Reckon exercise

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BACKGROUND AND FACTS: RECKON AND EXCEL Rosie Chen is the owner of Power Sports, a retail sports equipment business located in Toowong. She established the business 3 years ago and operates as a sole trader. Rosie submits the Business Activity Statements (GST Return) quarterly on an accruals basis. Rosie is currently using a manual system to prepare the financial records. She has come to you to implement Reckon software. To ensure the accuracy of the software implementation, she has asked you to prepare both manual records and records in Reckon for the month ending 30 April 2020. Refer to Chart of Accounts below when preparing journals for the account numbers and names used. Chart of Accounts and Trial Balance as at 31 March 2020 Account No. Account Name Balance

DR CR 101 Cash at Bank – ANZ 27,580 110 Accounts Receivable 36,518 112 Inventory 93,540 115 Prepaid Insurance - 118 Office Supplies 1,520 130 Computer Equipment 24,460 131 Accumulated Depreciation - Computer Equipment 15,288 135 Store Equipment 29,080 136 Accumulated Depreciation - Store Equipment 14,040 200 GST Clearing (Tax Payable GST)** 12,450 201 Accounts Payable 28,970 203 Wages Payable - 205 PAYG Tax Payable* 5,180

301 Capital

136,770

Total

212,698

212,698 302 Drawings 307 Profit or Loss Summary 401 Sales Revenue 402 Sales Returns & Allowances 501 Cost of Sales 503 Bank Charges 505 Depreciation Expense - Computer Equipment 506 Depreciation Expense - Store Equipment 520 Insurance Expense 522 Marketing Expense 542 Office Supplies Expense 560 Rent Expense 580 Telephone and Internet Expense 582 Utilities Expense 585 Wages Expense

*PAYG Tax Payable is tax withheld from staff wages owed to the government. **GST Clearing (Tax Payable GST) is the account set up for the GST owing. Reckon will also add another account named Tax Payable as you process transactions with GST. You will have 2 GST accounts when your assignment is complete: GST Clearing (Tax Payable) will have a zero balance and Tax Payable should have the same balance as your 1 general ledger account for GST in Excel.

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Accounts Receivable Subsidiary Ledger as at 31 March Dawson Training 23,120 Indigo Sports Centre 7,448 Mainstream Adventures 0 Snowy Resort 0 Weston High School 5,950 Total 36,518

Accounts Payable Subsidiary Ledger as at 31 March Ballistic Sports 16,500 Heavy Duty Weights 0 Insight Computers 4,520 Odin Training & Recruitment 1,100 Premium Accountants 3,850 Sports Wholesalers 3,000 Total 28,970

Inventory Balances as at 31 March Power Sports sells three types of inventory and uses a perpetual inventory system. The stock take at 31 March showed: Item Description Units on Hand Unit Cost

(excluding GST) $

Total Value (excluding GST)

$

Unit Selling Price (excluding GST)

$ Weights packs 64 320 20,480 640 Kettle bell packs 23 220 5,060 440 Weights stations 17 4,000 68,000 8,000 93,540

Cost price of inventory items remains constant for the month and thus the inventory cost flow method is irrelevant for this assignment.

Accounting Information The business uses the following specialised journals to record its business transactions:

• A Sales Journal is used to record the sale of inventory on credit during the month (not sales returns). • A Cash Receipts Journal is used to record all cash received. • A Cash Payments Journal is used to record all cash paid. • A Purchases Journal is used to record all purchases of inventory on credit (not purchase returns). • A General Journal is used to record all other transactions. All invoices received for expenses

incurred and owing are recorded in the general journal at the time of receiving the invoice. (Narrations are not required for general journal transactions.)

The business uses a general ledger, an accounts receivable subsidiary ledger and an accounts payable subsidiary ledger. The 4 column running balance form of ledger account is used. The business does use a Sales Returns and Allowances account in the Excel to record sales returns from customers. Note that there is no ability in our Reckon student version software to record Sales Returns separately. Instead the software will process a sales return as a reduction from Sales Revenue. Do not create a separate Sales Returns account in Reckon. NOTE: There is an extra column in the ledger accounts to make a note of source document numbers etc. We do not have such information so leave this column blank.

