2000
Depreciation on furniture 1850
Salaries expenses
General expenses 14500
Supplies expenses 800
Depreciation on building 2000
Depreciation on furniture 1850
Interest expenses

Accounting system 19
Suspense 6600
Total 402790 409390
Formula view:
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
G H I J
Data Trial balance Debit Credit
Cash 12450
Accounts receivable 17650
Inventory 56980
Supplies 7560
Buildings 145000
Accumulatde depreciation, building 17600
Furniture 23780
Accumulated dep, furniture 5760
Accounts payable 17400
Salary payable 2300
Interest payable 1400
Unearned sales revenue =2900+7650
Note payable, long terms 34000
Capital 142675
Drawings 4590
Sales revenue 166000
Sales discount 3450
Sales returns and allownces 3430
Purchase 89700
Purchase discount 4015
Purchase return and allownces 7690
Selling expenses 23700
Supplies expenses =2400*2/3
Depreciation on building =4000/2
Depreciation on furniture =3700/2
Salaries expenses
General expenses 14500
Supplies expenses =2400*1/3
Depreciation on building =4000/2
Depreciation on furniture =3700/2
Interest expenses
Suspense =(J40-I40)
Total =SUM(I7:I38)-I30-I31-I32-I35-I36-I37 =SUM(J7:J38)
Fancy Footwear
Changes:
Normal View:
Fancy Footwear
Data Trial balance Debit Credit
Cash 12450
Accounts receivable 21650
Inventory 56980
Supplies 7560
Buildings 145000

Accounting system 20
Accumulated depreciation,
building 17600
Furniture 23780
Accumulated dep, furniture 5760
Accounts payable 22900
Salary payable 2300
Interest payable 1400
Unearned sales revenue 10550
Note payable, long terms 34000
Capital 142675
Drawings 4590
Sales revenue 166000
Sales discount 3450
Sales returns and allowances 5030
Purchase 93700
Purchase discount 4015
Purchase return and
allowances 5190
Selling expenses 23700
Supplies expenses 1600
Depreciation on building 2000
Depreciation on furniture 1850
Salaries expenses
General expenses 14500
Supplies expenses 800
Depreciation on building 2000
Depreciation on furniture 1850
Interest expenses
Suspense
Total 412390 412390
Formula view:

Accounting system 21
5
6
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8
9
10
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19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
L M N O
Data Trial balance Debit Credit
Cash 12450
Accounts receivable =17650+4000
Inventory 56980
Supplies 7560
Buildings 145000
Accumulatde depreciation, building 17600
Furniture 23780
Accumulated dep, furniture 5760
Accounts payable =17400+5500
Salary payable 2300
Interest payable 1400
Unearned sales revenue =2900+7650
Note payable, long terms 34000
Capital 142675
Drawings 4590
Sales revenue 166000
Sales discount 3450
Sales returns and allownces =3430+1600
Purchase =89700+4000
Purchase discount 4015
Purchase return and allownces =7690-2500
Selling expenses 23700
Supplies expenses =2400*2/3
Depreciation on building =4000/2
Depreciation on furniture=3700/2
Salaries expenses
General expenses 14500
Supplies expenses =2400*1/3
Depreciation on building =4000/2
Depreciation on furniture=3700/2
Interest expenses
Suspense
Total =SUM(N7:N38)-N30-N31-N32-N35-N36-N37=SUM(O7:O38)
Fancy Footwear
Que 7:
Application of inventory flow assumptions:
a) Inventory:
Normal:
Statement
of units

Accounting system 22
Purchase Sales Balance
Date
No of
units
No of
units
No of
units
20XX
Oct-01 60
Oct-03 10 70
Oct-12 30 100
Oct-18 70 170
Oct-31 170
115 55
Formula:
15
16
17
18
19
20
21
22
23
24
A B C D
Statement of units
Purchase Sales Balance
Date No of units No of units No of units
20XX
37165 =C6
=A7 =C7 =D19+B20
=A8 =C8 =B21+D20
=A9 =C9 =D21+B22
=A10 =D22+B23
115 =D23-C24
b) Avg cost method:
Normal:
Increase Decrease Balance
Date
No of
units
Unit
cost
Total
cost
No of
units
Unit
cost
Total
cost
No of
units
Unit
cost
Total
cost
20X
X
Oct-
01 60 57 3420
Oct-
03 10 65 650 10 65 4070
60 57
Oct-
12 30 70 2100 30 70 6170
10 65
60 57
Oct- 70 72 5040 70 72 11210

