PROCEDURES

1. Setup of company
 Main information: names, fiscal year, conversion month, last month in the
financial year
 COA [include all major accounts that are necessary to enter opening balances
– all information is in page 2 of the assignment] other accounts will be added
when necessary. Notice
 Must open accounts to keep track of accumulated depreciation for fixed
assets
 Entering opening balances of control accounts [fixed assets, existing debtors
and creditors. Notice
 Value of the Forklift is 5,100 not 7,000
 Goodwill – it is the difference between Owner’s capital (160,000) +
creditors and all listed assets [can use accounting equation to determine]

2. Setup subsidiary ledgers

 Open cards for customers and suppliers
 Entering existing balances of exiting customers and suppliers – all info.
needed is in page 3 of the assignment. Notice
 Use add sales or add purchases in Setup/balances/receivable balances or
/payable balances. Don’t forget to put the date as of 1/1/01 and Sales#
should be something other than 000001 to avoid the confusion with sales
during the month – that starts from invoice 00001 in 3/1/01.

 Open cards for inventory items. Notice

 If the periodic inventory system is chosen there is nothing to do with cost
price and volume in stock.
 At this stage, think of what accounts you want to use to keep track of sales
and cost of sales. At least 2 accounts – one sales, one purchases are
chosen, if they are not created yet you have to open new ones. Sales
accounts in group 4 under Income tab, and purchases accounts in group 5,
under Cost of Sales tab
 If you intend to keep records of sales in different states separately, then
you have to think of opening separate accounts for sales and purchases in
each states.
 One more is the treatment of discounts – given and taken. If you treat them
as finance expenses put in the group 6, not in group 4 or 5. If you treat
discounts given as a deduction of sales, put it in group 4 – Income tab and
discounts taken as deduction of purchases, put it in group 5 – Cost of Sales
tab.

3. Enter Sales and Purchases transactions

 Use sales and purchases modules to enter sales and purchases transactions. All
information needed is in pages 4-7. Notice
 Every sales transaction either on credit or for cash needs the issuance of
invoice. Then it is needed to open a card for Cash customers to record cash
sales.
 Cash sales can be treated the same way as credit sales. However, you can
record the cash received at the time of sales by entering the amount of $ in
 the field “Paid Today” giving the field “Balance Due” zero and press
record button.

4. Cash receipts and payments transactions

 Record receipts from debtors. Customers payment in Sales module. Notice
 For payment of invoice No.00004 put the discounted amount of $12.03 in
the Discount column. The amount applied and amount received is only
$649.73
 Record cash payments. Notice
 Not all cash payments are recorded in cheque book
 If the payment is for purchases, use Vendor Payments under Purchases
module
 If the payment is for expenses use Write a Cheque under Cheque Book
module
 Opening Petty Cash fund use Write a Cheque under Cheque Book
 When writing a cheque for expenses, remember to add GST [if you don’t
have any other assumptions] except $30 paid as donation is not subject to
GST
 For payroll transactions, if you cannot load tax table then you can use GL
to record, how to break up the amount paid to employees and Payroll
Deduction Payable is up to you based on your own assumptions.
 Petty cash reimbursement in fact is the payments for 5 types expenses at
the end of page 7, remember to put GST for these expenses
 In this stage you may have to open new accounts for expenses when
needed [may edit the unused accounts]

5. Entering other transactions

 Record fruit for personal use. Use GL the cost of fruit can be treated as
decrease in Purchases or decrease in inventory depending on your own
assumptions and how you can justify

 Fruit thrown away as damage. Use GL the cost of fruit thrown away can be
treated as an expense or a loss and reflects a decrease in asset [inventory] or
purchases depending on your own assumptions

 Fruit given away as promotion. Use GL, this creates an expense and reflects a
decrease in asset [inventory] or purchases depending on your own assumption

 Wallies’ outstanding balance. Use Customer payments in Sales module to

record the payment of 40% of outstanding balance. The remaining will be
written off using credit transaction – you all must know how to do this. Notice
 In writing off the bad debt you may choose to debit directly to bad debt
expense account [this account may locate in group 6, if it is not available
you have to open a new account for this kind of expense] or use the
Provision for Doubtful Debt. The account to debit is entered in the
“Allocation account” column in the invoice that you use to record the
credit transaction. For more info. of how to write off a bad debt pls refer to
you M.Y.O.B book.
  Return of goods on Invoice No. 00006. Use Sales module to record a credit
transactions – you all must know how to do this.

