Explain the Different Procedures Involved in Recording Bad Debts and Doubtful Debts - Accounting and Finance Assignment Help

Assignment Task:

Task:

Task 1 – Practical exercise
Complete the following tasks:
Process transactions
Refer to the list of transactions at Appendix C. You are required to process these transactions in accordance with and using relevant information from the policies and procedures of Gold Catering. As part of the processing you will be required to carry out the following tasks:
Prepare all journals (PJ, SJ, CRJ, CPJ and three GJ) for the transactions listed (enter into the Templates provided – spreadsheet tab named “Journals”). Remember to enter relevant transactions into the Accounts Receivable and Accounts Payable Subsidiary Ledgers as well. Note that you must not process a General Journal for every transaction. Prior to processing ensure cheques and electronic payments are valid and authorised as per organisational policies and procedures.
Prepare Purchase Orders, Delivery Dockets, Invoices, Adjustment Notes, Receipts, Statements, cheques, cheque requisitions and Remittance Advices as requested (items in bold and indicated as “prepare”) (Use organisational documents which are in the Templates provided – spreadsheet tab named “Source Docs”)
Prepare the banking summary for the 30/6/20 (enter into the Templates provided – spreadsheet tab named “Banking & Bank Rec”)
Ensure that that all required entries have been made to the Accounts Receivable and Accounts Payable Subsidiary ledgers. Complete the Accounts Receivable and Accounts Payable reconciliations for 30 June 2020 showing the aged accounts (enter into the Templates provided – spreadsheet tab named “Acc Rec & Pble”).
Note: At this stage you will not have the General Ledger account balance for Accounts Receivable or Accounts Payable so the reconciliation is not yet complete.
Report actions required for the outstanding Debtors and Creditors per Gold Catering Policies & Procedures Manual (Use organisational documents which are representative of industry best practice. Complete using the Templates provided – spreadsheet tab named “Acc Rec & Pble”)

Task 2 – Theory

• Provide answers to the following questions.
• Using the policies and procedures for Gold Catering:
• Explain the different procedures involved in recording bad debts and doubtful debts.
• Why is there a difference between the two?
• Understanding legislation and regulations for debt collection is important.
• Research the Australian Competition and Consumer Commission’s “Debt Collection Guideline”. Explain what an organisation’s obligations are under Privacy Law when making contact with a debtor?
• Research dealing with debtors through the Queensland Government, Office of Fair Trading website. (https://www.qld.gov.au/law/laws-regulated-industries-and-accountability/queensland-laws-and-regulations/business-advice-rights-and-responsibilities/tips-for-starting-and-running-your-business/dealing-with-debtors). Discuss guidelines provided to deal with debtors.
• The company auditor has come to you requesting a copy of invoices. Using Gold Catering Policies and procedures advise the auditor where supplier invoices have been filed and advise of the name filing convention.

Identity the 3 errors in the current asset section of the balance sheet below.

• Correct the errors.
• Who should the error be reported to? Refer to the Extract from Gold Catering Policies and Procedures.
• Current Assets
• Petty Cash 120
• Inventories 61,200
• Accounts receivable 30,000
• Cash at bank 32,000
• Inventories 61,200
• Drawings 4,000
• Total Current Assets $80,000
• Reconcile the below statement to the Subsidiary Ledger account (in your spreadsheet file).
• Statement for June 2020
• Bevan Wholesalers  
• ABN: 111 123453  
• PO Box 95  
• Metropolis 40222  

   
Customer: Gold Catering  
  ABN: 164 134 314  
  15 Buckjumper Ave  
  Rodeocity QLD 4277  
   
Date Details $
1/06/2020 Opening balance 11,310.00
7/06/2020 Payment received - 6,000.00
6/06/2020 Invoice 8112 8,634.00
   
  Total outstanding 13,944.00
Current 30 days 60 days 60 days +
8,634.00 5,310.00  
       
6.If there are any discrepancies in the statement above, who are they reported to (per Gold Catering Policies and Procedures Manual)?
7.Identify any suppliers in Task 1 who Gold Catering owes money to and write a generic email asking for their organisation to issue a statement of account. Remember to use professional wording and set out when designing your email.