Accounting system 23
18
30 70
10 65
60 57
170
55
65.94
12
3626.7
6
Oct-
31 115 66 7590
Formula:
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
A B C D E F G H I J
Date No of units Unit cost Total cost No of units Unit cost Total cost No of units Unit cost Total cost
20XX
37165 =C6 =D6 =H32*I32
37895 =C7 =D7 =B33*C33 =B33 =C33 =(H33*I33)+(H34*I34)
=H32 =I32
41183 =C8 =D8 =B35*C35 =B35 =C35 =(H35*I35)+(H36*I36)+(H37*I37)
=H33 =I33
=H34 =I34
43374 =C9 =D9 =B38*C38 =B38 =C38 =(H38*I38)+(H39*I39)+(H40*I40)+(H41*I41)
=H35 =I35
=H36 =I36
=H37 =I37
=SUM(B33:B41)+H32
55 =J38/B42 =E44*F44
11597 =SUM(H38:H41)-E44=AVERAGE(I38:I41)=H45*I45
Increase Decrase Balance
(Bromwich and Bhimani, 2005)
c) FIFO:
Normal:
FIF
O
Increase Decrease Balance
Date
No of
units
Unit
cost
Total
cost
No of
units
Unit
cost
Total
cost
No of
units
Unit
cost
Total
cost
20X
X
Oct-
01 60 57 3420
Oct-
03 10 65 650 10 65 4070
60 57
Oct-
12 30 70 2100 30 70 6170
10 65
60 57
Oct-
18 70 72 5040 70 72 11210

Accounting system 24
30 70
10 65
60 57
170
Oct-
31 55 3135
Oct-
31 5 8075
115 30
Formula:
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
A B C D E F G H I J
FIFO
Date No of units Unit cost Total cost No of units Unit cost Total cost No of units Unit cost Total cost
=A31
37165 =H32 =I32 =H55*I55
37895 =B33 =C33 =D33 =H33 =I33 =(H56*I56)+(H57*I57)
=H34 =I34
41183 =B35 =C35 =D35 =H35 =I35 =(H58*I58)+(H59*I59)+(H60*I60)
=H36 =I36
=H37 =I37
43374 =B38 =C38 =D38 =H38 =I38 =(H61*I61)+(H62*I62)+(H63*I63)+(H64*I64)
=H39 =I39
=H40 =I40
=H41 =I41
=SUM(B56:B64)+H55
=A68 55 =I55*55
11597 5 =(H68*I55)+(10*I56)+(H58*I58)+(H61*I61)
115 30
Increase Decrase Balance
d) LIFO:
Normal:
LIF
O
Increase Decrease Balance
Date
No of
units
Unit
cost
Total
cost
No of
units
Unit
cost
Total
cost
No of
units
Unit
cost
Total
cost
20X
X
Oct-
01 60 57 3420
Oct-
03 10 65 650 10 65 4070
60 57
Oct-
12 30 70 2100 30 70 6170
10 65
60 57
Oct-
18 70 72 5040 70 72 11210

Accounting system 25
30 70
10 65
60 57
Oct-
31 55 3470
Oct-
31 10 65 3830
30 70
15 72
Formula:
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
A B C D E F G H I J
LIFO
Date No of units Unit cost Total cost No of units Unit cost Total cost No of units Unit cost Total cost
20XX
37165 =H55 =I55 =H77*I77
37895 =B56 =C56 =D56 =H56 =I56 =(H78*I78)+(H79*I79)
=H57 =I57
41183 =B58 =C58 =D58 =H58 =I58 =(H80*I80)+(H81*I81)+(H82*I82)
=H59 =I59
=H60 =I60
43374 =B61 =C61 =D61 =H61 =I61 =(H83*I83)+(H84*I84)+(H85*I85)+(H86*I86)
=H62 =I62
=H63 =I63
=H64 =I64
=A88 55 =(10*C83)+D80+D78
11597 10 65 =(H88*I88)+(H89*I89)+(H90*I90)
30 70
15 72
Increase Decrase Balance
Gross profit calculations:
Normal view:
Calculation of gross profit
Average cost FIFO LIFO
Total cost 7590 8075 3830
Total sales 25000 25000 25000
Gross profit margin 30.36% 32.30% 15.32%
Formula view:
4
5
6
7
8
9
I J K L M N
Average cost FIFO LIFO
Total cost =J45 =J68 =J88
Total sales =$C$12 =$C$12 =$C$12
Gross profit margin =K7/K8 =L7/L8 =M7/M8
Calculation of gross profit

