Accounting Assignment: Financial Statements and Analysis of Wesfarmers

This accounting assignment explores core financial accounting concepts, including the use of spreadsheets for data entry and reporting, with a focus on clarity and understandability through the use of names instead of cell references and the display of negative numbers. It delves into the periodic inventory system, demonstrating how to calculate the cost of goods sold. The assignment highlights the advantages of spreadsheets in accounting, such as editing, formula usage, and graphical data presentation. It also presents journal entries for accounts receivable, bad debts, and bill of exchange transactions, including the estimation of bad debts using both the percentage of sales and percentage of receivables methods. Furthermore, the assignment includes a ratio analysis to evaluate a firm's financial position and a summary of investment decisions related to Wesfarmers, providing a comprehensive overview of financial accounting practices.

ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
Q 1....................................................................................................................................................1
Q 2....................................................................................................................................................2
Q 3 ...................................................................................................................................................2
Q 4 ...................................................................................................................................................4
Q 5 ...................................................................................................................................................7
Q 6....................................................................................................................................................8
Q 7..................................................................................................................................................12
Q 8..................................................................................................................................................15
Q 9 .................................................................................................................................................16
Q 10................................................................................................................................................16
Q 11 Evaluate firm financial position............................................................................................18
Q 12................................................................................................................................................18
Q 13................................................................................................................................................19
Business which are part of Wesfarmers...............................................................................19
Summary to Vikram on investment decisions......................................................................23
CONCLUSION .............................................................................................................................23
REFERENCES .............................................................................................................................24

Illustration Index
Illustration 1: Q 1.............................................................................................................................1
Illustration 2: Data entry area..........................................................................................................2
Illustration 3: Report area................................................................................................................3
Illustration 4: Formula view.............................................................................................................3
Illustration 5: Formula view of IF statement...................................................................................5
Illustration 6: Trial balance, income statement and balance sheet...................................................7
Illustration 7: Trial balance, income statement and balance sheet..................................................8
Illustration 8: FIFO and LIFO method...........................................................................................10
Illustration 9: Average cost............................................................................................................11
Illustration 10: bank Reconsilation ...............................................................................................12

INTRODUCTION
Financial accounting helps the company to understand its position in the market. The
report covers that the idea of separation and data and report and also the use of IF function in the
spreadsheet. Also, the report mentions the periodic system and the use if worksheet in financial
reports. A bank reconciliation statement will be prepared. Journal entries of bad debts and
account receivables. The annual report of Wesfarmers is studied to and examined to summarise
the investment decision in the company.
Q 1
By using names instead of cell references makes it easier to interpret, understand and
maintain. Names can be given to cell range, table, function and table. This also makes the
formula presentable and rather easy to understand by the reader. Giving relevant names
facilitates the identification of the calculation which has been done in the worksheet.
1
Illustration 1: Q 1

Q 2
Negative number in accounting are displayed in parentheses as in the books of a company
a minus sign is not that easy to read so to present the negative number clearly parentheses is
used. Also, the negative numbers are displayed in red in excel sheet but considering that all the
companies do not use colour printers it may become hard to identify the negative balances in the
accounting books (Banerjee, 2010). The minus sign is very small to be omitted while reading the
report, so to avoid any error brackets are used to display negative figures.
Q 3
In a spread sheet the data entry and report area is displayed separately for better
presentation and understanding of the data and report. Th report looks easy to read when is
separate and also if and error has been made, the separate segmentation makes it easier to find
out the error as the data becomes easier to read.
2
Illustration 2: Data entry area

3
Illustration 3: Report area

Q 4
The if statement function is a logical function of excel software. The function works on
the simple reasoning of if else algorithm. The function considers a condition which is checked to
be be true or false. If the answers is true the if code is printed, and if the condition results to be
false the else code prints (Vasarhelyi, Kogan and Tuttle, 2015). This statement function is can be
used in worksheet. The function can be added in the cell as part of a formula and it acts on the
values in the cells of the worksheet.
Account Trial Balance
Debit Credit
Cash 12450
4
Illustration 4: Formula view

Accounts Receivable 17650
Inventory 56980
Supplies 7560
Buildings 145000
Accumulated Dep., Building 17600
Furniture 23780
Accumulated Dep., Furniture 5760
Accounts Payable 17400
Salary payable
Interests payable
Unearned Sales Revenue 7650
Note, payable, Long term 34000
Capital 142675
Drawings 4590
Sales Revenue 166000
Sales Discount 3450
Sales return and Allowances 3430
Purchases 89700
Purchases Discount 4015
Purchases Returns and Allowances 7690
Selling Expense 23700
Supplies Expense
Depreciation on building
Depreciation on Furniture
Salaries Expense
General Expense 14500
Supplies Expense
Depreciation on building
Depreciation on Furniture
Interests Expenses
Total 402790 402790
5

Q 5
Periodic inventory system is one under which amount of inventory is determined at end
of each accounting period or in specific period. Counting of inventory is done in period
inventory system and same are recorded in the financial statements. It is one of the important
system that is observed in most of business firms. Inventory is considered as an asset and due to
this reason it is necessary to transfer it in to company books of accounts. It can be said that
periodic inventory system have great significance for firms.
Inventory balance on January 1, 2016: $600,000
Purchases made during the year 2016: $1,200,000
Inventory balance on December 31, 2016: $500,000
6
Illustration 5: Formula view of IF statement

Cost of goods sold (COGS) = Beginning inventory + Purchases – Closing inventory
= $600,000 + $1,200,000 – $500,000
= $1,300,000
Q 6
Advancements of spreadsheet: spreadsheet are is the software of office is used in the accounting
process. The main advantage of the spreadsheet software are:
 Editing: The spreadsheet, the data can be entered in work sheet. You can enter data and
perform formula on the entered data. Any update in the value of the cell updates the
values in the result of the formula. This helps the company to compile data and make
reports of it, if any errors in the making of the file the company scan rectify the error in
the city.
 Formulas: Spreadsheet has the prime function of formula inside the software this enables
the company to enhance formula (Ngwakwe, 2012). The mathematical formula allows
the user to calculate with the values in the cell and common processes include looking up
values within a specified range, testing whether values meet certain conditions, carrying
out arithmetic operations, counting and transforming data items.
 Present functions: Formula are the most useful entity of the the spreadsheet but another
function of the spread sheet that is really useful is that the function of the software. All
the formulas used in the spreadsheet are integrated in the spreadsheet, all the common
formulas are present in the Excel which allows the fast working.
 Graphical displays of Data: The spreadsheet also allows the user to customize the data
into a graphical charts and diagrams which can be used to make the presentation better in
the excel sheets. By the use of pie charts and tables which makes the data easier to
understand and conclude the result from it.
7

8
Illustration 6: Trial balance, income statement and balance sheet

9
Illustration 7: Trial balance, income statement and balance sheet