To establish and implement an accounting system using information supplied in the case study of the Blue

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Question:

To establish and implement an accounting system using information supplied in the case study of the Blue Surf.

Required:

1. Set up a company on Xero using your name Blue Surf. 2. Create and submit a chart of accounts using Xero. 3. Develop and process all transactions from the information provided into Xero to demonstrate the functionality of your system. 4. Print and submit the following required outputs: - Trial Balance - Inventory Item Details - Payable Invoice Summary - Receivable Invoice Detail - Fixed Asset Reconciliation

On 1 January 2016 you, the owner of Blue Surf, decided to start using Xero accounting software to process your transactions. You sell three main types of inventory: Bodyboards, Surfboards, and SUPs (Stand-up Paddle Boards). You also offer a surfboard repair service.

1. Set up Chart of Accounts

Import the CSV Chart of Accounts file for Your Name Blue Surf - CoA-bluesurf-student.csv

Add the highlighted accounts in the trial balance and all the additional accounts in the list below. Note for Capital and Drawings edit the account names to include your name.

Your Name Blue Surf has the following balances (tax details in brackets for accounts you need to add) on 31 December 2015.

Your Name Blue Surf Trial Balance as at 31 December 2015
Code	Account Name	Debit	Credit
601	Bodyboard Inventory (15% GST on expenses)	840
602	Surfboard Inventory (15% GST on expenses)	7,980
603	SUP Inventory (15% GST on expenses)	13,680
610	Accounts Receivable*	2,990
621	Bank - Blue Surf (Xero bank account)	2,800
730	Shop Fittings	60,000
731	Accumulated Depreciation on Shop Fittings		13,400
740	Repair Equipment (15% GST on expenses)	24,000
741	Accumulated Depreciation on Repair Equipment (No GST)		4,576
800	Accounts Payable**		2,294
820	GST		1,020
905	Loan - MNZB		19,000
971	Capital - Your Name		72,000
		112,290	112,290
* The Accounts Receivable represents $2,990 owed by Paddle Safe. **The Accounts Payable represents $2,294 owed to Surf Co.

The following additional accounts are required to be added to the imported Chart of Accounts file:

Code	Account Name	Account Type	Tax details
201	Bodyboard Sales	Sales	15% GST on income
202	Surfboard Sales	Sales	15% GST on income
203	SUP Sales	Sales	15% GST on income
211	Surfboard Repair Fees	Other Income	15% GST on income
301	Bodyboard COGS	Direct costs	No GST
302	Surfboard COGS	Direct costs	No GST
303	SUP COGS	Direct costs	No GST
432	Bank Charges	Expense	No GST
434	Shop Insurance	Expense	15% GST on expenses
811	Total Engineering*	Current Liability	No GST
* The supplier, in this example, for the credit purchase of plant or equipment

2. Enter opening balances Set the Conversion date to 1 January 2016 Enter the opening/conversion balances from the trial balance at 31 December 2015, by selecting settings-> Conversion Balances. Complete the opening balance invoice for the accounts receivable, and the opening balance bill for accounts payable.

3. Add Inventory items Set up the following inventory items for Your Name Blue Surf.

	Bodyboards	Surfboards	SUPs
Cost price excluding GST	$42.00	$399.00	$684.00
Selling price excluding GST	$86.00	$746.00	$1,300.00
Quantity on hand	20	20	20

In order to enter the quantity on hand, opening balances need to be created and imported.

4. Process the following transactions in Xero:

Date	Transactions
2016 Jan 4	Purchased 7 bodyboards and 5 SUPs on credit from Sea Gear.
	Purchased 10 surfboards on credit from Surf Co.
7	Paid KiwiSurf for marketing $1,362.75 using online bill payment #7210.
7	Cash sales (EFTPOS): 6 bodyboards, 4 surfboards and 2 SUPs
7	Cash received for surfboard repairs (EFTPOS) $235.70
8	Sold 5 bodyboards and 8 surfboards to Raglan Surf School on credit. Gave them a 15% discount on the body boards and a 20% discount on the surfboards. Record each discount in the discount column of the invoice.
11	Sold 5 SUPs to Paddle Safe on credit.
12	Used the business EFTPOS card at The Warehouse, total $147.99. Of this $120.00 cash out was for personal expenses, the remainder was for business stationery. Business stationery is included in Office Expenses.
14	Paddle Safe returned 1 SUP purchased on 11 January 2016
15	Returned 2 bodyboards purchased on 4 January 2016 to Sea Gear.
15	Paid B Kane $2,725.73 for wages by online bill payment #3100
16	Surfboard repairs (EFTPOS) for $297.90
16	Cash sales (EFTPOS): 3 SUPs
16	Paid monthly Xero account $50.00 by online bill payment #2001. The Xero account is included in Office Expenses.
21	Paid Surf Co $1,500 in part payment of the amount due on 31 December 2015. Bill payment #4100
21	Charged Sam Hewitt $100.00 for surfboard repairs.
22	Monthly cash drawings transferring $4,500 from the business bank account to your personal bank account.
22	Purchased 11 bodyboards and 9 SUPs on credit from Sea Gear. They added a freight charge of $55 excluding GST.
23	Sold 2 SUPs on credit to V Jacobs. Added $47 excluding GST for repairing V Jacobs old surfboard.
24	Pacific Media charged $2,400 for advertising in NZ Surfing magazine. Advertising is included in the Marketing account.
25	Cash sales (EFTPOS): 5 Bodyboards, 3 Surfboards and 4 SUPs
25	Import the bank statement file BS-surf.csv and complete the bank reconciliation process Note: Telco Direct Debit is for Phone & Website Max Energy Direct Debit is for Electricity A2 Property Direct Debit is for Shop Rent
	Direct credit from Paddle Safe is in full settlement of their 31 December 2015 balance Direct credit from Raglan Surf is in part payment of their invoice. Other items should be self-explanatory
28	You gave one SUP to your dad for his birthday.
28	One bodyboard has been damaged beyond repair and needs to be written off.
30	Last month phone & website expense of $253.20 was posted in error to electricity. Correct this error.
30	Last month shop insurance of $1,700 was posted in error to depreciation on shop fittings. Correct this error.
31	Total Engineering charged $25,300 for the purchase and installation of new shop fittings.
31	Sold old shop fittings for cash $3,105. The shop fittings originally cost $10,000 excluding GST. Straight-line depreciation at 15% p.a. has been recorded for five full years. At the date of disposal an additional three months depreciation is required to be recorded. Record the following: Three months depreciation at 15% p.a. straight line Transfer of the shop fittings to the Shop Fittings Disposal account. Write off accumulated depreciation to the Shop Fittings Disposal account. Record the cash sale of the old shop fittings using a Receive Money transaction. Record the loss or gain on disposal - review the Shop Fittings Disposal Account Transactions to determine whether you need to record a loss or gain on disposal. When you have completed all of the above review the Shop Fittings Disposal account to ensure the balance is now zero.