CPPDSM4006A: Trust Accounting Assessment 2 - Evansdale Realty

This assignment, part of the CPPDSM4006A unit, focuses on sales trust accounting within the context of Evansdale Realty. The assignment is divided into two main parts: Part A involves answering knowledge-based questions on key accounting principles like Accounting Entity, Monetary, and Recognition of Law Conventions, crucial for maintaining accurate client fund records. Part B requires students to complete practical accounting tasks, including preparing the trust cash book (receipts and payments), trust ledgers, trial balance, and a bank reconciliation statement. Students are provided with a detailed scenario involving various transactions in May 2017, along with a bank statement, and are expected to apply their knowledge to accurately record and reconcile all transactions in compliance with relevant regulations. The assignment emphasizes the importance of correct journal entries, ledger postings, and the preparation of a bank reconciliation to ensure the integrity of trust accounts. The provided solution includes the completed flow chart, explanations of accounting principles, and the completed books of account, allowing students to understand and master trust accounting procedures. The assignment ensures compliance with the Act and Regulations of the State and uses the Trust Cash Book and ledger records of Evansdale Realty to prepare a Trust Bank Reconciliation.

Journal (Cashbook)
Reports
Receipts Payments
Settlement
Statements
Itemised accounts
Item
Landlord Statements
Source document
Journal cash receipt Journal payment
Trial Balance
Account ledger
Transactions
CPPDSM4006A: Assessment2 Sales
What you have to do
This unit of competency specifies the outcomes required to establish and manage trust
accounts in an agency context. It includes reviewing agency accounts for compliance with
trust account requirements, establishing and managing trust accounts, maintaining records
of trust transactions, and monitoring and reviewing trust accounts.
Do not submit project 2 until you have received a satisfactory result and feedback from your
teacher for project 1.
You must complete all activities.
Part A - Knowledge questions
Complete the flow chart for the trust accounting cycle

NB: you may answer this question by clicking onto the boxes in the flow chart or in the
‘answer sheet’ spread sheet – task 1
2. Briefly explain the meaning of the following key accounting principles fortrust
accounting that ensures accurate maintenance of clients’ funds.
Accounting principles are set of rules and regulation or guidelines that need to be
followed by enterprise while representing financial data and information. Interested
individuals of firm can easily trust data or information represent in balance sheet or
other financial documents. Thus, the major aim for several accounting principles is to
build accounting trust and storage of correct information related to funds. Therefore,
several accounting principles needs to be considered while representing financial
information are explained below:
 Accounting Entity Convention
It is one the basic principle of accounting which state the way companies need to
record or stores related to specific business transaction. In another words, it
emphasis to keep personal transaction of owner separate from business as
enterprise is always separate and legal entity. There are four main method of
accounting convention that assist accountant the way several information can be
stored and managed for better use in future. Like conservatism it emphasis that when
two value of transaction is present that accountant needs to considered lower that
means” it should provide for all losses but anticipate no profit”. So, business must
have record of all losses incurred but record profit or asses when they actually
realised. Consistency is another accounting convention method which states that
company needs to follow similar principle of accounting in different accounting cycle
expect when it is necessary for firm to change. At the same time company need to
fully disclose all relevant facts and figure to interest parties so that they can make
right decision. Materiality stated that financial statement of company should include
all material or crucial information, facts and statistics that are necessary to
understand firm position and market share.
 Accounting Monetary Convention
This principle specifies that accounting transaction can only be written in financial
statement if they can be easily measured in monetary terms. Thus, non quantified
data like employees skills, performance and customers experienced cannot be
present in financial statement as they have no value or cannot be converted into
money. This principle also assumes that changes in purchasing power required to be
made adjustment in financial statement of company.
 Recognition of Law Convention
It state about recognised laws related to convention or set accounting
principles that are mainly applied to trust accounts. This law is mainly implemented to
reduce conflict of law rules so that trust accounts can be effectively used. Therefore
it can be stated that it is mostly applicable to trust accounts and their recognition with
main aim to reduce chance of conflict.
2

