poa redo.docx

School based

ASSESSMENT

Candidate Name: Adrian Turnbull

Candidate #:

Centre Number: 100033

School: Excelsior High School

Territory: Jamaica

Principles of accounts

School Based Assessment

TURNBULL’S WHOLESALE

Candidate Name: Adrian TurnbullCandidate #:Centre Number: 100033School: Excelsior High SchoolTerritory: Jamaica

School based

ASSESSMENT

Candidate Name: Adrian Turnbull

Candidate #:

Centre Number: 100033

School: Excelsior High School

Territory: Jamaica

TABLE OF CONTENT

PRINCIPLES OF ACCOUNTS


AIMS OF THE PROJECT………………………………………………………1

DESCRIPTION OF BUSINESS……………………………………………….2

LIST OF TRANSACTIONS…………………………………………………..3-4

PURCHASE ORDER……………………………………………………………..5

CREDIT NOTE………………………………………………………………………6

BANK STATEMENT………………………………………………………………7

CASH DEPOSIT…………………………………………………………………….8

CASH RECEIPT…………………………………………………………………….9

STATEMENT OF AFFAIRS………………………………………………….10

BOOKS OF ORIGINAL ENTRY

OPENING JOURNAL ENTRIES……………………………………………11

SALES JOURNAL……………………………………………………………….12

PURCHASE JOURNAL……………………………………………………….13

RETURN INWARDS JOURNAL…………………………….……………..14

RETURN OUTWARDS JOURNAL………………………..………………15

GENERAL JOURANL………………………………………………………….16

SALES JOURNAL……………………………………………………………….17

CASHBOOK………………………………………………………………………..18

UPDATED CASHBOOK……………………………………………………….19

LEDGERS

SALES LEDGER…………………………………………………………………20

PURCHASE LEDGER…………………………………………………………21

GENERAL LEDGER………………………………………………….……22-24

SALES & PURCHASE CONTROL A/C…………………………………25

TRIAL BALANCE………………………………………………………………..26

BANK RECONSILIATION……………………………………………………27

TRADING PROFIT AND LOSS A/C……………………………………..28

BALANCESHEET……………………………………………………………….29

PERFORMANCE OF BUSINESS………………………………………….30

RATIOS………………………………………………………………………….31-35

GRAPHS AND CHARTS………………………………………………….36-38

RECOMMENDATON………………………………………………………….39

CONCLUSION…………………………………………………………………..40

AIMS OF THE PROJECT

The aim of this Principles of accounts School assessment is to improve and get a better understanding of making use of analytical skills and working with figures and making comparisons.

To receive a thorough manipulation of an actual business, by applying accounting principles.

To manage a more practical usage of the accounts that we would normally apply theatrically.

1

Descriptions of Business

Turnbull’s Wholesale is located at 169 Bedward Garden, Kingston 7. Turnbull’s Wholesale is a sole trader business, owned operated by Adrian Turnbull consisting of 7 employees. This business will be retailing Tin foods, Beverages, Kitchen supplies, meat kinds, Hair products, school items, Dry goods such as rice, flour, sugar etc. Turnbull’s Wholesale will be opened from 8 am to 7 pm on Mondays to Saturdays while on Sundays it will opened from 7 am to 4 pm. The business will be started off with a capital of $180610, stock of $12000, cash in hand and bank $510 and $9000 respectively. This business will start operating on January 1 2014 to January 31 2014.

2

List of Transactions

On January 1, 2014 started a grocery business employing shop assistance with the following list of balance Assets and liabilities.

Assets Premises $130,000, Fixtures and fittings $25,000, Stock $12,000

Debtors: M. Lyn $3,000, James $2,600 Creditors: R. Graham $1,500

Cash at Bank: $9000, Cash in hand: $510

During January the following transactions took place:

January 1. Sold goods to M. Lane on credit $2,700

3. Purchase on credit from R. Graham goods $1800 less 10% trade discount

6. Cash sales $1504

7. Paid R. Graham the amount due on January 1, by cheque, less 5% cash discount

9. Paid sundry expense in cash $290

10. Purchased goods on credit from R. Gordon $5720 less 5% Trade discount

11. Receive a credit note from R. Gordon for goods returned with value of $452

13. Purchased by cheque a refrigerator for business use $7000

15. Paid wages and salaries by cheque $2000

3

17. Sent Credit Note to M. Lane for goods returned with value of $300

18. Cash sales $4664

24. Withdraw cash from till for is personal use $400

26. Receive cheque for $2500 from M. Lyn less %5 cash discount

28. Paid sundry expense $850 in cash

29. Sold goods to C. Browne on credit on credit $4900. Paid Transportation cost $450 by cheque

30. J. James is bankrupt. He can pay only 0.70 cents of every dollar by cheque. Write off the rest as bad debt

31. Put $3000 in the bank from cash received

Note: Closing stock in hand at January 3, 2014 was valued at $10,400

Additional:

