Marvel Landscaping: Accounting Fundamentals Assignment Solution

This assignment solution focuses on the accounting fundamentals for Marvel Landscaping, a sole proprietor business. The solution encompasses a detailed analysis of business transactions, presented through journal entries, and the creation of various accounts, including assets, liabilities, and equity. Furthermore, the document provides a comprehensive overview of financial statements, T-accounts, and proposes actions for business improvement. It explores different depreciation and inventory valuation methods, along with a discussion of internal control mechanisms to prevent fraud. The assignment covers transactions from July 2017 to June 2018, including purchases, sales, rent, wages, and asset acquisitions, culminating in the preparation of a trial balance and a worksheet for the financial year-end, including adjustments and closing entries. The solution demonstrates a clear understanding of accounting principles and their application in a real-world business scenario.

ACCOUNTING FUNDAMENTALS 1
ACCOUNTING
FUNDAMENTALS

ACCOUNTING FUNDAMENTALS 2
Contents
Introduction:.............................................................................................................................3
Financial statements:..................................................................................................................4
Financial Report:......................................................................................................................27
Alternative methods of depreciation:...................................................................................32
Alternative methods of inventory:........................................................................................32
Internal control mechanisms:...............................................................................................33
Conclusion:.............................................................................................................................33
References:..............................................................................................................................34

ACCOUNTING FUNDAMENTALS 3
Introduction:
This assignment comprises of the business transactions that have been entered into by Stanlee
who is a sole proprietor of his business. This report records all of the business transactions in
the form of journal entries, lists down the various accounts as current and non-current assets
etc. further, this report also draws various T accounts and also, draw financial statements.
Then the respective actions that could be undertaken for the purposes of improving the
business of the company have been listed down. The report also lists down the various
method of depreciation that could be used along with its own set of advantages and
disadvantages. Also, lists down the internal control mechanisms that must be in place so that
there is no fraud and also, the various method of inventory valuation.

ACCOUNTING FUNDAMENTALS 4
Financial statements:
TRANSACTIONS
Date Details
Jul-17 2 Business established with contribution from A Stanlee of $100,000 cash.
5
Purchased inventory on credit from SuperStock. Purchased 25x Mermaid Fountains
for $349 each (not incl GST) and 12x Kingseat Garden Benches for $275 each (not
incl GST).
Aug 2 Bought office furniture (asset) from Smart Mart, on credit, for $33 000 (incl GST).
Aug 18 Bought general supplies for the office for $665.50 (incl GST). Paid with cash.
Aug 29 Paid Super Stock account in full for July purchases.
Sept 4
Sold 10x Mermaid Fountains on credit to Garden Solutions for $10 516 (gross
total). Credit terms 4/15 n60.
Sept 16 Received payment from debtor of Sept 4 (4% discount applies).
Sept 29 Sold 3x Kingseat Benches for $3 135 cash (incl GST).
Oct 2
Paid cash for insurance Invoice in the amount of $2750. (Invoice amount covers
insurance for 12months - 1 Oct 17-30 Sept 18, and includes GST)
Oct 9
Performed services including delivery and installation for $1870 (incl GST) on
credit to customers.
Oct 12
Purchased inventory from SuperStock: 10x Mermaid Fountains for $360 each (not
incl GST). Paid with cash.
Nov 5 Paid Super Realty rent for July to October - paid cash $1232 (incl GST).
Nov 7
Sold 6x Mermaid Fountains on credit to Bank Botanicals for $6 479 (incl GST).
Credit terms 3/30 n60

