Financial Accounting

FOA189
Practice Assignment 1

1. Introduction
This accounting assignment is to be solved in groups. The assignment can be solved using
any bookkeeping system of choice as long as you can understand how to operate it. Our
recommended software is Fortnox. Similar software you can use are Microsoft Excel,
QuickBooks and Sage. However, support for other software will not be provided as
Fortnox is the software recommended for this course. (If you want to use Excel, se excel
worksheet in Canvas).
In the accounting software you can choose language for the system in the settings.
The intention is that by working with a Swedish accounting system, you will become
familiar with Swedish accounting terms and get a head start if you intend to work in the
accounting field in Sweden.
To help you in understanding the Swedish terms, the assignment comes with an
accompanying sheet with a list of all the accounts used on Fortnox with an English
equivalent (available on Canvas) and a user guide to Fortnox, you will find through their
help button I the system. (We recommend that you will be at least one Swedish student in
your group if help is needed with the language and translation.)

2. The structure of Assignment

You are provided with the opening balances of company Start AB as at 1st January 2022.
You are also provided a list of transactions that took place in 2022 and some year-end
transactions that are assumed to have taken place on 31st December 2022. Your task is put
the right accountnumbers for the opening balance (see chart of accounts) and to enter the
opening balance in Fortnox. Then you need to make journal entries for transactions below
and produce the financial statements for 2022.
The account numbers used in this task are in accordance with the Fortnox system
accounts.
If you need a new account, please refer to accounting literature for a good name and try to
find a suitable number.

The solutions are to be handed in, in a pdf format. The solution handed in should contain:
1. Journal entries list (Preliminär Verifikationslista in Fortnox).
2. Profit and loss report (Preliminär resultaträkning in Fortnox).
3. The balance sheet (Preliminär balansräkning in Fortnox).
4. A document with explanations and calculations
These will be four separate files, to be uploaded on Canvas. Remember to include any
notes and calculations that you think are necessary.
(If you are using the Excel worksheet, your solution should be easy to follow, every
transaction should show its postings, all calculations should be shown in sheet and you
should be ending up in Balance sheet and Income statement as solution proposal. You
should also put in account numbers to every account.)

Incomplete submissions will not be examined.

Only one opportunity for completion per submission task:
Not submitted or incomplete information or non-participation in the work means that the
information may be done at a later examination.
The right to supervision ends at the end of the partial course.
Any remaining assignments are submitted to the correcting teacher at the time specified
by the teacher, in Canvas (not mail).
Unapproved submission results in the group being referred to the next examination
opportunity.

3. How?
This is our suggested procedure for going about this assignment.
1. To access Fortnox, you will get an email with a link to log into your account. You will
get the page below.

2. A new company has been created in Fortnox for your group. Click on “Start AB” and
“Inloggningsuppgifter” to change the language, “spara”, change org.nr to 000000-
0000 to be able to save on next.
 You need to log out and log in again – then you will have English in the system.
(Unfortunately, the account names are still in Swedish – you need the enclosed list so
you can see the names in English, bilaga 1)

3. Follow the steps and information in document “Get started with Fortnox” in Canvas.

4. Record the opening balances (from Subsection 4.1). Search for the specific accounts
using the account number and make the inputs. You have the account numbers in
“Chart of Accounts” in Canvas and in the end of this document.

5. Record all of the business transactions for January to December 2022 as shown in
Subsection 4.2 in the journal entries.

6. Continue with recording the 7 closing transactions from Subsection 4.3 in the journal
entries. Each of these transactions should be on its own journal entry and the date
should be set to 31st December 2022. If you make any mistake, just edit or delete or
reverse the entry.

7. Generate the reports (Fortnox) and save them as pdf and upload them on Canvas or
send them to the teacher on email. To get your work approved, see Assessment Criteria
in Canvas.
 4. The Information
The following information relates to Start AB:
4.1 Opening Balances
The opening balances for Start AB as at 1st January 2022 are as shown below.