Task 3 – Video Role-plays: Oral communication

• This task requires you to undertake 2 role-plays which you must video: during your video role-plays you must demonstrate your oral communication skills to communicate professionally with a range of personnel and to follow organisational guidelines with regards to debt collection processes and authorisations required.
• Role-play 1: conversation with a debtor regarding overdue debt.
• Role-play 2: feedback to the Accountant on the discussions and agreements reached with the debtor and responses to some questions the Accountant asks you.
• Both role-plays must be video recorded and submitted to Connect along with your other assessment documentation. A mobile phone is suitable as a recording device for this task. The recording must be clear and audible and provide an adequate visual view of both parties. You will be required to nominate a friend/peer or relative to take the role of the Debtor - Role-play 1 and your Accountant - Role-play 2. Video recordings should be 3 – 5 minutes in duration.
• Role-Play 1
• You will play the role of the Bookkeeper for Gold Catering, following the Organisational Procedures and using the information provided and the financial reports produced in Task 1 of this Assessment.
• You will be contacting the manager of First Class Functions, (role-played by a friend/peer or relative) to discuss their debts and negotiate payment.
• In reference to the information provided and the financial reports developed in Assessment Task 1, you are required to discuss the following with the manager:
• Introduce yourself and your role and responsibilities in this conversation
• Advise you will be making a record of this conversation and decisions made will be confirmed by email.
• Confirm the identity of the person to whom you are talking
• Identify the date and amount of the invoice that remains unpaid
• Identify debt collection procedures of Gold Catering
• The manager of First Class Functions (your friend/peer or relative) must ask you if it is an option for them to enter into a long term payment plan. Follow organisational guidelines when providing your response to this question.
• Negotiate with the manager payment date and method
• Answer any questions from the manager with reference to work role responsibility, financial reporting and organisational procedures
• Confirm that the manager and yourself are clear on the decisions made to make the payment
• Confirm with the manager that the payment plan still has to be approved.
• Negotiate follow up dates and actions to confirm debts have been cleared as negotiated, and if not, consequences for non-payment and further action to be taken.
• Thank the manager for their attention to the issues as discussed
• End the conversation but keep the communication line open
• Advise the manager that you will confirm the above negotiations, upon confirmation from your Accountant.
• Role-play 2
• You will be reporting to the Accountant to discuss the outcome of your conversation with the Manager of First Class Functions (the debtor). As part of your position you were required to organise the banking of cash ($1200), following organisational policy and procedures for security.
• At the start of the conversation, provide a summary of your discussion with the debtor.
• Answer these four questions posed by the Accountant during your conversation:
• Question 1: Identify one legal procedure you have followed in this scenario
• Question 2: Identify one Industry Standard that you are abiding by in this scenario
• Question 3: Identify one organisational procedure you followed in this scenario.
• Question 4: How did you ensure security for the $1200 deposit banked, what proof of lodgement did we receive and where did it get filed?
• Following your conversation and confirmation from your Accountant, compose an email to the Manager of First Class Functions detailing the decisions made and procedures to be followed. You will be completing the reporting cycle by uploading the email to Connect as part of your assessment.
• Appendix A
• Chart of Accounts
• 1-0000 Assets
• 1-1000 Current Assets
• 1-1100 MyBank Cheque Account (BSB: 111-111 Acc no: 88888888)
• 1-1160 Petty Cash
• 1-2000 Accounts Receivable Control
• 1-3000 Inventory
• 1-4000 Prepaid Expenses
• 1-5000 Non-Current Assets
• 1-5100 Equipment at Cost
• 1-5200 less Accum Dep Equipment
• 1-5300 Truck at Cost
• 1-5400 less Accum Dep Truck
• 2-0000 Liabilities
• 2-1000 Current Liabilities
• 2-2000 Accounts Payable Control
• 2-3000 GST Liabilities
• 2-3010 GST Collected
• 2-3030 GST Paid
• 2-5000 Payroll Liabilities
• 2-5010 PAYG Withholding Payable
• 2-5020 Superannuation Payable
• 2-5500 Accrued Expenses
• 2-6000 Non-Current Liabilities
• 2-6100 Bank Loan - Truck
• 3-0000Equity
• 3-1000 Capital, S Golden
• 3-2000 Drawings, S Golden
• 4-0000 Income
• 4-1000 Sales
• 4-4000 Delivery Charges
• 4-5000 Interest Income
• 4-6000 Other income
• 4-7000 Profit/Loss on Disposal of Assets
•  
• 5-0000 Cost of Sales
• 5-1000 Purchases
