Assessment Task 2 - Practical tasks

Assessment task description

This is the second (2nd) assessment task which incorporates a scenario and practical activity where you will be required to develop your first business document. In the first task you will identify and break down the task from the case study information. In the second task you will create the document, present it to your trainer and save it using organisational guidelines.

Purpose of the assessment task

This assessment task is designed to evaluate student's ability to interpret financial information and

correctly complete each of the following financial information documents or reports used to monitor overall business performance:

account summaries and balances, balance sheets, bank deposit documentation, bank statements, banking summaries, business activity statements, credit card transaction statements, invoices, journal entries, merchant statements, merchant summaries, profit and loss statements, trial balance, provide financial information using correct financial terminology on six different operational or departmental financial activities listed in the knowledge evidence.

Assessment conditions and resources

Assessment will be conducted in a safe simulated classroom environment where you will have access to technology such as computer, internet, WIFI, software to produce business documents, sample style guides and policies and procedures.

Activities:

1. Journal Entries

Double-entry bookkeeping, in accounting, is a system of bookkeeping so named because every entry to an account requires a corresponding and opposite entry to a different account. This lesson will cover howto create journal entries from business transactions. Journal entries are the way we capture the activity of our business.

As you have learned that when a business transaction requires a journal entry, we must follow these rules:

• The entry must have at least 2 accounts with 1 DEBIT amount and at least 1 CREDIT amount.
• The DEBITS are listed first and then the CREDITS.
• The DEBIT amounts will always equal the CREDIT amounts.

Complete the following journal entries using spreadsheet software.

1. The owner invested $30,000 cash in the corporation. We analysed this transaction by increasing both cash (an asset) and common stock (an equity) for $30,000. We learned you increase an asset with a DEBIT and increase an equity with a CREDIT. The journal entry would look like this:

	Debit	Credit
Cash	30,000
Common Stock		30,000

1. Purchased $5,500 of equipment with cash. We analysed this transaction as increasing the asset Equipment and decreasing the asset Cash. To increase an asset, we debit and to decrease an asset, use credit. This journal entry would be:

	Debit	Credit
Equipment	5,500
Cash		5,500

1. Purchased a new truck for $8,500 cash. We analysed this transaction as increasing the asset Truck and decreasing the asset Cash. To increase an asset, we debit and to decrease an asset, use credit. This journal entry would be:

	Debit	Credit
Truck	8,500
Cash		8,500

1. Purchased $500 in supplies on account. We analysed this transaction as increasing the asset Supplies and the liability Accounts Payable. To increase an asset, we debit and to increase a liability, use credit. This journal entry would be:

	Debit	Credit
Supplies	500
Accounts payable		500

1. Paid $300 for supplies previously purchased. Since we previously purchased the supplies and are not buying any new ones, we analysed this to decrease the liability accounts payable and the asset cash. To decrease a liability, use debit and to decrease and asset, use debit.

	Debit	Credit
SupAccounts payableplies	300
Cash		300

1. Paid February and March Rent in advance for $1,800. When we pay for an expense in advance, it is an asset. We want to increase the asset Prepaid Rent and decrease Cash. To increase an asset, we debit and to decrease an asset, use credit.

	Debit	Credit
Prepaid Rent	1,800
Cash		1,800

1. Performed work for customers and received $50,000 cash. We analysed this transaction to increase the asset cash and increase the revenue Service Revenue. To increase an asset, use debit and to increase a revenue, use credit.

	Debit	Credit
Accounts Receivable - Cash at bank	50,000
Services Revenue		50,000

1. Received $5,000 from customers from work previously billed. We analysed this transaction to increase cash since we are receiving cash and we want to decrease accounts receivable since we are receiving money from customers who we billed previously and not new work we are doing. To increase an asset, we debit and to decrease an asset, use credit.