Accounting system 26
Que 8:
Bank Reconciliation:
Donald Insurance
Data
Bank balance on April 30 18430
ADJ:
EFT Rent receipt -500
EFT Insurance payment 200
NSF Cheque from customer -900
Note receivable -1600
Bank error Cheque 1419 630
Bank service charges 30
Deposit in transit -2160
outstanding cheque
Cheque num 1420 1450
Cheque num 1421 800
Cheque num 1422 660
Cash account balance as of 30
April 17040
(Hansen, Mowen and Guan, 2007)

Accounting system 27
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
A B
Data
Bank balance on april 30 18430
ADJ:
EFT Rent receipt =-500
EFT Insurance payment =200
NSF Cheque from customer =-900
Note receivable =-1600
Bank error Cheque 1419 =630
Bank service charges 30
Deposit in trnasit =-2160
outstanding cheque
Cheque num 1420 =1450
Cheque num 1421 =800
Cheque num 1422 =660
Cash account balance as of 30 april =SUM(B5:B17)
Donald Insurance
Changes:
Donald Insurance
Data
Bank balance on April 30 18430
ADJ:
EFT Rent receipt -300
EFT Insurance payment 1200
NSF Cheque from customer -1100
Note receivable -1100
Bank error Cheque 1419 130
Bank service charges 30
Deposit in transit -3160
outstanding cheque
Cheque num 1420 1950
Cheque num 1421 600
Cheque num 1422 360
Cash account balance as of 30
April 17040

Accounting system 28
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
D E
Data
Bank balance on april 30 18430
ADJ:
EFT Rent receipt =-500+200
EFT Insurance payment =200+1000
NSF Cheque from customer =-900-200
Note receivable =-1600+500
Bank error Cheque 1419 =630-500
Bank service charges 30
Deposit in trnasit =-2160-1000
outstanding cheque
Cheque num 1420 =1450+500
Cheque num 1421 =800-200
Cheque num 1422 =660-300
Cash account balance as of 30 april =SUM(E5:E17)
Donald Insurance
Que 9:
Journalizing accounts receivable entries:
Date Particulars Amount
Debit Credit
Debtors a/c 5000
Sales a/c 5000
(Sales on credit.)
Cash a/c 3000
Debtors a/c 3000
(Amount received from debtors.)
Allowances for doubtful debts 2000
Debtors a/c 2000
(Debtors amount write off.)
Debtors a/c 2000
Allowances for doubtful debts 2000

Accounting system 29
(Reinstatement debtors amount)
Cash a/c 2000
Debtors a/c 2000
(Amount received from debtors.)
Que 10:
Estimating Bad debts:
Bad debts are the debtor’s amount which has not been covered by the company:
a) % of sales method:
It explains that the bad debts must be estimated on the basis of total sales of the
company. Sales which have not been collected are the basis to evaluate the bad debts.
Bad debts= Net sales (Total or credit)*% estimated as uncollectible
Account receivable 10000
Less:
Allowances for doubtful
debts 500
Accounts receivable 9500
b) % of receivable method:
This method takes the concern of financial statement. It calculates the allowances to
identify the bad debts amount (Gapenski, 2008).
Bad debts= (account receivable closing balance* % estimated as uncollectible)-
existing credit balance in allowances for doubtful debts+ existing debit balance in
allowances for doubtful debts
Bad debts
expenses
6000
Allowances for doubtful
debts
6000
(10000*6%)
Account receivable 10000

Accounting system 30
Less:
Allowances for doubtful
debts 500
Accounts receivable 9500
Que 11:
Computers and accounts receivable:
Computers have become one of the crucial parts for daily life. Most of the stores are
using the online store to sell their products; various portals are available in the market for
such factors such as e-bay. If a company wants to register it on e-bay than a computer is
required to update the stock, upload the images and track the stock of the company. Thus, the
computers are important part of life in case of online business (Snyder and Davenport,
(2013).
Que 12:
Dishonor of a note receivable:
Dishonoring of note receivable is the process in which note receivable of an
organization get dishonor and company gets fail to get the amount from debtors (Dixon and
Monk, 2009).
An evaluation has been done on XYZ Company which explains that 75% of sales are
generated by the company on credit basis. Current total sale is $ 10000 of the company. So
the total credit amount is $7500. A debtor has given a note receivable to the company against
the amount. In bank, the note receivable of $4000 gets dishonored (Weygandt, Kimmel &
Kieso, 2015).
Entry:
Note receivable account
Debit Credit
Debtors 7500 Bank 7500
dishonour 4000
Balance
c/d 4000

