Comprehensive Financial Analysis and Accounting Assignment Solution

This document provides a comprehensive solution to a finance assignment, offering detailed analysis and examples across various financial concepts. It includes solutions for financial statements, exploring topics such as sales and expense analysis, and applying formulas in Excel. The assignment covers diverse areas, including the analysis of Wesfarmers as a shareholder investment, the impact of bad debt estimation methods, and the comparison of periodic versus perpetual inventory systems. It also addresses the use of spreadsheets as accounting tools, highlighting their advantages and disadvantages. Furthermore, the document provides examples of the 'IF' function in Excel and explores transactions involving notes receivable. The assignment is a comprehensive resource for understanding financial reporting and analysis, offering practical insights and real-world applications.

Solution 1:
Normal View
Details Month 1 Month 2 Month 3 Month 4 Month 5
Sales
$
42,500.00 $
51,000.00
$
61,200.00
$
73,440.00
$
88,128.00
Less:
Expenses
$
25,500.00 $
30,600.00
$
36,720.00
$
44,064.00
$
52,876.80
Net Profit
$
17,000.00
$
20,400.00
$
24,480.00
$
29,376.00
$
35,251.20
Formula View
Details Month 1 Month 2 Month 3 Month 4 Month 5
Sales 42500 =D3*120% =E3*120% =F3*120% =G3*120%
Less:
Expense
s =D3*0.6 =E3*0.6 =F3*0.6 =G3*0.6 =H3*0.6
Net
Profit
=Sales-
Less__Expens
es
=Sales-
Less__Expens
es
=Sales-
Less__Expens
es
=Sales-
Less__Expens
es
=Sales-
Less__Expens
es
Solution 2:
Particulars Year 1 Year 2 Year 3 Year 4 Year 5
Sales
$
70,000.00
$
77,000.00
$
84,700.00
$
93,170.00
$
102,487.00
Less: Cost Expenses
$
49,000.00
$
53,900.00
$
59,290.00
$
65,219.00
$
71,740.90
Gross Profit $ $ $ $ $

21,000.00 23,100.00 25,410.00 27,951.00 30,746.10
Less: Other Expenses
$
57,000.00
$
57,000.00
$
57,000.00
$
57,000.00
$
57,000.00
Income (net)
($36,000.00
)
($33,900.00
)
($31,590.00
)
($29,049.00
)
($26,253.90
)
It was the general accounting practice, it is a trend to show the negative numbers in
brackets due to multiple reasons. Showing negative numbers in brackets helps to distinct the
negative number from the positive numbers and helps in understanding the financial report in
much better way. In case negative numbers are shown without the brackets than it will create
confusion and it is very difficult to recognize negative numbers provided in the financial
accounting report. Brackets clearly indicate that numbers inside them are being negative and
have to be subtracted from given value. It increases the presentation of the annual financial
report (Brealey, Myers & Marcus, 2007).
Solution 3:
Normal View
Financial Information of company
Particulars Year 1 Year 2 Year 3 Year 4 Year 5
Current Assets
$
22,000.00
$
24,200.00
$
26,620.00
$
29,282.00
$
32,210.20
Current
Liabilities
$
14,000.00
$
15,400.00
$
16,940.00
$
18,634.00
$
20,497.40
Inventory
$
40,000.00
$
44,000.00
$
48,400.00
$
53,240.00
$
58,564.00
Debt
$
55,000.00
$
60,500.00
$
66,550.00
$
73,205.00
$
80,525.50
Equity
$
95,000.00
$
104,500.00
$
114,950.00
$
126,445.00
$
139,089.50

Financila Report of the company
Particulars Year 1 Year 2 Year 3 Year 4
Current Ratio 1.57 1.57 1.57 1.57
Formula View
Financial Information of company
ParticularsYearYear 2Year 3Year 4Year 5
Current As### ### ### ### ###
Current Liab### ### ### ### ###
Inventory ### ### ### ### ###
Solution 4:
If function is the popular tool used in excel to check the defined statement is true or false.
In this context it can be said that it is type of programming condition statement that condition of
both true and false. In case statement condition turns to be true than value defined for true syntax
is followed otherwise value defined for false statement is followed.