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Financial statements are prepared monthly. Reckon software is to be used to prepare computerised records. An Excel template is available on Blackboard to be used to complete the Excel task. Reckon and Excel records must reconcile to each other. April 2020 Transactions to enter into both Reckon and Excel: The business transactions that occurred in April 2020 are as follows: (refer chart of accounts for account names and numbers. Do not make up your own account names). 1. April 1 Paid rent for April $4,400 with cheque number 46 (including GST $400).

2. April 1 Purchased an Apple computer on credit from Insight Computers for $1,342 (including GST $122)

3. April 2 Purchased office supplies with cheque number 47 for $770 (including GST $70). Power Sports records purchases of office supplies in the Office Supplies account.

4. April 2 Sold 5 weights stations on credit to Snowy Resort, invoice number AB32 $44,000 (including GST $4,000).

5. April 3 Purchased 40 weights packs on credit from Heavy Duty Weights $14,080 (including GST $1,280).

6. April 4 Paid for prepaid insurance of $1,320 for 12 months effective 1 April (including GST $120) with cheque number 48.

7. April 4 Sold 23 kettle bell packs, 6 weights packs and 1 weights station as a cash sale for $24,156 (including GST $2,196)

8. April 4 Rosie withdrew $8,000 cash for her personal use with cheque number 49 (no GST.)

9. April 4 Paid the monthly net wages of $10,400 with cheque number 50 (no GST applicable.)

10. April 10 Sold 4 weights stations and 20 weights packs on credit to Mainstream Adventures, Invoice Number AB33 $49,280 (including GST $4,480).

11. April 10 Signed a 6 month agreement to rent additional storage space from June 1, 2020 for $1,045 monthly (including GST $95)

12. April 11 Purchased 50 kettle bell packs and 5 weights stations on credit from Sports Wholesalers $34,100 (including GST $3,100).

13. April 14 Paid Premium Accountants the balance owing of $3,850 with cheque number 51.

14. April 21 Paid Ballistic Sports $15,400 with cheque number 52 as part payment of prior month purchases of inventory.

15. April 21 Issued a credit note to Mainstream Adventures for return of 2 weights packs, Credit Number 14 $1,408 (including GST $128). (Retain as an available credit in Reckon.)

16. April 22 Received $15,200 from Dawson Training as payment on account.

17. April 26 Paid the monthly telephone and internet expense with cheque number 53 for $275 (including GST $25).

18. April 26 Invoiced Dawson Training for 40 weights packs, Invoice Number AB34 for $28,160 (including GST $2,560).

19. April 28 Received $6,000 on account from Indigo Sports Centre.

20. April 28 Returned 5 kettle bell packs to Sports Wholesalers and received a credit of $1,210 (including GST $110).

21. April 30 Rosie lodged her quarterly Business Activity Statement (BAS return) and paid cheque number 54 to the ATO for a total of $17,630. This represented the previous quarter GST Clearing (Tax Payable GST) of $12,450 and also the previous month PAYG tax payable of $5,180. (Record GST Clearing and PAYG Tax Payable on a separate line in Excel).

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22. April 30 Received $22,000 from Snowy Resort as payment on account.

23. April 30 Paid April marketing expenses: cheque number 55 for $814 (including GST $74).

24. April 30 Paid April utilities expense with cheque number 56 for $616 (including GST $56).

25. April 30 Hired a new staff member who will commence on May 15 with an annual salary of $75,000.

26. April 30 Bank Statement: Paid bank charges of $25 (no GST applicable).

27. April 30 Record a general journal entry for $2,590 for the total PAYG tax withheld on the monthly wages. (Debit wages expense and credit PAYG Tax Payable). (PAYG tax payable is tax withheld from staff wages owed to the government.)