ACCOUNTING FUNDAMENTALS 5
Dec 2
Received full payment from Bank Botanicals for sale of 7 Nov (3% discount
applies).
Jan-18 1
Paid $27 500 (incl GST) on credit for a Toyota van (asset). The van will have a
residual value of $6000 at the end of its effective life.
Feb 22 Purchased 4x Kingseat Benches for $1 200 total (not incl GST) on credit.
Mar 5 Paid Super Realty rent for November to February - paid cash $1232 (incl GST).
Mar 31
Sold inventory: 2x Mermaid Fountains and 6x Kingseat Benches for a total of
$14,190 (incl GST) cash.
June 6
Paid fortnightly wages: office assistant, T Frankenstand received $970 (net pay)
(PAYG $172).
June 20
Paid fortnightly wages: Frankenstand received $970 (net pay) (PAYG $172); and M
Spiders received $448 (net pay) (PAYG amount $21).
June 27 A. Stanlee withdrew $4500 from the business for private travel.
GENERAL JOURNAL
Date Details Debit Credit
July 2 Cash at bank
1,00,000
.00
A Stanlee, Capital
1,00,000
.00
A Stanlee contributes cash to the business
July 5 Purchases
12,02
5.00
Account payable 12,02

ACCOUNTING FUNDAMENTALS 6
5.00
(Purchased raw material)
Aug 2 Office furniture
33,00
0.00
Cash
33,00
0.00
Purchased office furniture
Aug 18 General supplies
66
5.00
Cash
66
5.00
Purchased general supplies
Aug 29 Accounts payable
Cash
33,00
0.00
Paid for purchase of inventory
33,00
0.00
Sep 4 Accounts receivables
10,51
6.00
Sales
10,51
6.00
Sales made

ACCOUNTING FUNDAMENTALS 7
Sep 16 Cash
10,09
5.36
Accounts receivables
10,09
5.36
Cash received in respect of sales made
Sep 29 Cash
3,13
5.00
Sales
3,13
5.00
Sales made
Oct 2 Prepaid insurance
2,75
0.00
Cash
2,75
0.00
Amounts paid towards insurance
Oct 9 Accounts receivables
1,87
0.00
Sales
1,87
0.00
Sales revenue generated
Oct 12 Purchases
3,60

ACCOUNTING FUNDAMENTALS 8
0.00
Cash
3,60
0.00
Purchases made
Nov 5 Rent expense
1,23
2.00
Cash
1,23
2.00
Paid rent
Nov 7 Accounts receivables
6,47
9.00
Sales
6,47
9.00
Sales revenue generated
Dec 2 Cash
6,28
4.63
Accounts receivables
6,28
4.63
Cash received in respect of sales made
Jan 1 Van
27,50
0.00
Cash
27,50

ACCOUNTING FUNDAMENTALS 9
0.00
Purchased van
Feb 22 Purchases
1,20
0.00
Account payable
1,20
0.00
(Purchased raw material)
Mar 5 Rent expense
1,23
2.00
Cash
1,23
2.00
Paid rent
Mar 31 Cash
14,19
0.00
Accounts receivables
14,19
0.00
Cash received in respect of sales made
Jun 6 Wage expense
1,14
2.00
Cash
1,14
2.00
Paid wages

ACCOUNTING FUNDAMENTALS 10
Jun 20 Wage expense
1,61
1.00
Cash
1,61
1.00
Paid wages
Jun 27 Drawings
4,50
0.00
Cash
4,50
0.00
Withdrawing’s
2,76,026 2,76,026

ACCOUNTING FUNDAMENTALS 11
.99 .99
GENERAL JOURNAL - Adjustments 30 June 18
Date Details Debit Credit
ADJUSTMENTS:
a Supplies expense 3
65.00
Supplies 3
65.00
( adjustment for supplies used)
b Wages Expense 1,6
11.00
Wages Payable 1,6
11.00
(adjustment for wages)
c Insurance expense 2,0
62.50
Prepaid insurance 2,0
62.50
(adjustment for insurance)
d Provision for doubtful debts

ACCOUNTING FUNDAMENTALS 12
37.40
Accounts receivable
37.40
(adjustment for doubtful debts)
e Depreciation expense 13,3
75.00
Accumulated depreciation-furniture 9,0
75.00
Accumulated depreciation-vehicle 4,3
00.00
(record depreciation expense)
f Loss on inventory 6
80.00
Inventory 6
80.00
(to record the inventory damage)
g Rent expense 1,2
32.00
Rent payable 1,2
32.00
(to record rent payable)
19,36 19,36