Example of If Function in Excel (Normal View)
Particulars
Revenue
Less: Cost of Goods Sold
Gross Profit
Less: operating Expenses
Net Profit
Example of If Function in Excel (Function View)
Particulars Year 1
Revenue $ 100,000.00
Less: Cost of G $ 60,000.00
Gross Profit $ 40,000.00
Less: operating $ 15,000.00
Net Profit $25,000.00
Solution 5:
Periodic Vs Perpetual System of Inventory
Business organizations adopt the use of perpetual and periodic inventory systems for
maintaining a record of their inventories. The periodic system of inventory refers to carrying out
the occasional tracking of inventory level by its physical counting whereas perpetual system
maintains a record of continual track of the balances of inventory. Both the methods are regarded
as contrasting method of accounting used for tracking the quantity of products by the business
entities. The Foot video in Interact 2 resources depicts the perpetual inventory system as it is
about a type of inventory system that is continually updated and monitored. The example of
perpetual inventory system requires regular updates bout sale and purchase return and purchase
discounts. On the other hand, periodic inventory system is used to record the purchases of each
sale transaction (Robinson & Henry, 2015).
Solution 6:

Worksheet and financial reports
Introduction
The present report is developed for providing an analysis of the spreadsheets as tool for
accounting. In this context, it has provided the advantages and disadvantages of spreadsheet to
provide a detailed understanding of the critical usefulness of spreadsheets for processing the
accounting information.
Critical Evaluation of Spreadsheets as an Accounting Tool
Spreadsheet is regarded as an interactive computer application that enables the
accounting professionals to collect analysis and store the large quantity of data in tabular form.
The accounting professionals are adopting the use of spreadsheets to large extent for solving
complex calculations and therefore it helps in easy capturing and process of wide accounting
information. Spreadsheets have become a major productivity tools for business corporations as it
has provided an interactive platform to the accounting professionals for storing and interpretation
of data for financial decision-making. The spreadsheet uses can be categorized into three broad
categories, that are, operational, analytical and financial sheets. The operational spreadsheets are
used for tracking and monitoring the business processes whereas the analytic spreadsheets are
used for supporting the decision-making process of management. Lastly, the financial
spreadsheets are used for storing and determining the amounts and balances in the financial
statement (Wahlen et al., 2017). The use of spreadsheet is particularly becoming important in the
business organizations for supporting the critical financial functions and systems. One of the
most popular tools used for analyzing and visualizing the complex financial data sets in
spreadsheet technique is Microsoft Excel. The significant advantages and disadvantages of
spreadsheets to be used as an accounting tool can be discussed as follows:
Advantages
The main advantage of using spreadsheet as an accounting tool is that makes calculations
relatively easy for the accounting professionals. The spreadsheets have displayed various stages
of calculations adequately with brief explanation of each step of the calculation. The
spreadsheets can be displayed in the format as required as the grid in the cells can be either

hidden or can be made visible. The spreadsheet also provides the formulas for complex
calculations and increases productivity of an organization by easy processing of information. It
also removes the need for unnecessary calculations that saves time and money both for the
organization. It also eliminated the need for highly educated operators and as such removes the
need for hiring the skilled accounting professionals and reduces the operational costs.
Disadvantages
The spreadsheets use is also associated with risk such as poor design, functional errors,
fraud and security risk that can limit their application for processing and storing important
financial data. In addition to this, it also results in deskilling of accounting professionals as all
the formulas are provided ready-made and as such it can negatively impact the development of
numeracy ad reasoning skills of accounting professionals.
Conclusion
The report concludes that spreadsheets are an effective tool for the accounting
professionals. There most significant advantage is that it facilitates accounting professionals to
do complex calculation easily. However, the major disadvantage of using spreadsheet is that it is
associated with security issues and ca also case deskilled of accountants (Carlberg, 2007).
Solution 7:
Requirement 1 and 2
Report
Ending Inventory on October 31
FIFO Method Units Cost per unit
Inventory Shows 115 units
Cost 70 $ 72.00

Report
Ending Inventory on October 31
FIFO Method Units Cost per unit
Inventory Shows 115 units
Cost 70 $ 72.00
Inventory Shows 115 units
Cost 60 $ 57.00
10 $ 65.00
30 $ 70.00
15 $ 72.00
Value of ending inventory
Cost of Goods Sold
Add: Puchases 10 $ 65.00
Add: Puchases 30 $ 70.00
Add: Puchases 70 $ 72.00
Total
Less: Closing Inventory 115
Cost of Goods Sold
Cost of Goods Sold
Add: Puchases 10 $ 65.00
Add: Puchases 30 $ 70.00
Add: Puchases 70 $ 72.00
Total
Less: Closing Inventory 115
(Bromwich & Bhimani, 2005)
Solution 8:
Normal View