Accounting system 31
11500 11500
Que 13:
Work integrated assessment:
Executive summary:
Investors of an organization are required to evaluate and analyze the financial and non
financial position of an organization to make better decision about the performance of the
company. This report explains about the investment position of Wesfarmers limited.
Introduction:
This report mainly focuses on Wesfarmers limited. It evaluates the activities, process,
profits, products, and financial statement etc of the company to measure the performance of
the company. Mainly, this report has been prepared to give the investment brief to the
investors about the company.
Performance indicators
Performance indicator of Wesfarmers limited is as follows:
Financial Data
Description WESFARMERS LTD
2017 2016 2015
Revenue 68,015 65,512 62,102
Cost of goods sold 46,359 45,525 43,145
Gross profit 21,656 19,987 18,957
It explains that the gross profit margin of the company is 31.84% in current scenario
which has been enhanced from last 2 years.

Accounting system 32
Comprehensive income:
The comprehensive income of an organization includes the total turnover of an
organization from the main products and the exceptions products and services of the
company. The income of the company has been enhanced by 3.82% in current year in context
with last year, 2016.
Expertise from Board of Directors
The director’s report of the company briefs about various positive changes into the
current scenario and it also briefs that the performance and the position of the company has
been better in the industry.
Financial ratio
Financial ratio of the company briefs about the financial changes and the performance
of the company in the market. The calculations of financial ratios of the company are as
follows:
Description Formula WESFARMERS LTD
2017 2016 2015
Profitability
Return on
shareholder
funds NPAT/ Total equity 12.00% 1.77% 9.85%
Operating
profit margin
Operating net profit /
Sales 5.42% 0.98% 4.97%
Gross Profit
Margin Gross Profit / Sales 31.84% 30.51% 30.53%
Liquidity 2017 2016 2015
Current ratio
Current
assets/current
liabilities 0.93 0.93 0.93

Accounting system 33
Acid test
ratios
Current assets-
Inventory/current
liabilities 0.30 0.33 0.37
Asset
management
Efficiency 2017 2016 2015
Receivables
collection
period
Receivables/ Total
sales*365 8.76 9.07 8.60
Payables
collection
period
Payables/ Cost of
sales*365 52.08 52.04 48.74
Inventory
days
Inventory/ cost of
goods sold *365 51.41 50.19 46.50
Capital
structure
ratio 2017 2016 2015
Gearing
Noncurrent interest
bearing debt /
noncurrent interest
bearing debt +
equity 0.15 0.20 0.16
Debt ratio
Total Liabilities /
total assets 0.40 0.44 0.39
Financial
ratios 2017 2016 2015

Accounting system 34
Earnings per
share
NPAT/ Number of
ordinary shares 2.55 0.36 2.16
Price earring
ratio
Market price per
share / earnings per
share 16.32
Market to
book ratio
Market price per
share / Book value
per share 1.6624
(Hillier, Grinblatt and Titman, 2011)
Conclusion
On the basis of these reports, it has been found that the financial position of the
company has been better and the company is offering high returns to the stakeholders of the
company. Thus, the investors should invest into the company.

Accounting system 35
References:
Bromwich, M. and Bhimani, A., (2005). Management accounting: Pathways to progress.
Cima publishing.
Davies, T. and Crawford, I., (2011). Business accounting and finance. Pearson.
Dixon, A.D. and Monk, A.H., (2009). The power of finance: accounting harmonization's
effect on pension provision. Journal of Economic Geography, 9(5), pp.619-639.
Gapenski, L.C., (2008). Healthcare finance: an introduction to accounting and financial
management. Health Administration Press.
Garrison, R. H., Noreen, E. W., Brewer, P. C., & McGowan, A. (2010). Managerial
accounting. Issues in Accounting Education, 25(4), 792-793.
Hansen, D., Mowen, M. and Guan, L., (2007). Cost management: accounting and control.
Cengage Learning.
Hillier, D., Grinblatt, M. and Titman, S., (2011). Financial markets and corporate strategy.
McGraw Hill.
Hoque, Z., (2002). Strategic management accounting. Spiro Press.
Snyder, H. and Davenport, E., (2013). What does it really cost? Allocating indirect
costs. Asian Libraries.
Stratton, A.J., SAS Institute Inc., 2009. Systems and methods for costing reciprocal
relationships. U.S. Patent 7,634,431.
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2015). Financial & Managerial Accounting.
John Wiley & Sons.