Picard Publishing: Journals and Ledgers- Accounting Critical Analysis Assignment

Accounting Critical Analysis Assignment:

Introduction: Damian Picard is the sole proprietor of Picard Publishing - a GST-registered independent book publisher. The business focuses solely on Australian authors. It organises the promotion, sales and publicity of the books it publishes as well as organising book signing tours. Currently, Picard Publishing has signed the following authors – Kathryn Dewar, Debbie Thompson and Chris Nelson. Accounting System: Journals and Ledgers Linda Hart uses the following ledgers, and journals in maintaining all the accounting records: Sales Journal - records all credit sales of inventory. Purchases Journal - records all credit purchases of inventory. Cash Receipts Journal - records all cash received by the Business, including cash sales, cash receipts from debtors and other sundry receipts. Cash Payments Journal - records all cash payments and cheques issued by the business, including cash purchases, cash payments to creditors and other sundry payments. General Journal - records all transactions that cannot be recorded in the special journals listed above. Subsidiary Ledgers - maintained for accounts receivable, accounts payable, and author clearing account, which are then reconciled against the relevant general ledger accounts. Task: PART A - ACCOUNTING REQUIREMENTS - FOR JUNE 1. Record all the necessary entries in the relevant journals and ledgers, excluding balance day adjustments, to maintain proper accounting records for June. Please note that you may need to create new accounts using subsequent account numbers where necessary. 2. Prepare an Unadjusted Trial Balance on the worksheet provided. 3. Record all the necessary balance day adjustments for June in the General Journal and post to the General Ledger accounts. 4. Prepare an Adjusted Trial Balance on the Worksheet provided and complete the worksheet. 5. Record all closing entries in the General Journal, however, do not post them to the relevant general ledger accounts. 6. Prepare the Income Statement (using the Functional format) for the month ending 30 June 2013. 7. Prepare the Statement of Changes in Equity for the month ending 30 June 2013. 8. Prepare the classified Balance Sheet as at 30 June 2013. PART B - CRITICAL ANALYSES You are required to complete the questions from your text book and submit them separatelyu on a Word document. Note you should have prepared the template of the word document in computer lab 1. The questions are as follows with additional requirements as also noted: ITEM 1- FRAUD CASE The questions you are required to answer are: 1. How did the change in the journal entries affect the profit of the business at year- end? 2. Who gained and who lost as a result of these actions? You should provide specific examples from the company in your report. ITEM 2 ETHICS FOCUS CASE The questions you are required to answer are: 1. Does the recording the transaction in the general journal rather than in the cash payments journal affect the amounts of cash and total expenses reported in the financial statements? 2. Does this breach any accounting conventions and would/should this be identified by an audit? 3. Why did Linda White record these expenses in the general journal? 4. What is the ethical issue in this situation? 5. What role does accounting play in this situation? 6. Who are the parties affected by this action? You should provide specific examples from the company in your report.