module 4 group project

Financial Accounting Semester 2 Group Project

2018

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1. The Project is due on March 13, 2019 and is to be handed to the lecturer in class. 2. The project is to be done in groups of no more than three (3) students per group. 3. The project is to be typed written, font style Times New Roman and size 12.

Financial Accounting Semester 2 Group Project

2018

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The table below provides a list of three different sole trader businesses. You are to choose one then give it an appropriate name and state the nature of the business; which MUST be in accordance WITH the items sold.

After selecting, naming and describing the nature of the business as well as identifying at least three aims of the project, you should then perform the different actions outlined in Tasks 1-5 for period one (1), then Tasks 6-9 for period 2.

You may choose goods from the following list to prepare transactions:

* Computer Store * Clothing & Accessories

Store

* Small Appliances &

Household Supplies Store

A Keyboard A Pants A Irons B Mouse B Blouse B Blenders C Printer C Hand Bags C Juicers D Surge Protector D Skirts D Dish Drainers E Speakers E Sandals E Rugs

The (business name) has been in operations for some time and has been having problems with maintaining its accounting books. the owner is not sure how profitable the business is and has therefore decided to hire you as an accountant to record the daily transactions carried out by the business in the relevant books. You are also required to prepare the necessary financial statements as well as to prepare reports on how the business is doing as well as to provide recommendations on how the business can improve. During your first month (January 2018) as the new accountant, the following transactions were carried out by (business name). You are required to carefully analyse each transaction, then enter them in the appropriate books of accounts as outlined in the different tasks below:

2018 January 1 Opening Entries / Balances:

$ Capital 500,000 Cash at Bank 234,000 Cash in Hand 43,150 Debtors:

M. Jackson 21,400 A. Lewis 14,200

Creditor: J & J Manufacturers Ltd 33,350 Delivery Van 62,840 Fixtures and Fittings 8,000 Land 100,000 Stock:

18 units Irons 36,000 12 Blenders 6,400

Financial Accounting Semester 2 Group Project

2018

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12 Dish Drainers 7,360 Transactions during the month of January: January 1 Sold the following goods on credit to M. Jackson:

 1 dozen Irons @ $3,500 per unit  ½ dozen Blenders @ $1,650 each  1 dozen Dish Drainers @ $1,320 each

January 1 Bought machinery by cheque $78,000. January 2 Bought the following items on credit from J & J Manufacturers:

 10 dozens Irons @ $2,000 each  10 dozens Blenders @ $6,500 per dozen  7 boxes Juicer @ $2,500 per box  6 dozens Dish Drainers @ 2,250 each  8 dozens Rugs @ $1,500 per dozen

January 2 Withdrew $93,000 cash from the bank account to be used in the business.

January 3 Cash Sales:

 1 dozen Irons @ $2,520 each  1 dozen Blenders @ $2,950 each  1 dozen Dish Drainers @ $3,400 each

January 3 Paid rent by cheque $40,000. January 5 Sold goods on credit to P. Simpson:

 18 units Irons @ $1,650 each  3 dozen Blenders @ $1,200 each  1 dozen Rugs @ $2,500 per dozen

January 6 Bought fixtures with cash $55, 000. January 7 Cash Sales:

 3 boxes Juicers @ $5,875 per box  1 dozen Dish Drainers @ $2,400 each  1 dozen Rugs @ $2,500 per dozen

January 8 Paid wages $42, 000 by cheque. January 9. Returned goods to J & J Manufacturers as items were damaged:

 18 units Irons  3 boxes Juicers

January 11 Paid the following expenses by cheque:

 Telephone $9,100;  Electricity $12,300 and  General Expenses $2,600

January 13 Sold goods on credit to A. Holness:

 2 dozens Irons @ $3,650 each  2 dozens Blenders @ $1,250 each

Financial Accounting Semester 2 Group Project

2018

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 1 box Juicers @ $3,000 per box  1 dozen Dish Drainers @ $1,400 each

January 15 Paid J & J Manufacturers by cheque, and received a 5% cash discount. January 15 Paid office wages with cash $20,000 January 16 Owner withdrew $12,200 cash to pay his daughter’s school fees. January 18 Collected cheque from P. Simpson for goods sold on January 5th 2018,

allowing a 2.5% discount January 19 Purchased computer and desk from Singer Jamaica valued at $30,600,

paying $15,000 in cash. January 20 Sold goods on credit to H. Jackman:

 3 dozens Irons @ $1,650 each  3 dozens Blenders @ $1,200 each  2 dozens Rugs @ $3,500 per dozen

January 22 Paid wages with cheque $10,000. January 24 1 dozen Dish Drainers returned to us by A. Holness as they were the

wrong brand. January 27 Bought goods on credit from J & J Manufacturers Ltd.:

 6 dozen Irons @ $ 2,100 each  10 boxes Juicers @ $ 2,850 per box  3 dozen Rugs @ $ 1,080 per dozen

January 29 A. Holness paid half of what he owed us by cheque after deducting a 10% cash discount.