• 5-4000 Freight Paid on Purchases
• 6-0000 Expenses
• 6-1000 Advertising
• 6-1100 Motor Vehicle Expenses
• 6-2000 Bank Charges
• 6-2100 Bad Debts Expense
• 6-2200 Discount Expense
• 6-2300 Interest Paid
• 6-2400 Rounding and Adjustments
• 6-2500Office Cleaning
• 6-3000 Insurance
• 6-3100 IT Support
• 6-3200 Depreciation Expense
• 6-3300 Admin Expenses
• 6-3350 Postage
• 6-3400 Telephone Expense
• 6-3550 Stationery
• 6-4000 Industrial Premises Rent
• 6-4100 Workshop Maintenance
• 6-4200Water Rates
• 6-5000 Superannuation Expense
• 6-5100 Wages & Salaries Expense
• 6-5200 Staff Amenities
• 7-000 Trading and Profit & Loss
• 7-1000 Trading Account
• Profit & Loss Account
•  
• Appendix B
• Subsidiary Ledger Balances
• Accounts ReceivableInvoice Details
• 1-2100 Tablelands Supplies$10,200Inv no. 7275, 18/5/20
• 1-2110 Delightful Diner$ 1,680Inv no. 7252, 05/3/20
• 1-2120 Jim’s Buffet $ 5,400Inv no. 7253, 7/3/20
• 1-2130 First Class Functions $ 600Inv no. 7268, 15/4/20
• Total$17,880
• Accounts PayableInvoice Details
• 2-2011 Bevan Wholesalers$11,310Inv nos. 365 18/5/20 $9,120 & 378 28/5/20 $2,190
• 2-2012 Optus (account in dispute)$210Inv no. April A/c, 8/04/20
• Total$11,520
•  
• Appendix C
• Transactions
• Date Details $
• 4/6/2020 Received invoice no. 000158 from Micks Motors for repairs to a motor vehicle $255 incl GST
• 5/6/2020 Owner contributed cash to the business – process in cash receipts journal $6,000
• 7/6/2020 Paid part of the outstanding balance of Bevan Wholesalers invoice no. 365. Amount paid was $3,000, using cheque no. 2150. Prepare the cheque requisition, cheque and a remittance advice to go with the cheque. $3,000
• 7/6/2020 Invoice no. 468 received from Bevan Wholesalers for purchases of goods for sale. Freight included - $198 incl GST $8,634 incl GST
• 8/6/2020 Issued invoice no. 7278 to Barry’s Party Services for credit sale of goods. Freight charge included is $33 incl GST. Prepare this invoice. $3,327.60 incl GST
• 9/6/2020 Received cheque from Tablelands Supplies in full settlement of balance owing. (Chq details are no. 154368, Big Bank, Other branch) Prepare receipt number 725 which shows the discount taken. $9,894
• 9/6/2020 Issued invoice no. 7279 to Tablelands Supplies for credit sale of goods. Freight charge included is $33 incl GST. Prepare this invoice. $14,978.40 incl GST
• 12/6/2020 Issued invoice no. 7280 to Marjory Brown for credit sale. Freight charge included is $33 incl GST. $934.20 incl GST
• 12/6/2020 Marjory Brown decided to settle her account immediately, and paid via credit card (VISA). Prepare receipt no. 726 for this customer. No discount to be given. 13/6/2020 Received part payment of invoice 7278 by direct deposit from Barry’s Party Services, and then received payment by cash from Barry’s Party Services as payment of remaining balance of invoice 7278. The cash breakdown was: $500 of $100 notes, $400 of $50 notes, $100 of $10 notes, $100 of $5 notes, $60 of $2 coins, and $40 of $1 coins. They took discount with these payments. Prepare receipt no. 727 for this customer. $2,063.77 (direct deposit) & $1,200 (cash)
• 15/6/2020 Received invoice no. 005 from the cleaners, Bright & Shiny Ltd. This was for the period 1 June 2020 to 30 November 2020. $13,200 incl GST
• 15/6/2020 It was discovered that the owner had paid for office cleaning to the amount of $110. Prepare the general journal entry as owner does not want cash reimbursement $110 incl GST
• 15/6/2020 Marjory Brown returned goods originally purchased on 12/6/20. Prepare adjustment note no. 151 and pay the refund immediately using cheque no. 2151 $75 incl GST
• 19/6/2020 Issued invoice no. 7281 to new customer Happy Days for credit sale. Freight charge included is $33 incl GST. $9,000 incl GST
• 19/6/2020 Paid rent to the Landlord – ComRent - via direct debit – you are to determine the GST on this payment $825
• 19/6/2020 Cheques, cash and credit card documents received to date are banked. Prepare the banking summary and cash summary slip required for this deposit. 20/6/2020 The owner took a printer from the office home for his children. Disregard any depreciation or GST implications. Record the general journal entry to record this transaction. $500
• 20/6/2020 Paid Micks’ Motors with cheque no. 2152. Prepare a remittance advice to go with the cheque. $255
• 20/06/2020 After reviewing the receipt for rent paid on the 19/06/2020 it was discovered that $125 of the payment was for water rates. Prepare the general journal entry to record the correction (NB water rates do not have a GST component) $125
• 23/6/2020 Paid wages with cheque no. 2153. Details were: Wages $1,140 $1,140
• 23/6/2020 Owner withdrew cash for personal use $900
• 30/6/2020 Prepare a statement for Tablelands Supplies 30/6/2020 Chq no. 2154 is to be recorded in the Cash Payments Jnl to record the petty cash expenses for the month. Split the payment between the individual expense accounts as per the Petty Cash Book columns from Assessment 1 Task 3. $53.40

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