28. April 30 Rosie contributed $2,500 of capital into the business bank account.

April 2020 Adjusting Entries: adjusting entries are prepared monthly

A) Accrued Wages Wages owing as at 30 April are $3,300. B) Insurance Noted in the transactions above, Rosie prepaid 12 months of insurance on April 4. C) Depreciation – Store Equipment Annual Depreciation on Store Equipment has been calculated at $5,616. D) Depreciation – Computers Annual Depreciation on Computers has been calculated at $6,840. E) Office Supplies Expense On 30 April, Rosie performed a stocktake of office supplies and noted that there was $370 of supplies remaining.

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Part A Reckon Accounting Task Instructions (1 – 12) 7.5% Before Starting Reckon Component: It is vital that you complete the 2 Essential Reckon exercises under Learning Resources/ Reckon Support Materials before you start the Reckon component of this assignment. Reckon software is to be used to prepare computerised records to ensure they agree with Excel. It is important to save and backup regularly to your QUT student network drive or other secure location rather than relying on a USB or to the local drives of QUT computers which are cleared as users log off. Do not rely on one file location in case there is a problem such as corruption, losing USB etc. Reckon will name your original files with the extension. QBW and the backup files .QBB. Marks will be allocated, where students have produced correct reports that reconcile to the required values. Remember, key figures such as profit are provided and the client is expecting you to ensure Reckon and Excel agree. If they don't agree or you don’t allow enough time and only achieve the initial set up process, low marks will result because you haven't achieved assessment or client requirements. 1) Establish a new data base in Reckon. Step 1 Company Information. On the Reckon menu bar, click File > New company.

Click Start Interview

Enter Company Name and add your student number and surname and to the end of the company name. (e.g. Power Sports 9084574 Marsland). Leave other fields blank.

Note: Click Next at each step of the interview to move on.

Step 2: Select your industry. Select Product Sales/ Retail Step 3: How is your company organised? Select Individual Tax Return Step 4: Select the first month of your financial year. Select: July Step 5: Ignore passwords Step 6: Create your company file, indicating a directory to save to. Click Save. Step 7: Customising

In the interview process, choose the Preferences below. Take care to enter carefully as you can’t change these preferences and would otherwise need to start again:

Field Select Then What do you sell? Products only Click Next

Do you track tax? Yes Click Next

Do you want to create estimates in Reckon? No Click Next

Do you want to track sales orders before you tax invoice your customers?

No Click Next

Do you want to use sales receipts in Reckon? Yes Click Next

Do you want to use billing statements in Reckon? No Click Next

Do you want to use invoices in Reckon? Yes Click Next

Do you want to use progress invoicing? No Click Next

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Field Select Then Do you want to keep track of the bills you owe? Yes Click Next

Do you want to track inventory in Reckon? Yes Click Next

Do you want to track time in Reckon? No Click Next

Do you have employees? No Click Next twice

Select a start date to start tracking your finances Enter 31/3/2020 Click Next

Would you like to add an existing bank account? Yes Click Next Key in ANZ Bank Account for the name of the bank account. Click on or after 31/3/2020. Click Next three times. Click Finish to complete the initial set up process. 2) Set up preferences for banking for all receipts and payments to process to the ANZ Bank Account

(otherwise they will default to Undeposited Funds). (Edit Preferences.) 3) Important: Set up user for Audit Trail Log to enable production of an Audit Trail Report.

Click on Company. Click on Set Up Users. Click on Add User. Enter your student number followed by your surname (e.g. 9084574 Marsland). Record exactly what you have typed safely as you will use it to log in and record all of the assignment transactions. Do not enter Passwords. Click Next. Click No that you do not want to enter a password. Click on All Areas of Reckon Accounts (for the user to enable access). Click Yes to confirm that you do wish to allow the user to access all areas of Reckon. Click Finish. Click Close.

4) Choose the option File/ Close Company/(Log Off and Open the Power Sports.QBW File that you have established. Now log into Reckon using the User Name that you established earlier.