January 30 H. Jackman sent us ½ dozen B January 30 Cash Sales:

 3 dozen Irons @ $ 2,935 each  1 dozen Blenders @ $ 1,950 each  4 boxes Juicers @ $ 4,500 per box  2 dozen Dish Drainers @ $ 1,400 per dozen

YOU ARE REQUIRED TO:

Task 1: Enter the above transactions in the appropriate subsidiary book/book of original entry and then post the transactions to the relevant ledgers. Ensure that you use all the relevant books. The opening entries should be shown in the General Journal for the period.

Task 2: Prepare the Trial Balance as at January 31, 2018.

Task 3: On a Stock/Store Ledger, determine the value of the closing stock using the:

 LIFO method of stock valuation for the Computer Store  FIFO method of stock valuation for the Clothing Store.  AVCO method of stock valuation for the Small Appliances and Household

Items Store.

Financial Accounting Semester 2 Group Project

2018

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NB. You are only required that applies to your business, not all three (3).

Task 4: Prepare the Financial Statements for the period ending January 31, 2018.

On February 5, 2018: the (business name) received the following bank statement from its bank, National Commercial Bank (NCB). After examining the bank statement below, you observed that the cheques used to pay for machinery purchased on January 1, 2018 and the one sent to J & J Manufacturers Limited were not included. The cheques collected from P. Jackson and A. Holness were not deposited until February 1, 2018.

National Commercial Bank Date Particulars Withdrawals Deposits Balance

Jan 1 Balance b/f 234,000 Jan 1 Cheque (M. Jackson) 20,000 254,000 Jan 2 Standing Order (Insurance Expense) 6,400 247,600 Jan 2 Cheque 93,000 154,600 Jan 8 Rent 40,000 114,600 Jan 8 Wages 42,000 72,600 Jan 11 Telephone expense 9,100 63,500 Jan 11 Electricity 12,300 51,200 Jan 11 General expenses 2,600 48,600 Jan 19 Cheque 15,600 33,000 Jan 22 Wages 10,000 23,000 Jan 24 Credit Transfer (J & J

Manufacturers Ltd) 32,000 (9,000)

Jan 29 Standing Order 15,000 (24,000) Jan 31 Bank charges 650 (24,650)

Task 5: (1) Update the Cashbook for January 2018 and balance it off. (2) Draw up a Bank Reconciliation Statement as at January 31, 2018;

reconciling the corrected cash book balance with the bank statement

Period Two

February 1 Bought goods on credit from J & J Manufacturers Ltd valued at

 12 boxes of Juicers @ $2,750

 4 dozens Dish Drainers @ $2,300

 5 dozens Rugs @ $1,750

February 2. Sold the following to A. Holness on credit

 Irons: 30 units @ $3,500

 Rugs: 2 dozen @ $2,000

February 3. Paid wages $10,000 by cash

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2018

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February 4. Paid cleaning expense $2,500 by cash

February 5. Received a cheque from A. Lewis $14,200

February 6. Paid electricity bill by cheque $5,400

February 7. Deposit $80,000 of cash into bank.

February 9. Paid water rate by cash $6,800

February 12. Paid J&J Manufacturers Ltd. by cheque $60,000

February 15. Paid for the maintenance of machinery $6,000 by cash

February 17. Cash sales paid directly into bank:

 Irons: 15 units @ $3,500

 Juicers: 3 boxes @ $2,500

 Rugs: 4 boxes @ $2,500

February18. Bought goods on credit from J & J Manufacturers Ltd.

Irons: 50 units @ $2,000 per unit

Blenders: 5 dozen @ $6,500 per dozen

Juicers: 3 boxes @ $2,500 per box

February 19. Paid wages $12,000 by cash

February 20 Paid telephone bill of $8,000 by cash

February 24. Sold the following to A. Holness on credit:

Irons: 3 units @ $3,500

Blenders: 3 dozen @ $1,200 each

Task 6: Enter the above transactions in the appropriate subsidiary book/book of original entry and then post the transactions to the relevant ledgers. Ensure that you use all the relevant books. The opening entries should be shown in the General Journal for the period.

Task 7: Extract a trial balance as at February 28, 2018.

Task 8: Prepare the Financial Statements for the period ending February 28, 2018. The following additional information must be considered when preparing the financial statements:

1. Closing Stock as per the stock valuation method used as per Task 3 above.

2. Depreciate non-current assets as follows: a. Fixtures & fittings – 15% on the straight line basis. b. Delivery van – 20% on the reducing balance basis c. Machinery – 20% on the reducing balance basis. d. Computer desk – 25% on the straight-line basis.

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2018

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e. Land is not depreciated. 3. The following expenses were outstanding at the end of February 2018:

a. Water rates $3,500 b. Telephone $1,750 c. Electricity $2,590

4. The following expenses were paid in advance: a. Machine Maintenance $1,500 b. Cleaning expense $500

5. $1,800 of the amount owed by M. Jackson is to be written off as bad debt.