1. Opening balances as at 01.01.2022

ASSETS

Non-current assets
Land 73 000
Machines 224 000
-Acc depreciation machines - 47 900 249 100
Current assets
Inventory 48 900
Accounts receivable 138 000
Prepaid expenses and accrued income 130 400
Cash 2 000
Bank 245 270 564 570
Total assets 813 670
EQUITY AND LIABILITIES
Own capital
Share capital 50 000

Retained profit 198 600

Profit from previous year 28 800 277 400
Long-term liabilities
Loan from bank 223 400 223 400

Current liabilities
Short-term loan liabilities to banks 6 300
Accounts payable 83 500
Tax liabilities 7 600
Accrued expenses and prepaid income 215 470 312 870
Total equity and liabilities 813 670
2. Summary business events for 2022 (1 Jan – 9 Dec 2022)
( Please note that opening balances are not included below. This is what
have happened in the company transactions of accounting during the year
and that you need to record, before the last transactions and year end
postings)

(Ver 1) Post the business events in Fortnox

(or in excel worksheet if you choose to work in EXCEL instead of Fortnox)

(Balance sheet and Incomestatement in order)

Account name Debit Credit
Land
Mahines 140 000
Acc.depreciation machines
Inventory
Accounts receivables 42 650
Doubtful debts
Impairment of accounts receivable
Tax authorities account
Tax claim
Prepaid expenses and accrued income 130 400
Cash 15 000
Bank 230 775
Share capital
Retained profit/loss
Profit from previous year
Reported profit (Profit or loss for the year)
Loan from bank
Short-term loan liabilities to banks 6 300
Accounts payable 30 550
Accrued interest costs 9 570
Accruing costs and deferred income 180 900
Sale 2 476 912
Cash discount given 4 500
Profit disposal machines/equipment 75 000
Cost of Goods sold 1 363 090
Change in inventories
Rent 112 200
Other costs rented premises 27 000
Miscellaneous material 25 300
Repair and maintenance 19 535
Freight and transport 50 346
Travel expenses 35 488
Advertising and public relations 25 350
Office supplies 32 940
Tele and mail 28 262
Company insurance 39 000
Expenses for bad debts
Expenses for audit 28 500
Other external services 52 272
Salary for employees 193 000
Employer's national insurance 57 900
Depreciation inventory
Loss disposal machinery/equipment
Interest income 18 500
Interest expense, reverse loan 11 484
Tax expense of the year
Reported profit or loss
Summa: 2 731 362 2 731 362
4.2 Transactions During December, 2022 to be posted into Fortnox.
The following transactions took place during December, 2022. Figures are in
SEK.
1. 10/12, We purchased a new machine for SEK 60 000 plus freightcost SEK 5 000 and
oil SEK 2 500, on credit. (capital expenditure vs revenue expenditure?)

2. 16/12, Invoice from Officestuff AB on office supplies. Amount: SEK 17,500, Due
date: 10/1.

3. 18/12, Invoice is sent to a customer regarding sales of SEK 65,000, Due date: 18/1

4. 22/12 Due to a complaint from the customer (see 18/12), we send a credit note of SEK
8,125

5. 22/12, Payment to the supplier Component AB is made via bank with SEK 18,200.

6. 22/12, Direct withdrawals from bank of SEK 6,000 are transferred to the cashier.

7. 23/12, We paid salaries for December to our employee, the total cost for salaries SEK
18 000 (net value 12600, taxes 30% as a debt to tax authorities). On the same day, we
also posted the debt for the national insurance 30%, both taxes and national insurance
to be paid 17/1 to the tax authorities.

8. 30/12, When comparing accounts receivable and the accounts receivable account in
the ledger, a difference is detected. After investigation, it was concluded that a sale on
credit of SEK 7,500 had been recorded as paid to bank.

9. 31/12, We received interest revenues worth SEK 1 800 via the bank.

10. 31/12, We refunded travel expenses in cash to those who incurred them during the
year. The amount was SEK 18 750. These were paid through the bank.
 4.3 Closing Transactions
The following are year-end transactions that need adjustment entries. Make a journal entry
for each of the closing transaction, continue with the same voucher series A.
1. Inventories are valued according to the AVCO- average cost method. Calculate and post
the change in stock.

