A Step by Step Approach to Preparing Financial
Reports and Processing Journal Entries
[manual and using MYOB Accounting Plus v17]
Copyright Notice:
Copyright ©2008 Marian Brown. All rights reserved.
No part of this material may be reproduced or copied in any form or by any means (graphic,
electronic or mechanical, including photocopying or by information retrieval systems) without
permission in writing from Marian Brown.
Written by:
Marian Brown Dip T [Commerce], MICB
Cert IV Workplace Training and Assessment, Cert IV in Financial Services [Bookkeeping]
MYOB Certified Consultant for 13 years
MYOB Accredited Author, MYOB Publisher, MYOB Accredited Trainer
MBS Training Services Pty Ltd
sales@mbsts.com.au
www.mbsts.com.au
Publishers:
Software Publications Pty Ltd [ABN 75078026150]
Head Office – Sydney
Unit 10, 171 Gibbes Street
Chatswood NSW 2067
Phone:
Web address:
ISBN
1 800 146 542
www.softwarepublications.com.au
1-74123-877-3
Printed September 2008
This book is dedicated to my Year 10 commercial teacher, Delmai Winnett who taught me my bookkeeping basics and
encouraged me to further my accounting studies.
© Copyright Marian Brown 2008
A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB] – Table of Contents
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Table of Contents
A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB] © Copyright Marian Brown 2008
⌦Unit 4:
Process Journal
Entries
[manually and using MYOB Accounting Plus]
In this Unit you will learn how to process journal entries for the following:
Depreciation
Disposal of an asset
Prepaid Income
Prepaid Expenses
Accrued Income
Accrued Expenses
Stock Adjustments
Bad and Doubtful Debts
This unit covers the following performance criteria in BSBADM408A:
2.1
Depreciation of non-current assets and disposal of fixed assets are recorded in
accordance with organisational policy and procedures.
2.2
Expense and revenue accounts are adjusted for prepayments and accruals in
accordance with organisational policy and procedures and accounting requirements.
2.3
Bad and doubtful debts are recorded in accordance with organisational policy and
procedures and accounting requirements.
2.4
Ledger accounts are adjusted for inventories, if required, and transferred to final
accounts in accordance with organisational policy and procedures and accounting
requirements.
© Copyright Marian Brown 2008 A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB]
Process Journal Entries– Unit 4
49
This unit also covers the following performance criteria in FNSICACC306B.
1.1
1.2
2.1
3.1
4.1
4.2
4.4.
5.1
5.2
6.1
6.2
50
Supporting documentation is examined to establish accuracy and completeness
Supporting documentation is examined to ensure authorisation by appropriate level
Journal is accurate, complete and prepared within company timelines
Journal is authorised in accordance with company policy and procedures.
Data is entered into system accurately and in accordance with company input
standards.
Transaction is correctly allocated to system and account.
Data entry is undertaken in accordance with relevant health and safety requirements.
Where appropriate, processing report is examined for accuracy and reconciled in
accordance with relevant company policy and procedures, accounting principles and
practices.
Entries requiring alteration are identified and adjusting entries processed accurately
in accordance with company policy and procedures.
Documentation is filed promptly and in accordance with company policy and
procedures, industry and legislative requirements.
Filed documentation is easily accessible and traceable.
Unit 4 – Process Journal Entries
A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB] © Copyright Marian Brown 2008
Brocks Tyreworld Policies and Procedures
(i)
Read the Policies and Procedures of Brocks Tyreworld in Unit 2.
(ii)
What procedures must be followed when entering journal entries?
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Analysing and Interpreting reports
The Depreciation Schedule for 2009 created in the previous unit looked like this.
You will now use this document, approved by Angus to process journal entries in the books
of Brocks Tyreworld.
You may need to refer to your double-entry accounting rules in your “Maintain Financial
Records” text.
(i)
What is the annual amount of Office Equipment depreciation to be written off? ……….
(ii)
What is the annual amount of Motor Vehicle depreciation to be written off? ………….
(iii) What is the annual amount of Low-Value Pool depreciation to be written off? ………...
© Copyright Marian Brown 2008 A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB]
Process Journal Entries– Unit 4
51
Creating Journals for Depreciation
Task 1:
Account for depreciation on Office Equipment – $3,298.63.
Your journal entry will look like this.
GENERAL JOURNAL
Date
June
30
Particulars
Ref
Depreciation
Debit
Credit
3,298.63
[Increase in Expenses]
Accumulated Depreciation – Office Equipment
3,298.63
[Decrease in Assets]
[Annual depreciation using diminishing value method]
Task 2:
Account for depreciation on Motor Vehicles – refer to Schedule.
Enter the above transaction in the journal below using the example above as a
guide.
You may need to refer to the Chart of Accounts on page 8.
GENERAL JOURNAL
Date
June
Particulars
Ref
Debit
Credit
30
Task 3:
Account for depreciation on Low-Value Pool - refer to Schedule
Enter the above transaction in the journal below using the example above as a
guide.
You may need to refer to the Chart of Accounts on page 8.
GENERAL JOURNAL
Date
June
Particulars
Ref
Debit
Credit
30
Solutions can be found on page 63.
