ACCT 1008 - Accounting for Business Assignment - University of South Australia

Assignment Task

Aim to complete this assignment a few days prior to the due date to allow for any unforeseen circumstances such as illness, holidays, family issues, work commitments etc. You may submit the assignment early if you have other commitments around the due date.

The due date and time are stated in the course outline, on the course website and above. All times listed are local (South Australia) times. Please ensure you factor in any time difference between Adelaide (South Australia) and your location when submitting your assignment, to avoid incurring any late submission penalties. 

Question

1. Balance Day Adjustments and Posting to General Ledgers

Toonabin is a small but thriving regional area with a close-knit community of small business entrepreneurs. Once a month the group meet at ‘The Roasted Onion’ a local trattoria (an Italian restaurant), to discuss various issues about their businesses. One of the business owners met you whilst you were at Uni together and she knew you worked extremely hard at university and had won various university prizes for your outstanding academic results. After chatting to you recently she found out you are working for Johnson & Lake Accounting Services and that your passion lies in assisting small business entrepreneurs. As a result of this you have been invited to their monthly meeting at a local trattoria where you will meet each of the group and where you understand (if they are impressed with you) that you will be engaged to undertake various accounting functions for them.

Once at the meeting, you start chatting with Olive one of the business owners, and by the end of the night you have been given the following information on the next page:

Below is the unadjusted Trial Balance for the year ending 30 June 2023 for “Glam Camping”, a business providing deluxe spacious bell tents situated in a beautiful location between bushland and vineyards. It is owned and operated by Olive Groves.

Olive is the sole proprietor and keeps records of the business as best she can. At year end Olive send the information she has recorded to Johnson & Lake Accounting Services who complete the necessary balance day adjustments and prepare the end of year financial statements. 

Glam Camping Unadjusted Trial Balance For the year ending 30 June 2023 

You are a Graduate Accountant at Johnson & Lake Accounting Services. It is now the end of the financial year and based on the information provided below by Olive , you have been asked to prepare any necessary journals and balance day adjusting journals. Round numbers to the nearest dollar.

1. Groundkeepers’ wages which are payable but have not yet been recorded as at 30 June 2023 are $3,420.

On careful review of the accounting records, you determine that $530 of the above $3,420 was paid on the 8 June 2023 but had incorrectly been recorded as Cleaning Expense - Office.

2. Both the Furniture & Fittings and the Motor Vehicle are expected to be used evenly over their useful lives. The expected total useful lives and residual values of both assets is as follows:

3. On 30 June 2023, Olive reviewed her outstanding Accounts Receivable balance. Based on her previous experience, she has estimated that 2% of this balance is unlikely to be collected.

4. A customer paid $1,180 on 22 June 2023 for an accommodation booking commencing on the 12 September 2023. At the time the money was received, Olive recorded this amount as Bell Tent Rent Revenue and has not posted any journal to adjust this since that time.

5. On review of the bank statement Olive noticed that interest earned in May was $30. Olive now realises this was incorrectly recorded in the accounting records as $40.

6. Olive has not yet received the June electricity account but has estimated that the cost of her electricity for June will be $2600, 20% will be for the office while the remaining amount is for the Bell Tents.

7. On the 30 June 2023 Olive shut the office for the afternoon and met with her friends Chiva and Alice at ‘The Roasted Onion’ trattoria for lunch. Olive paid $180 from her personal account. Olive explained that the purpose of the lunch was to discuss the marketing of a ‘holiday package’ that will use products from ‘Gourmet Grazing’ owned by Alice and ‘The Roasted Onion’ trattoria owned by Chiva.

Required

1. Use the General Journal document provided on the next page to record the correctly formatted journal entries required and include a narration (explanation) for each entry.

2. Post the relevant Balance Day Adjustment Journals from Part 1 to the General Ledgers provided. Both ledgers must be footed (the closing balance must be evident and on the correct side).

use the tab function to navigate through the ledgers. It is acceptable to abbreviate account names if required for formatting.

Olive is unsure how to complete the General Ledger accounts and asked for some assistance.

2. Financial Statement

Chiva owns and operates a trattoria called ‘The Roasted Onion’.

Chiva is passionate about cooking and sustainability and as such the food purchased by Chiva is based on locovore principles, that is, he only sources foods grown locally thereby supporting other businesses in the region. The ingredients are fresh from the grower to the trattoria and less greenhouse gases are emitted through transportation.

Chiva works long hours in the trattoria not only cooking but preserving ingredients so they can be used in the ‘off season’. The long hours in the trattoria results in him having little time to do the bookkeeping for the business but does his best to prepare information to provide to the accountant at year end. Chiva has prepared the following Trial Balance for ‘The Roasted Onion’ but he realises it is not in the correct order

The Roasted Onion Adjusted Trial Balance For the year ending 30 JUNE 2023 

Required

Using the Trial Balance provided above, prepare the following for the period in question:

1. Fully classified Income Statement
2. Statement of Changes in Equity 
3. Fully classified Balance Sheet (Narrative format)

3. Accounting Concepts

As you have built up an outstanding rapport with business people in the Toonabin region, the Managing Partner is keen for you to continue your professional development. The Managing Partner (Phoebe Johnson) has noted that your verbal communication skills are very good however she believes your letter and report writing skills need ‘polishing’. As Olive Grove has raised a few queries, the Managing Partner believes this is a great opportunity for you to write a letter to Olive, the proprietor of ‘Glam Camping’ assisting her with the queries she has raised.

Your letter will be reviewed by the Phoebe Johnson before it is sent out to client.

Important - When preparing the letter any advice or explanations provided must be consistent with the materials provided on the ACCT1008 SP2 2024 course site. While not normally included in a professional letter, text references are required as this work is being assessed for academic purposes.

Required

1. Repairs and maintenance at Glam Camping include mowing the grass areas around the Bell tents, patching any tears in the canvas of the tents, fixing leaking taps in the bathrooms, toilets and laundries amongst many other maintenance tasks.

Explain to Olive why Repairs and Maintenance is considered an expense? You must incorporate the element definitions presented in Topic 1 to support your answer and apply. 

2. Olive was not sure how to order the accounts in the Trial Balance for ‘Glam Camping’ (refer to question 1). Olive would like you to explain what order to put the accounts in and why.

3. Because the amount of the Doubtful Debts is low Olive is considering not posting the journal (refer to transaction 3 in question 1). Explain to Olive why the journal must be prepared and state and explain what accounting concept will be violated if the journal is not posted.

4. Closing Entries

Alice is the sole proprietor of “Gourmet Grazing” a gourmet picnic service. Gourmet Grazing provides a customised picnic experience for tourists visiting the area. The picnic hampers can be picked up from Alice, delivered to Glam Camping or there is a full service where Alice sets up the picnic in advance at a designated picnic spot and packs it all up once the customers have enjoyed their picnic.

Alice remembers meeting you at the monthly meeting at ‘The Roasted Olive’ and has heard very good things about you and your accounting expertise from her friends Olive and Chiva. Based on this Alice has decided to contact you for assistance in the mystical accounting process of ‘closing entries’ for the financial year as she has absolutely no idea how to do it.

During her appointment with you, Alice hands over the following Trial Balance. Alice has very little bookkeeping experience and was not sure in what order to list the accounts, so she has put all the accounts into a table.

Gourmet Grazing Trial Balance For the year ended 30 June 2023

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