Bought Sold

2022 2022
January 100 at 225 kr each 22 500 March 92 for 314 kr each 28 888
February 120 at 232 kr each 27 840 May 99 for 320 kr each 31 680
July 200 at 235 kr each 47 000 September 190 for 340 kr each 64 600
October 180 at 240 kr each 43 200
600 140 540 381 125 168

2. Included in the accounts receivable is a claim on Svanen AB, which during the
autumn cancelled its payments. There are rumors that the company is having
problems with its liquidity. The claim amounts to SEK 75,000 and for
precautionary reasons it is estimated that the customer will pay only half (50%) of
the customer's claim.

3. Sales in the last week of December have not yet been invoiced. During that week
we sold for SEK 93,960.

4. Rent, which is paid quarterly, has been paid in advance for January-March 2022
with SEK 28,050.

5. Insurance premium of SEK 39,000, annual premium, has been paid for the period
210701-220630.

6. The company has a bank loan (originally SEK 236,000). The interest (5%) on the
loan and amortization will be paid once a year on 30 September. The annual
amortization is SEK 6,300. At the end of the financial year, the remaining value of
the loan is SEK 223,400. Calculate and post the interest and transfer next year's
amortization of SEK 6,300 to current liabilities (short term loan).

7. The machine purchased in 2019 for SEK 100,000 has been sold during the year
for SEK 75,000. The sale of the non-current asset has been posted (Debit bank
and credit profit disposal machines), but at the financial statements a possible
capital gain/loss shall be investigated and posted. (Non-current assets are written
off at 10% per year according to plan.)
8. The Equipment owned at the beginning of 2022 had been purchased as follows:

Acquisition year Acquisition

cost
2019 100 000 kr
2020 55 000 kr
2021 69 000 kr

During the current year, the purchase of Equipment has been made with SEK
205,000 The estimated useful life (economic life) of all machines and equipment is
10 years. The company is entitled to accounting depreciation. Calculate and post
the depreciation for the year according to plan.

9. Fees to the auditors for auditing the company's accounts in 2022 are estimated at
SEK 24,000.

10. Calculate the tax for 2022 and post any tax asset/liability. The tax rate is 20%.

11. When preparing this year´s financial statements, it is discovered that last year's
results have been forgotten, see IB account 2098 Profit from previous year, to new
account. Post the record to account retained profit.

12. Close the financial statements by transferring recognized income in the income
statement to equity in the balance sheet.

Link to Dictionary Swedish-English Far Online (mdu.se/library)

https://www-faronline-se.ep.bib.mdh.se/engelska-
ordboken/?q=resultatr%C3%A4kning&qtype=startswith&dictionary=sv
To search for words, see below.

Type Swedish word in the bottom row, press enter – English words appears
You can change dictionary to English – Swedish as well.