(if you forget your username, log in as Admin and note down the user name and repeat the log in process).The Administration User is not to be used in any of the assignment process, otherwise you will receive 0 for the Reckon component.

Set up lists and Opening Balances for Inventory, Customers and Suppliers as at 31 March 2020. (Addresses are not required for this project for customers or suppliers).

5) Run an Audit Trail Report 1/1 to today’s date to ensure that you can see your User Name in all the transactions (not the Admin user). If you fail to submit an Audit Trail Report or submit an Audit Trail with the Admin user only recorded, you will receive 0 for the Reckon component.

6) Enter opening balances for all other accounts as at 31 March 2020. 7) Run a trial balance as at 31 March 2020 to ensure all opening balances are accurate. Process a

general journal entry to correct the items in the trial balance which require adjustment including an entry to correct Uncategorised income, Uncategorised expenses and Opening Balance (equity).

8) Save your file. Also, backup your Reckon file using the Save Copy or Backup function (which will

name it with the extension.QBB).

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9) Record the April transactions in Reckon, opening new accounts as necessary. For Reckon, you do

not need to use the account numbers provided in the Chart of Accounts.

Tips: • GST codes: where payments have GST included, use the tax code NCG for expenses and CAG for

the purchase of the computer. • Bank Accounts: Check each receipt and payment is processed to the ANZ bank account, not

Undeposited Funds). • Dates: ensure that dates are entered correctly in the month of April. • Names: are required if the transactions involve Accounts Receivable or Accounts Payable but for

other transactions such as Cash Sales and Cash Cheques, you can simply enter “Cash Sale” or “Cash” respectively.

• For transaction 15 involving the credit note choose the option ‘Retain as an available credit’ in Reckon.

• For transaction 21 involving the payment of GST and PAYG tax payable, use the Write Cheques function in Reckon.

• For transaction 26 involving bank charges, use the Write Cheques function in Reckon.

Regularly save and backup your files. Do not rely on 1 backup in case there is a problem such as corruption, losing USB etc. Reckon will name your original files with the extension. QBW and the backup files .QBB.

10) Prepare a trial balance as at 30 April 2020 and ensure all account values agree to the unadjusted

manual trial balance prepared in Part A except for Sales and Sales Returns. (Reckon Trial Balance total should be $368,271 as Sales Returns is netted off against Sales in Reckon not displayed separately as it is in Excel). Note that there is no ability in our Reckon student version software to record Sales Returns separately. Instead the software will process a sales return as a reduction from Sales Revenue. Do not create a separate Sales Returns account in Reckon.

11) Process the adjusting entries above in Reckon.

12) Print to pdf the following reports from Reckon. Combine into 1 pdf or zipped folder of 8 Reckon reports if possible for ease of marking. Please name your report files for submission to Blackboard with a file name less than 12 characters so that we can download them for marking.(e.g. TB.pdf). See below

1. JNL: Journals: 1 April to 30 April 2020 (Reports Accountant) 2. TB: Trial Balance as at 30 April 2020 (Reports Accountant) 3. PL: Profit and Loss Standard: 1 to 30 April 2020* (Reports Company & Financial) 4. BS: Balance Sheet as at 30 April 2020 (Reports Company & Financial) 5. INV: Inventory Valuation Summary as at 30 April 2020 (Reports Inventory) 6. CUS: Customer Balance Detail as at 30 April 2020 (Reports Customers & Receivables) 7. SUP: Supplier Balance Detail as at 30 April 2020 (Reports Suppliers & Payables) 8. AUD: Audit Trail Report (Date Range: 1/1 to today’s date) (Reports Accountant: Audit Trail)

* Note Profit and Loss does not need to be classified into Business Function for Reckon.

Closing entries are not required in Reckon as they are done automatically by the software.

RECKON CHECK VALUES TO ASSIST YOU TO COMPLETE THE SET ACCURATELY: Total of Unadjusted Trial Balance (due to netting off sales returns in sales) $368,271 Total of Adjusted Trial Balance (due to netting off sales returns in sales) $372,609 Net profit for April $40,687