Part B - Practical activity
You are to complete the appropriate books of account(journals, ledgers and trial balance) for
Evansdale Realty sales trust account based on the following scenario:
Using the Trust Cash Book and ledger records of Evansdale Realty prepare a Trust Bank
Reconciliation so it complies with the Regulations. You are entitled to assume that the
bank statement is correct.
Scenario
Students to note the following:
 The Trust Cash Book, Trust Ledgers, Trust Trial Balance and Bank Reconciliation
are to be completed so as to comply with the Act and Regulations of your State.
 The next Trust Receipt Number to be issued is number 101 and the next Trust
Cheque number is 710.
 All trust receipts are banked on the day of receipt.
 All receipts and payments are by cheque unless otherwise stated.
 All transactions are GST free unless stated.
 The accounts in the Trust Ledger had the following balances as at 30th April, 2017.
LEDGER# LEDGER NAME LEDGER BALANCE
600 Trust Bank Ledger $120,000 Debit
610 Lambeth to Thomas 55,000 Credit
620 Appleyard to Crain 65,000 Credit
May 2017
1st Received the balance of 10% deposit from D King on the property owned by H
Beattie. The sales price is $970,000.
2nd Received a deposit $74,000 from F Burrell for a development property owned by D
Koorey. The cheque was payable to the agent who made special arrangements for
its clearance to facilitate investment in a separate interest bearing account at
Countrywide Bank with the proceeds being distributed equally in accordance with a
special agreement.
4th Received a preliminary deposit from M Paul on a property owned by A Rankin, $500
6th Received part deposit from P Sherlock for the purchase of a house owned by N
Stewart $10,000.
7th Received an initial deposit of $500 from V Black on the property owned by M
Gleeson.

10thReceived $5000 advertising contribution from C Albanese whose property will be
auctioned on 26 May.
12thThe sale between Lambeth to Thomas settled after commission of $12,100 was paid.
14thThe balance of a 10% deposit was received from M Paul on a property owned by A
Rankin with a sale price of $760,000.
16th Received balance of 10% deposit from P Sherlock on the property owned by N
Stewart with a sales price of $850,000.
19th The Gleeson to Black sale did not proceed and initial deposit was refunded.
20th Paid $4,500 being commission for salespeople
21st Paid $1200 to Evansdale Newspapers for advertising on behalf of C Albanese.
29th Settlement occurred on the sale of H Beattie to D King. The conveyancer requested
the deposit be released after the agent’s commission of $21 340 is deducted.
30th Settlement occurred between Koorey to Burrell. The initial deposit plus $230
interest was rebanked into the Trust Account. Sales commission was $16,280 with
the appropriate balance of funds being sent to the two parties involved.
The blank forms required for this exercise can be found on a separate document
called ‘CPPDSM4006A_Assmt2_Answer_sheet.xls’. Click on tabs at the bottom of the
window (i.e. - receipt side of cash book, payment side of cash book, ledgers & trial
balance & bank reconciliation) to access the relevant worksheet for each task (see
diagram below)
You are entitled to assume that the bank statement is correct.
Countrywide Bank
Evansdale Realty Sales Trust Account
4

Date Details Debit Credit Balance
$120,000.00
c
r
01/05/2017
Deposi
t $ 97,000.00 $217,000.00
c
r
02/05/2017
Deposi
t $ 74,000.00 $291,000.00
c
r
02/05/2017 710 $ 74,000.00 $217,000.00
c
r
04/05/2017
Deposi
t $ 500.00 $217,500.00
c
r
06/05/2017
Deposi
t $ 10,000.00 $227,500.00
c
r
07/05/2017
Deposi
t $ 500.00 $228,000.00
c
r
10/05/2017
Deposi
t $ 5,000.00 $233,000.00
c
r
12/05/2017 711 $ 12,100.00 $220,900.00
c
r
12/05/2017 712 $ 42,900.00 $178,000.00
c
r
14/05/2017
Deposi
t $ 75,500.00 $253,500.00
c
r
16/05/2017
Deposi
t $ 75,000.00 $328,500.00
c
r
19/05/2017 713 $ 500.00 $328,000.00
c
r
29/05/2017 715 $ 21,340.00 $306,660.00
c
r
29/05/2017 716 $ 75,660.00 $231,000.00
c
r
30/05/2017 717 $ 16,280.00 $214,720.00
c
r
Checklist
Before uploading project to the OLS, please ensure that you completed the following:
Part A - Knowledge Questions
Part B -Practical activity:
 Receipt side
 Payments side
 Ledgers and trial balance
 Bank reconciliation