Good Luck!
Appendix 1 Chart of Accounts
Accounting services 6530 Redovisningstjänster
Accounts payable 2440 Leverantörsskulder
Accounts receivable 1510 Kundfordringar
Accrued holiday wages 2920 Upplupna semlöner
Accrued interests 2960 Upplupna utgiftsräntor
Accrued national insurance 2940 Upplupna sociala avgifter och
andra av
Accrued national insurance holiday 2921 Upplupna soc.avg sem.lön
wages
Accrued salaries 2910 Upplupna löner
Accumulated Depreciation of Cars 1249 Ack avskr bilar/transportmedel
Accumulated Depreciation of Machines 1219 Ack avskrivn maskiner och inv
Advertisement 5900 Reklamkostnader
Auditor services 6420 Ersättning till revisor
Bad debts expenses 6350 Kundförluster
Bank account 1940 Bank Övriga bankkonto
Bank loan 2350 Reverslån
Buildings 1110 Byggnader
Buildings Written off 1118 Ack nedskrivn byggnader
Cars 1240 Bilar och andra transportmedel
Cars Written off 1248 Ack nedskr bilar/transportmedel
Cash 1910 Kassa
Cash discount (given) 3731 Kassarabatter
Cash discount received 4731 Erhållna kassarabatter
Catalogs pricelists 6010 Kataloger och prislistor
Cent adjustments 3740 Öres-- och kronutjämning
Change finished products 4950 Förändr lager färdigvaror
Change in inventory 4900 Lagerförändring
Change in Inventory material 1419 Förändring av lager av råvaror
Change in Inventory of finished goods 1459 Förändring av lager av färdiga
varor
Change in salary liability 7090 Förändr sem löneskuld
Change in salary liability 7290 Förändring av semesterlöneskuld
Change in Work in progress 1449 Förändring av produkter i arbete
Change items in production 4940 Förändr produkter i arbete
Check account 1930 Bank checkräkningskonto
Check account credit 2330 Checkräkn ingskredit
Cleaning rented premise 5060 Städning, renhållning hyrd lokal
Company insurance 6310 Företagsförsäkringar
Cost of sales 4010 Kostnad sålda varor
Credit card charges 6040 Kontokortsavgifter
Currency exchange from trading 3960 Kursvinst rörelsen
Currency Exchange losses 7960 Kursförluster
Customs 5720 Tull- och speditonskost
Depreciated 1119 Ack avskrivn byggnader
Depreciation expenses for 7820 Avskrivningar byggnader/mark
buildings/Land
Depreciation expenses for machines 7830 Avskrivningar maskiner/inv
Depreciation over/under normal 8850 Avskrivn över/under plan
depreciation schedule
Doubtful Debts 1515 Osäkra kundfordringar
Electricity expense 5020 El hyrd lokal
Expense compensations (exch. for 7390 Övr kostnadsersättningar
reciepts
Export outside EU 0% 3055 Försäljn varor utanför EU momsfri
External staff (employed at other 6800 Inhyrd personal
company
Extra cash wages 7310 Kontanta extra ersättn
Freight and transport 5710 Frakt och transport
Freight & customs revenues 3520 Frakt tull och spedition
Fuel for cars 5611 Drivmedel personbilar
General reserve fund 2086 Reservfond
Heating expense 5030 Värme hyrd lokal
Holiday salaries 7082 Semesterlöner till kollektivt
anställda
Holiday salaries 7285 Semesterlön tjänstemän
Impairment of accounts receivable 1519 Nedskrivning av kundfordringar
Input VAT 2641 Ingående moms
Interest expenses 8410 Räntekostnader
Interest revenues/income 8310 Ränteintäkter fr omsättn tillgångar
Inventory items purchased 1460 Lager av handelsvaror
Inventory material 1410 Lager av råvaror
Inventory of finished goods 1450 Lager av färdiga varor
Land 1130 Mark
Land telephone expenses 6211 Fast telefoni
Last years profit 2098 Vinst/förlust föreg år
Latent tax claim 1370 Uppskjuten skattefordran
Leased assets 1260 Leasade tillgångar
Leasing cars 5615 Leasingavg personbilar
Long term claims 1380 Långfristiga fordringar
Long term debts 2840 Låneskulder
Loss on selling buildings 7972 Förlust avyttr fastigheter
Loss on selling machines 7973 Förlust avyttr maskiner/inv
Machines (Note this is NOT Inventory!!) 1210 Maskiner och inventarier
Machines Written off 1218 Ack nedskrivn maskiner och inv