- Sundry expense owing $150- Wages paid in advance $250

- Decide to make a provision for bad debt of 5% on debtors per annum

- Provision for Depreciation to be charged i. Fixtures and fittings 5% (per annum)ii. Refrigerator 10%(per annum)

4


Purchase Order

Name: Turnbull’s wholesale

Address: 169 Bedward Garden Kgn 7

Tel: 856-5078 Fax: 188-4321

Supplier: R. Gordon Address: 2 short road

No. Description Quantity Unit Price Total Cost1 Crate of Red Stripe Bear 2 2860 $5720.00

2 Less 5% Trade Discount - $286.00

$5434.00

R. Gordon

Authorised Signature

5


Credit Note

Name: R. Gordon Customer Name: Turnbull’s wholesale Address: 2 Shortroad

Address: 169 Bedward Garden Tel: 123-4567

Kgn 7 Fax: 1800-611

Our Invoice No.: Date of Invoice: Jan. 11, 2014.

No. Description Quantity Unit Price Total

Bag of Banana Chips 2 $226

Total: $452

A. Gordon

Authorised Signature

Finance Department

6

TURNBULL’S WHOLSESALE

NATIONAL COMMERCIAL BANK

OLD HOPE ROAD

CROSS ROADS. KINGSTON

Address: 169 Bedward Garden

Kingston 7.

DATE PARTICULARS DR CR BALANCEJan 1 Balance c/d 9000Jan 7 Cheque 1425 7575Jan 13 Cheque 7000 575Jan 10 Credit Transfer -

R. Binns750 1325

Jan 12 Standing Order – Insurance

500 825

Jan 15 Cheque 2000 -1175

Jan 20 Interest Earned 150 -1025Jan 26 Deposit 2375 1350Jan 28 Stamp duty 50 1300Jan 31 Deposit 3000 4300Jan 31 Bank Charges 340 3960

7


9


Statement of Affairs as at December 2014

$ $Non-current assets

Premises 130,000Fixtures & Fittings 25,000

155000

Current assetsStock of Goods 12000Debtors 5600Bank 9000Cash 510

27110

Less-current liabilitiesCreditors 1500Working Capital 25610

180610

Financed By:Capital 180610

10

BOOKS

OF ORIGINAL

ENTRY


Opening journal entries

Date Details Folio Debit CreditJan 1 Premises GL $130,000

Fixtures & Fittings GL $25,000Stock of Goods GL $12,000Debtors-M. Lyn GL $3,000-James GL $2,600Cash at Bank GL $9,000Cash in Hand GL $510Creditors GL $1,500Capital GL $180,610

$182,110 $182,110

11


Sales Journal

Date Details folio Debit CreditJan 1 M. Lane SL $2700Jan 29 C. Brown SL $4900Jan 31 Transfer to Sales a/c GL $7600

12


Purchases Journal

Date Details Folio Debit CreditJan 3 R. Graham PL $1620Jan 10 R. Gordon Pl $5434Jan 31 Transfer to Purchases

a/c GL $7054

13


Return Outwards Journal

Date Details Folio Debit CreditJan 11 R. Gordon PL $452Jan 31 Transfer to Return

Outwars a/lGL $452

14


Return Inwards Journal

Dates Details Folio Debit CreditJan 17 M. Lane SL $300Jan 31 Transfer to Return

Inwards a/cGL $452

15

TURNBULL’S WHOLSESALE

General Journal

Date DetailsFoli

o Debit($) Credit ($)

Premises GL 130000

Fixtures and Fittings GL 25000

Stock of Goods GL 12,000

Debtors:

