Interactive assignment (Part 5) Weeks 10 & 11 Based on Week 8 & 9 topics: Balance Sheet Income Statement Statement of Changes in Equity Task requirements: 1. Complete the last four columns of the July 10-column Worksheet, which will generate the framework for your Income Statement and Balance Sheet: – The worksheet has been set up to accept only the correct values in the correct positions within the worksheet. It is important to ensure all your entries are correct prior to proceed to the 10-Column worksheet. 2. Prepare the financial statements that Nicholas will present
View complete question Interactive assignment (Part 5) Weeks 10 & 11 Based on Week 8 & 9 topics: Balance Sheet Income Statement Statement of Changes in Equity Task requirements: 1. Complete the last four columns of the July 10-column Worksheet, which will generate the framework for your Income Statement and Balance Sheet: – The worksheet has been set up to accept only the correct values in the correct positions within the worksheet. It is important to ensure all your entries are correct prior to proceed to the 10-Column worksheet. 2. Prepare the financial statements that Nicholas will present to the CBA, by converting the last four columns of the July 10-Column Worksheet into three formalised financial statements. These financial statements include: – The Income Statement (use Excel worksheet Income Statement); – The Changes in Equity Statement (use Excel worksheet Changes in Equity), and – The Balance Sheet (use Excel worksheet Balance Sheet); Note: The Balance Sheet should be fully classified and must be prepared in the narrative format. Tax expense should be ignored for the Income Statement. These statements should not contain account numbers. ACCG1000 Interactive Assignment 2 Session 2, 2020 FlixCity Closing Entries & Post-Closing Trial Balance Now that Nicholas has rolled over his accounts into August, he can prepare the July financial statements for FlixCity & Gaming. After examining the July trial balances, adjustments and closing entries, Nicholas is confident that his organisation is performing well, which he had expected. This level of performance seemed to him to be contrary to what his accountant had reported for the previous financial year and this was of concern. Whilst he conceded that it was unrealistic to compare one months performance with an entire years, he was keen to examine the financial reports to find some clues to explain the obvious discrepancy between the levels of profit. One such clue, as he suspected, was the accountancy expenditure. Unfortunately, Nicholas only had the aggregated annual financial statements from the previous financial year to use for comparison, but found that the expenditure on accounting was astronomical! Including various meetings, advice, the bookkeeping, the year-end work and tax returns, it seems he paid his accountant, on average of $3,000 each month last year. Now that he could attend to the bookkeeping and reporting himself. Nicholas was confident that he could save a significant portion of these costs, which would drastically improve the profits and cash flow ofFlixCity. The Balance Sheet Nicholas will produce, will balance the Net Assets of FlixCity (i.e. Assets less Liabilities) with the Equity he holds in the enterprise. It will include the retained earningsfrom previous periods, along with the operating profit or loss for the month of July and any drawings that Nicholas has made from the business bank account. It will essentially be a snapshot of FlixCity & Gaming as at July 31st. This information will be useful for Nicholas to monitor the claims against FlixCitys assets. He can assess monthly whether his debts to the bank and other creditors are able to be met by the current assets (i.e. the bank account, prepayments and receivables). If he suspects that there will be a shortfall in resources to meet the upcoming obligations, Nicholas may consider selling off some of the noncurrent assets to provide sufficient liquidity to pay his bills (although this would require serious consideration, as such decisions may impact future incomes). His Income Statement will list the details of FlixCitys income and expenditure, and report the residual profit or loss for the month. Nicholas will be able to see how his business has performed over the month of July, and use that information to predict performance for future months. He should be able to more effectively plan his capital expenditure and operating expensesif he can accurately predict the income the business will generate. This of course will favourably impact the organisations monthly cash flows. The Statement of Changes in Equity will explain and reconcile the differences between Nicholas equity in the business at the beginning of July and at the end. It will include the accumulated profits/losses for FlixCity, as well as the funds that Nicholas has contributed and withdrawn from the business. This will be useful for him to monitor the level of capital he has contributed, the value of funds hes withdrawn and whether the profits/losses for the period will impact favourably or unfavourably on this level of capital. This information should restrict Nicholas drawings in months of predicted low profits or losses, but may free him to draw funds in months of higher profits. These subsequent decisions will also improve the cash flow of FlixCity throughout the year. Producing this set of financial statements on a monthly basis, will not only meet the banks new reporting requirements, but will also provide Nicholas with the ability to track more closely the progress of each of the businesses. At the end of each month, he will be able to assess the performance of FlixCity and will, in the years to come, be able to compare it with the same period of time in previous financial years. Nicholas new accounting system will provide him with timely information about the prices he is charging for the various goods and services he provides, and should indicate how and when these might require adjustment. This should allow him to manage his cash flows more effectively by helping him determine when and how much money should be spent on inventory and other running expenses. In the last financial year, there were expenses, such as wages and utility bills that could not be managed, since they were regular and not open to negotiation. The new accounting system will help Nicholas ensure there are sufficient funds in the bank to cover these obligations. It will also track more accurately, the progress of paying back the CBA loan Nicholas will now be able to see each month the balance owing, the repayments made and how much interest is payable. 3 Session 2, 2020 ACCG1000 Interactive Assignment Finally, Nicholas is now confident that he had accurate, reliable, timely and relevant information available to enable him make good business decisions the future looks bright for FlixCity & Gaming Interactive assignment (Part 4) Week 9 Based on Week 7 topic: Closing entries Post closing entries to general ledger Posts-closing Trial Balance Task requirements: 1. Prepare the required closing entries in Excel worksheet Closing. Narrations are required. – This needsto be done in the prescribed orderso that yourfeedback will function properly (i.e.the closing entry numbers must correspond to the Journal Reference numbers); – Do not leave blank lines between your journal entries; – Your description (i.e. the narration) and account choice for each journal will not be corrected; – Take care with your journal entries. If you select the incorrect accounts for your closing journals, then your T-Accounts will be wrong when you attempt to post your entries to them and your 10-Column Worksheet will not accept incorrect $values. 2. After the closing entries have been prepared, post the closing entries to the general ledger. – Post the closing entries in the same order as instructed for the feedback to function properly; – You must ensure that each T-Account is balanced; 3. Prepare the Post-closing Trial Balance in Excel worksheet Post TB. ACCG1000 Interactive Assignment 2 Session 2, 2020 FlixCity Closing Entries & Post-Closing Trial Balance Now that Nicholas has prepared the Adjusted Trial Balance, which has included all the accrual and prepayment adjustments. He now needs to roll over the accounts into August. This means he will need to prepare and post the closing journal entries to the General Ledger T-Accounts and prepare the Post-Closing Trial Balance. After checking his notes from his last weekend class, Nicholas identifies the four closing entries that need to be processed, which he summarises below: FlixCity & Gaming Summary of Closing Entries for July 2016 Entry No: Date Entry Description 1 31-Jul Close off the revenue accounts 2 31-Jul Close off the expense accounts 3 31-Jul Close off the profit to the Capital account 4 31-Jul Close off drawings to the Capital account Once these closing entries have been prepared and posted to the General Ledger T-Accounts, Nicholas can then produce the Post-Closing Trial Balance and prepare the final set of July Financial Statements for submission to the Bank Manager.
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