 Record the loan. Use GL remember to set the date of the transaction as the
beginning of the month. Notice this transaction needs a debit to an account
under Income session. You may choose to debit directly to Sales account or to
another account, say, Sales Returns and Allowances if so then you have to
open a new account for Sales Returns and Allowance. This depends on your
own assumptions and what you got from accounting fundamentals. In the case
you employ the Periodic Inventory system, you don’t have to worry about the
cost of damaged goods, since the it will be automatically goes to COS. But if
you use Perpetual Inventory System you have to think of how to treat this cost
of damaged goods

6. End-month adjustment
 Record unrecorded interest expense. Use GL, you can create a new account for
this type of expense or use the existing one under group 9
 Record unrecorded sales commission expense. Use GL, the amount is 0.75%
of total sales in Queensland. So if you did not record separate sales for each
states you have to recalculate manually
 Record unrecorded expense – $65. Use GL, you can assume the expense and
assign a name for it, open an account for this expense if needed.

Notice, the three kinds of expenses above reflect accrued liabilities they need
a credit to a liability account. If needed you have to open an account for this
kind of liability.
Secondly, you should think of recording GST on those amounts or not – it
depends on your assumptions.

 Provide for doubtful debts. Use GL, the amount to debit to Bad Debt Expense
is based on how you recorded the write off of Wallies’ bad debt above. If you
have already written off directly to Bad Debt expense then the amount
assigned to Bad Debts Expense this time is only the difference between
Required Provision Amount and the amount already debited to Bad Debt
Expense. If you have already written off using Provision for Doubtful Debt,
then the amount assigned to Bad Debts Expense this time is equal Required
Provision amount plus the amount written off above. Notice
 The total closing balance of debtors consists of the amount customers
owed the company [company’s sales] and the GST that company has to
collect on behalf of the Government [company’s liability]. The Required
Provision amount MUST be 5% of sales amount that customers owed
company. That is total Debtor exclusive any GST.

 Stock adjustment. Use GL. Notice

 The way to make stock adjustment depends on your assumption. If you use
opening/closing method, you have to think of opening new accounts under
cost of sales tab [group 5]. If you use stock adjustment account then you
have to open only one account “Stock Adjustment” under group 5
 The mount of stock adjustment depends on how you have treated fruits use
for personal use, fruits giving away as promotion, and damaged fruits. If
 you have already decreased inventory in those transactions then the
amount of stock adjustment is the deference between the balance of
Inventory Account just before the adjustment [not $8,000] and the stock on
hand at the end of the month [$3,612.16]. If you did not decrease inventory
in those transactions above then the adjustment must be the difference
between $8,000 and $3,612.6

 Record depreciation of fixed asset [tangible] and amortization of Goodwill.

Use GL these are straightforward.

ASSIGNMENT ASSUMPTIONS
No unique assumptions, each one will have his/her own assumptions in doing the
assignment. You have to make your own assumptions in the areas as followed
1. Inventory System used [periodic or perpetual]
2. Treatment of Discounts [where to put them – as expense or deductions in sales
and purchases]
3. Recording of sales in different states [use separate accounts or not]
4. Treatments of fruit used for personal use, thrown away and given away
5. Payroll transactions [use payroll module or GL instead because of program’s
error]
6. GST applied to different items of expenses

SOME FINANCIAL CRITERIA

The results will be different depending on people’s assumption. I cannot guarantee if

don’t know what you assume for your assignment.

I come up with the total sales of $10,555.10 [exclusive of $181.70 as sales return] and
Total Cost of Sales of $7,789.44. Expenses other than COS is not unique depending
on your treatment of items.