	Debit	Credit
Accounts Receivable	5,000
Services Revenue		5,000

1. Paid office salaries $900. We analysed this transaction to increase salaries expense and decrease cash since we paid cash. To increase an expense, we debit and to decrease an asset, use credit.

	Debit	Credit
Salaries Expense	900
Cash		900

1. Paid utility bill $1,200. We analysed this transaction to increase utilitiesexpense and decrease cash since we paid cash. To increase an expense, we debit and to decrease an asset, use credit.

	Debit	Credit
Utilities Expense	1,200
Cash		1,200

1. In this task you must demonstrate your ability apply accounting equation, create a spreadsheet and prepare income statement at the end of December 31.

Comprehensive Problem 1.

"Break-a-leg Adventures" company has the following account balances:

Cash, $6,000; Accounts Receivable, $7,000; Prepaid Rent, 1,900; Prepaid Insurance, $1,200 Supplies, $950; Equipment, $7,000; Trucks, $10,000; Accounts Payable, $2,700; Common Stock $25,000; Retained Earnings $6,350.

Business transactions during December are presented as follows:

1. Company received cash from clients for services, $7,500
2. Company paid to creditors $600,
3. Paid office rent for the month of December, $950,
4. Company billed client for accounting services on account, $8,200
5. Supplies were purchased on account, $450,
6. Company received cash from clients billed previously, $4,200
7. Cast 77 received an invoice for services from Copy Plus for December (the invoice will be paid next month), $550,
8. Cast 77 paid monthly salaries, $4,700,
9. Utilities expense were paid, $380,
10. Miscellaneous expense was paid, $250,
11. Paid for monthly insurance, $200
12. Dividends were paid, $750.

Required:

• Apply the basic accounting equation (create a spreadsheet, please see comprehensive example) to complete a transaction analysis for each transaction(hint:enter the balances provided first).
• Prepare income statement at the end of December 31.
• Prepare statement of retained earnings equity at the end of December 31.
• Prepare balance sheet at the end of December 31.

1. In this task you must prepare entries in the general journal, post journal entries to three-column general ledger accounts and prepare a trial balance as of December 31. Read the scenario below and complete the activity.

Scenario

Trim Lawn, Inc., is a lawn care company. Thus, the company earns its revenue from sending its trucks to customers' residences and certain commercial establishments to care for lawns and shrubbery. Trim Lawn's trial balance at the end of the first 11 months of the year follows:

	TRIM LAWN, INC Trial Balance November 30
Acct.
No	Account Title	Debits	Credits
100	Cash	$63,740
103	Accounts Receivable	88,600
150	Trucks	102,900
160	Office Furniture	8,400
200	Accounts Payable		$ 33,600
300	Capital Stock		30,000
310	Retained Earnings, 2010 January 1		30,540
400	Service Revenue		371,010
505	Advertising Expense	18,300
506	Gas an d Oil Expense	21,900
507	Salaries Expense	65,850
511	Utilities Expense	2,310
515	Rent Expense	15,000
518	Supplies Expense	75,600
531	Entertainment Expense	2,550
		$465,150	$465,150

Dec. 2 Paid rent for December, $ 3,000.

5 Paid the accounts payable of $ 33,600.

8 Paid advertising for December, $ 1,500.

10 Purchased a new office desk on account, $ 1,050.

13 Purchased $ 240 of supplies on account for use in December.

15 Collected cash from customers on account, $ 75,000.

20 Paid for customer entertainment, $ 450.

24 Collected an additional $ 6,000 from customers on account.

26 Paid for gasoline used in the trucks in December, $ 270.

28 Billed customers for services rendered, $ 79,500.

30 Paid for more December supplies, $ 12,000.

31 Paid December salaries, $ 15,300.

31 Paid a $ 4,000 cash dividend. (The Dividends account is No. 320.)

TASK INSTRUCTIONS

1. Prepare entries in the general journal for the preceding transactions for December.
2. Post the journal entries to three-column general ledger accounts.
3. Prepare a trial balance as of December 31.