M. Lyn SL 3000

J. James SL 2600

Cash at Bank CB 9000

Cash in Hand CB 510

R. Graham PL 1500

Capital PL 18610 182110 182110

Assets and Liabilities at this date entered to open the books GL

16


Sales Invoices

Name: Turnbull’s wholesale Customer: M. Lane Address: 169 Bedward Garden

Kingston 7

Tel: 856-5078 Fax: 1800-119

Invoice No.: 1

Date: 1 Jan 2014

No. Description Quantity Unit Price Total

Banana Chips 4 $250 $1,000

1 Case of soda 2 $850 $1,700

$2,700

17


Cashbook

Date Details Folio D.A Bank Cash Date Details Folio D.R Bank CashJan. 1 Balance B/F $9,000 $510 Jan. 7 Carriage Inwards GL $350Jan. 6 Sales GL $1,504 Jan. 7 R. Graham PL $75 $1,425Jan.18 Sales GL $4,664 Jan. 9 Sundry Expense GL $290Jan. 26 M. Lyn SL $125 $2,375 Jan. 13 Refrigerator GL $7,000Jan. 31 Cash C $3,000 Jan. 15 Wages GL $2,000Jan. 31 J. James SL $1,820 Jan. 24 Drawings GL $400

Jan. 28 Sundry Expense GL $850Jan. 29 Carriage Inwards GL $450Jan. 31 Bank C $3,000Jan. 31 Balance c/d $5,320 $1,788

$125 $16,195 $6,678 $75 $16,195 $6,678Feb. 1 Balance b/d $5,320 $1,788

18


Updated cash book as at 1 January 2014

Date Details Amount Date Details AmountJan. 1 Balance $5,320 Jan. Standing Order $500Jan. Credit Transfer $750 Jan. Stamp Duty $50

Jan. Bank Charges $340Jan. 31 Balance c/d $5,330

$6,220 $$6,220Feb. 1 Balance b/d $5,330

19

LEDGERS


Sales Ledger

Date Details amount Date Details Amount

M. Lane a/cJan. 1 Sales $2,700 Jan. 7 Return Inwards $300

Jan.31 Balance c/d $2,400$2,700 $2,700

Feb. 1 Balance b/d $2,400M. Lyn A/c

Jan. 1 Balance b/d $3000 Jan. 26 Bank $2375Jan. 26 Discount $125

Jan. 31 Balance c/d $500

$3,000 $3,000

Feb. 1 Balance b/d $502

C. Brown a/cJan. 29 Sales $4,900 Jan. 31 Balance c/d $4,900

$4,900 $4,900

Feb. 1 Balance b/d $4,900

J. James a/cJan. 1 Balance b/d $2,600 Jan. 30 Bank $1820

$780

$2,600 $2,600

20


Purchases Ledgers

Date Details Amount Date Details AmountR. Graham a/c

Jan. 7 Bank $1,425 Jan. 3 Balance b/d $1,500Jan. 7 Discount $75 Jan. 3 Purchases $1,620Jan.31 Balance c/d $1,620