Particulars Amount
Bank Balance on 31 July
Add: Deposit Transit
Balance
Less: Outstanding Checks
Cheque no. 1420 $ 1,678.00
Cheque no. 1421 $ 760.00
Cheque no. 1422 $ 340.00
Adjusted cash Balance as per bank
Cash balance as per book
Add:
EFT Rent Receipt $ 600.00
Note Receivables $ 2,650.00
Less:
EFT Insurance Payment $ 300.00
Bank service Charge $ 65.00
NSF Cheque from customer $ 2,400.00
Error Cheque 1419 $ 456.00
Adjusted Cash Balance as per books
Formula View

Bank Balance on 31 July ###
Add: Deposit Transit ###
Balance ###
Less: Outstanding Checks
Cheque no. ###
Cheque no. ###
Cheque no. ### ###
Adjusted cash Balance as ###
Cash balance as per book ###
Add:
EFT Rent Receipt ###
Note Receivables ### ###
Less:
EFT Insurance Paym ###
Bank service Charge ###
NSF Cheque from cu ###
Error Cheque 1419 ### ###
Adjusted Cash Balance a ###
(Bromwich & Bhimani, 2005)
Solution 9:

Journal Entries Debit
Accounts Receivables $ 14,000.00
Sales
(Sales to Ram on Credit)
Cash $ 4,000.00
Account Receivables
(Part Collection of accounts receivables)
Bad Debt Expense $ 10,000.00
Account Receivable
(Writing off the account receivable)
Account Receivable $ 10,000.00
Bad Debt Expense
(Reinstatement of an amount written off)
Cash $ 10,000.00
(Bromwich & Bhimani, 2005)
Solution 10:
The two moth important methods of estimating the bad debt are as follows:
 Percentage of sales method
 Percentage of account receivable method
Percentage of sales method: As per this method bad debt are estimated as the percentage of the
sales made on credit.
Example on percentage of sales method:
Suppose the credit sale of the firm is $25000 and it has been estimated that bad debt is equal to
10% of credit sales. The bad debt expenses estimated by the company is $25000 *10% = $2500.

Percentage of accounts receivable method: According to this method bad debt expenses is
estimated as percentage of amount remain uncollected in the accounts receivable account. In this
method there is need to make the adjustment of prior period allowance for doubtful debt.
Example on percentage of accounts receivable method
Given data: It is estimated that company has ending accounts balance of $ 50000 and company
maintains 5% bad debt as a percentage of accounts receivable. Therefore bad debt is equal to
$50000 * 5%= $ 2500.
Solution 11:
Computers have become essential to online retailing as it has provided a platform to the
retailers for selling their products and services to the customers who access computers with the
development of an online website. For example, Ebay provides an attractive option on its online
website to the customers for bidding on various products (Ginsberg, 2010).
Solution 12:
Transaction that took place in May, 2018
 On May 1 Goods of amount $ 20000 has been sold to Mr. Y.
 On May 1, Notes Receivable has been drawn on Mr. Y for $20000.
 On May 15, Notes Receivable has been dishonored.
 On May 30, Amount has been collected for dishonored Notes Receivable
Date Journal Entries Debit Credit
1-May Account Receivable $ 20,000.00
Sales $ 20,000.00
1-May Notes Receivable $ 20,000.00
Account Receivable $ 20,000.00
15-May Account receivable $ 20,000.00
Notes Receivable $ 20,000.00

Date Journal Entries Debit Credit
1-May Account Receivable $ 20,000.00
Sales $ 20,000.00
Date Journal Entries Debit Credit
1-May Account Receivable $ 20,000.00
Date Journal Entries Debit Credit
(Brigham & Michael, 2013)
Solution 13:
Work Integrated Assessment case study
Introduction
The present report is prepared for discussing the performance of Wesfarmers as a
shareholder investment. In this context, it presents a brief description of the activities of
Wesfarmers, it sustainability issues and the financial information. The financial information is
also analyzed with the creation of charts for easy interpretation of financial information selected.
Critical Analysis of Wesfarmers as a Shareholder Investment
Wesfarmers, a supermarket giant of Australia is also involved in carrying out diverse
business activities such as liquor, hotels, convenience stores, home improvement and office
supplies. The annual report of the company has depicted it has grown into one of the largest
listed companies in Australia since the past few years. The company is also placing high focus
on reducing the environment footprint that results from various business activities. It also
complies with ISO 14001 environmental standards for ensuring that there is no negative impact