Misc. material 5460 Förbrukningsmaterial
Mobile phone expenses 6212 Mobiltelefon
National insurance 2730 Lagstadgade sociala avg
National insurance 7510 Arbetsgivaravgifter
National insurance for holiday salary 7519 Soc.avgifter semesterlön
Newspapers etc. 6970 Tidningar facklitteratur
Office supplies 6110 Kontorsmaterial
Other expenses on rented premise 5090 Övr kostnader hyrd lokal
Other external services 6590 Övr. främmande tjänster
Other financial expenses 8490 Övr finansiella kostnader
Other financial revenues 8390 Övr finansiella intäkter
Other management expenses 6490 Övr förvaltningskostnader
Other accrued expenses & prepaid 2990 Övr upplupna kostnader och
revenue förutbetalda intäkter
Other prepaid expenses & accrued 1790 Övriga förutbetalda kostnader och
revenues upplupna intäkter
Other revenues 3990 Övr ersättn och intäkter
Other sales expenses 6090 Övr försäljningskostnader
Other short term loans 2410 Andra kortfristiga låneskulder till
kred
Other staff expenses 7690 Övr personalkostnader
Output VAT 12% 2621 Utg moms försäljning/u ag 12%
Output VAT 25% 2611 Utg moms försäljning/u ag 25%
Output VAT 6% 2631 Utg moms försäljning/u ag 6%
Package material 3510 Emballage
Postage expenses 6250 Porto
Postal bank account 1920 Bank PlusGiro
Premium account 2097 Överkursfond
Prepaid from customers 2420 Förskott från kunder
Printing expenses 6150 Trycksaker
Profit at sale of building 3972 Vinst avyttr fastigheter
Profit at sale of machinery 3973 Vinst avyttr maskiner/inv
Profit for this year 2099 Redovisat resultat
Profit for this year 8999 Redovisat resultat
Provision for pensions 2210 Avsättn till pensioner
Provision for taxes 2250 övr avsättningar för skatter
Rent expense 5010 Lokalhyra
Rent expenses for non current assets 5220 Hyra inventarier
Rental expenses for tools/machines 5210 Hyra arbetsmaskiner
Repair and maintenance 5500 Reparation och underhåll
Repairs for cars 5613 Reparation personbilar
Repairs of rented premise 5070 Reparationer hyrd lokal
Retained profit/loss 2091 Balanserad vinst/förlust
Revenues from Property 3911 Hyresintäkter
Road tax, insurance for cars 5612 Skatt, försäkr personbilar
Salaries for Management 7220 Lön företagsledare
Salaries for Office staff 7210 Lön tjänstemän
Salaries for workers 7010 Lön kollek anställda
Sales commission 6050 Försäljningsprovision
Sales inside EU 3048 Försäljn tjänst EU momsfri
Sales of goods 0% in Sweden 3054 Försäljn varor sv momsfri
Sales of goods 12% inside EU 3052 Försäljn varor 12% sv 05 (12%)
Sales of goods 25% inside EU 3051 Försäljn varor 25% sv 05 (25%)
Sales of goods 6% inside EU 3053 Försäljn varor 6% sv 05 (6%)
Sales services 0% 3044 Försäljn tjänst sv momsfri
Sales services 12% 3042 Försäljn tjänst 12% sv 05 (12%)
Sales services 25% VAT 3041 Försäljn tjänst 25% sv 05 (25%)
Sales services 6% 3043 F örsäljn tjänst 6% sv 05 (6%)
Sales services Export outside EU 3045 Försäljn tjänst utanför EU momsfri
Sales Sweden 3000 Försäljning Sverige
Share capital 2081 Aktiekapital
Short term claims 1680 Övr kortfristiga fordr
Short-term bank loan 2411 Kortfristig skuld till kreditinstitut
Sick pay 7281 Sjuklön tjänstemän
Staff Income tax 2710 Personalens källskatt
Subcontractors 4600 Legoarbeten, underentrepr
Supplies 5460 Förbrukningsmaterial
Tax authority account 1630 Avräkn skatter och avgifter
Tax claims 1640 Skattefordringar
Taxes, employees 2710 Personalskatt
Tax expenses this year 8910 Årets skattekostnad
Tax liability 2510 Skatteskulder
Tele and mail 6200 Tele och post
Training expenses 7610 Utbildning
Travel expenses 5800 Resekostnader
Treasury shares 2094 Egna aktier
VAT claims 1650 Fordran moms
VAT to be payed to tax authority 2650 Moms redovisningskonto
Work in progress 1440 Produkter i arbete
Write-off of buildings 7720 Nedskrivn av byggnader och mark
Write-off of machines 7731 Nedskrivn av maskiner och inv