$3,120 $3,120Feb. 1 Balance b/d $1,620

R. Gordon a/cJan. 11 Return

Outwards$452 Jan. 10 Purchase $5,434

Jan. 31 Balance c/d $4,982$5,434 $5,434


21


General Ledger

Date Details Amount Date Details AmountCarriage Inwards a/c

Jan. 3 Cash $350 Jan. 31 Balance c/d $350$350 $350

Feb. 1 Balance b/d $350Sales a/c

Jan. 31 Transfer to trading A/c

$13,768 Jan. 6 Cash $1,504

Jan. 18 Cash $4,664Jan. 31 Total credit sale for

the month$7,600

$13,768 $13,768

Carriage Outwards a/cJan. 29 Bank $450 Jan. 31 Transfer to P&L A/c $450

$450 $450

Return Outwards a/cJan. 31 Transfer to

trading A/c$452 Jan. 31 Total return outwards

for the month$452

$452 $452

Refrigerator a/cJan. 31 Bank $7,000 Jan. 31 Balance c/d $7,000

$7,000 $7,000Feb. 1 Balance b/d $7,000

22


General Ledger

Date Details Amount Date Details AmountReturn Inwards a/c

Jan. 31 Total return inwards $300 Jan. 31 Balance c/d $300

for the month$300 $300

Stock a/cJan. 1 Balance B/F $12,000 Jan. 31 Balance c/d $12,000

$12,000 $12,000Feb. 1 Balance b/d $12,000

Sundry Expense a/cJan. 9 Cash $290 Jan. 31 Transfer to P&L

A/c$1,140

Jan. 28 Cash $850$1,140 $1,140

Premises a/cJan. 1 Balance B/F $130,000 Jan. 31 Balance c/d $130,000

$130,000 $130,000Feb. 1 Balance b/b $130,000

Discount Allowed a/c Jan. 31 Total Discount

allowed for the month$125 Jan. 31 Transfer to P&L

A/c$125

$125 $125

23

TURNBULL’S WHOLESALEGeneral ledger

Date Details Amount Date Details Amount

Fixtures & Fittings a/c

Jan. 1 Balance B/F $25,000 Jan. 31 Balance c/d $25,000

$25,000 $25,000Feb. 1 Balance b/d $25,000

Wages & Salaries a/c

Jan. 15 Bank $2,000 Jan. 31 Transfer to P&L A/c

$2,000

$2,000 $2,000Drawings a/c

Jan. 24 Cash $400 Jan. 31 Balance c/d $400$400 $400

Feb. 1 Balance b/d $400Bad Debt a/c

Jan. 30 J. James $780 Jan. 31 Transfer to P&L A/c

$780

$780 $780Purchases a/c

Jan. 31 Total credit purchases for the month

$7,054 Jan. 31 Transfer to trading A/c

$7,054

$7,054 $7,054

Capital a/c

Jan. 31 Balance c/d $180,610 Jan. 1 Balance B/F $180,000

$180,610 $180,000


24


Control Accounts

Date Details Amount Date Details AmountSales Legers Control a/c

Jan. 1 Balance B/F $5,600 Jan. Return Inwards $300Jan. Sales $7,600 Jan. Bank $4,195

Jan. Discount allowed

$125

Jan. Bad Debt $780Jan. 31 Balance c/d $7,800

$13,200 $13,200Feb. 1 Balance $7,800

Purchases Ledger Control a/cJan. Bank $1,425 Jan. 1 Balance B/F $1,500Jan. Return

Outwards$452 Jan. Purchases $7,054

Jan. Discount Received

$75

Jan. 31 Balance c/d $6,602

$8,554 $8,554


25


Trial Balance as at January 2014

Debit Credit

Carriage Inwards $350

Sales $13,768Carriage Outwards $450Return Outwards $452Refrigerator $7,000Return Inwards $300Stock of Goods $12,000Sundry Expense $1,140Premises $130,000Discount Allowed $125Fixtures & Fittings $25,000Wages & Salaries $2,000Drawings $400Bad Debt $780Purchases $7,054Capital $180,610Bank $5,320Cash $1,788R. Graham $1,620M. Lane $2,400M. Lyn $500R. Gordon $4,982C. Brown $4,900Discount Received $75

$201,507 $201,507

26


Bank Reconciliation Statement as at January 2014

Details AmountBalance as per adjusted cashbook $5,330Add un-presented Cheques $450

$5,780

Less Late Lodgements $1,820Balance as per updated Bank reconciliation $3960

27


Trading Profit & Loss Account as at Jan 31 2014

$ $ $Sales 13,768Return Inwards 300

13,468Less Cost Of Goods SoldOpening Stock 12,000Add Purchase 7054

Carriage Inwards 350Gross Purchase 7,404Return Outwards 452Net Purchase 6,952Cost Of Goods Available For Sale 18,952Closing Stock 10,400Cost Of Goods Sold 8,552Gross Profit 4,916Add Other IncomeDiscount Received 75

4,991Less ExpenseProvision Bad Debt 33Carriage Outwards 450Discount Allowed 125Bad Debt 780Sundry Expense 1,290Wages & Salaries 1,750DepreciationFixtures & Fittings 104Refrigerator 58

4,590Net Profit 401

28


Balance Sheet as at 31 Jan 2014

Non-Current Assets $ $ $Premises 130,000Fixtures & Settings 25,000Less Depreciation 104

24,896Refrigerator at Cost 700

Less Depreciation 586,942

161,838Current AssetsStock 10,400Trade Debtors 7,800Less Provision for Bad Debt 33

7,767Cash at Bank 5320Prepaid Expense 250Cash 1,758

25,525Less Current LiabilitiesTrade Creditor 6,602Accrued Expense 150

6,75218,773

180,611Financed ByCapital 180,610Add Net Profit 401

181,011Less Drawings 400

180,611

29

Performance of business

The performance of Turnbull’s Wholesale was less than the performance expected of an average firm just starting up in that type of industry. In the analysing the financial statements of the business it was evident that the business performed poorly even though it made a profit and it was only for one

month. In the month of January the business mustered a net profit of $401, this profit may be attributable to the fact that the business is new, and is expected of a new business to have some forms of problem. Turnbull’s Wholesale sales were more than the expenses which Is always a good thing as a result the business had a better chance of making a profit which it did. The turnover ratio was 0.76 which means the stock is being converted into sales less than 1 time during the month of January also the gross mark-up was 57.8% which means the mark up on cost was only enough to arrive at the selling price which is not adequate to meet Turnbull’s Wholesale expenses. Turnbull’s wholesale took 18 days to collect outstanding funds from credit customers in the month of January.

30

RATIOS

Ratio Analysis and Interpretation of results

Working capital ratio:

Comparison made: Beginning vs ending

Working Capital= CA-Cl=27,110-25,610

This reveals that at the beginning of the month the working capital was $27110, however at the end it was reduced by $1,500 to $25,610 a decrease of 5.5%.

Ratio: 27,110

25,610

= 1:1

Solvency Ratios:

(a) Current Ratio = CA CLComparison Made = Beginning vs Ending CA = 27,110 25,525 CL = 1,500 6,752 18:1 4:1

This means that at the beginning of the month current assets could cover current liabilities 18 times. However at the end of the month this was reduced to 4 times.

31

Acid-Test of quick ratio:

Comparison being made: Beginning vs ending

Acid-Test Ratio: CA-STOCK 27,110-12,000 25,525-10400

CL 1,500 6,752

10:1 2:1

This means current assets without at the beginning of the month could cover current liabilities 10 times. However at the end of the month it is reduced to 2 times.

Gross Profit % Sales: GP X 100

Net Sales

= 4,916 X 100

13,468

= 36.5%

This means that for every $100 of sales 36.5% or $36.50 goes to cover expenses and contribute to any net profit.

Net profit % of Sales: Net Profit X 100

Net Sales

= 401 X 100

= 2.9%

This means that for every $100 of sales, the business owner is gaining 2.9% or $2.9.

32

Gross Mark-Up: GP X 100

COGS

= 4,916 x 100

8,552

=57.8%

This means that the mark up on cost was only enough to arrive at the selling price. This is definitely not adequate to meet the Turnbull’s Wholesale expenses.

Turn Over Ratio: COGS

Average Stock

= 8,552

10400 + 12,000/2

= 0.763 or 0.76

This means that the stock is being converted into sales less than 1 time during the month of January.

33

Debtors to Creditor Ratio:

This measures the length of time taken for debtors to pay the business and the business in turn its creditors.

Debtors Sales Ratio = Trade Debtors X 31

Credit Sales

= 7,800 X 31

13,768

= 17.5 days or 18 days

This means that it takes 18 days for the Turnbull’s wholesale to collect outstanding funds from credit customers in the month of January.

Creditors to Debtors Ratio:

This measures the length of time taken for the business to pay its suppliers.

Credit Sales Ratio = Creditors X 31

Purchases

= 6,602 X 31

7,054

= 29 days

This means that it takes Turnbull’s Wholesale 29 days to pay the suppliers.

34

Expense as a percentage of Sales:

= Expense X 100

Sales

= 4,590 X 100

13,768

= 33%

This means 33% of sails is an individual expense to Turnbull’s Grocery.

Return on Capital Employed Ratio (ROCE)

= Net Profit X 100

Capital Employed

= 401 X 100

180,610

= 0.22%

This means that Turnbull’s Wholesale receives a net profit of only 22c per $100.

35


Gross Profit

Net Profit

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

4916

401

Area Chart showing Gross profi t vs Net Profi t

36


1

0 2000 4000 6000 8000 10000 12000 14000

7054

13468

Bar Chart showing Sales vs Purchases

Sales Purchases

37


4590; 25%

13768; 75%

Pie Chart showing Sales vs expenses

Expenses Sales

38

Recommendations

After all these analysis, I have noticed that the business the business was not successful even though it made a profit.

In order to improve Turnbull’s Wholesale return the business will maximise the sale of goods by cash as this will and I will lessen all expenses. By doing this there will a greater chance of the business being more successful as a result of the business gaining profit. Turnbull’s Wholesale will limit the amount of credit sale to increase the frequency of earnings on sales and also provide discount to creditors to less the amount of days it takes for the business to collect outstanding funds from our credit customers. The business will also try lessen the expenses which will help Turnbull’s wholesale by increasing the net profit.

39

Conclusion

This school based assessment improved and gave me a better understanding of making use of analytical skills and working with figures and making comparisons. By applying accounting a thorough manipulation of an actual business was received and a more practical usage of the accounts was managed.

40

poa redo.docx

Documents

cash sales

cash discount

business use

actual business

performance of business

grocery business

cash receipt

purchase journal