52
Unit 4 – Process Journal Entries
A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB] © Copyright Marian Brown 2008
Creating Journals for Disposal of Asset
The completed Toyota Ute Asset Card [after disposal] looked like this.
ASSET: TOYOTA UTE
Asset No.:
M010
Purchase date:
30/6/08
Class/Category:
Motor Vehicles
Purchased from:
Black Toyota
Deprec. Cost:
$35,000.00
New/second-hand:
NEW
Location:
N/A
Effective life:
8
Rego Number
00 OEQ
Depreciation method:
Straight-Line
Date
Cost
Details
GST
30/6/08
Purchase
30/6/09
Depreciation
$35,000
Depreciation
Accumulated
Depreciation
Written-down
Value
$0
$0
$35,000.00
$4,375.00
$4,375.00
$30,625.00
$3,500
Date of disposal:
30/6/09
Disposal price:
$27,500.00 inc GST
Authorised by:
Angus Brock
Gain/{Loss} on disposal:
Loss $5,625.00
You will record the above disposal like this. [Explanation is in italics.]
You are required to complete the journal by completing the “?” fields.
[Remember to refer to the Chart of Accounts on page 8 for appropriate accounts.]
30 June 2009 – Sold Toyota Ute for $27,500.00 including GST to T White. Paid by bank transfer.
GENERAL JOURNAL
Date
June
30
Particulars
Ref
Debit
Bank
[Amount actually received and banked.]
Accumulated Depreciation – Motor Vehicles
[Depreciation amount already written off]
Loss on Sale
[Amount calculated in Unit 3]
Credit
27,500.00
?
?
Motor Vehicle [at Cost]
35,000.00
[The cost price of the car which is now being
disposed of.]
GST Collected
2,500.00
[Amount of GST= 1/11th of $27,500.]
[Sale of Toyota Ute 00 0EQ to T White]
[Totals to check the double-entry is accurate.]
$?
$?
Solution can be found on page 63.
© Copyright Marian Brown 2008 A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB]
Process Journal Entries– Unit 4
53
Creating Journals for Disposal of Asset
The completed Canon Photocopier Asset Card [after disposal] looked like this.
ASSET: CANON PHOTOCOPIER
Asset No.:
P312
Purchase date:
30/6/08
Class/Category:
Office Equipment
Purchased from:
Printer Supplies
Deprec. Cost:
$8,000.00
New/second-hand:
NEW
Location:
Print Room
Effective life:
5
Serial Number
DNRX547892
Depreciation method:
Diminishing Value
Date
Cost
Details
GST
30/6/08
Purchase
30/6/09
Depreciation
$8,000.00
Depreciation
Accumulated
Depreciation
Written-down
Value
$0
$0
$8,000.00
$3,200.00
$3,200.00
$4,800.00
$800
Date of disposal:
30/6/09
Disposal price:
$5,500.00 inc GST
Authorised by:
Angus Brock
Gain/Loss on disposal:
Gain $200.00
Record the above figures in the General Journal below.
[Remember to refer to the Chart of Accounts on page 8 for appropriate accounts.]
30 June 2009 – Sold Canon Photocopies for $5,500.00 inc GST to Local School. Paid by bank transfer.
GENERAL JOURNAL
Date
Particulars
Ref
Debit
Credit
Solution can be found on page 63.
54
Unit 4 – Process Journal Entries
A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB] © Copyright Marian Brown 2008
Creating Journals for Balance Day Adjustments
The Trial Balance of Brocks Tyreworld on 30 June 2009 is printed on Page 21.
However there are a number of other transactions that have happened in the business and
need to be accounted for to report an accurate picture of the business for the 2009 financial
year.
You will now account for these transactions.
Prepaid Expenses
Task 1:
Advertising costs [$495.00 inc GST ie $450.00 ex GST] were paid for 12
months – August to July. The business needs to account for 1/12th of the amount
[$37.50] which is paid for the next financial year to report the correct amount
for the 2009 financial year.
The Advertising Account looks like this in the General Ledger.
610 ADVERTISING
Date
Particulars
Ref
31//7/08
Cash Payments
CPJ
Debit
Credit
450.00
Balance
Dr/Cr
450.00
Dr
However $37.50 needs to the deducted so that the account looks like this.
610 ADVERTISING
Date
Particulars
Ref
31/7/08
Cash Payments
CPJ
30/6/09
Prepaid Expenses
Debit
Credit
450.00
37.50
Balance
Dr/Cr
450.00
Dr
412.20
Dr
Therefore the following journal entry must be created.
[Complete the ? fields from the information above.]
GENERAL JOURNAL
Date
June
30
Particulars
Ref
Debit
Prepaid Expenses [see Chart of Accounts]
[increase an asset]
Advertising
[decrease an expense]
Credit
37.50
?
{Account for advertising paid for July]
Solution can be found on page 63.
© Copyright Marian Brown 2008 A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB]
Process Journal Entries– Unit 4
55
Creating Journals for Balance Day Adjustments
Prepaid Income
Task 2:
$1,000 [ex GST] has been paid and recorded in Sales for work not yet done. The
business wishes to report the exact sales amount.
The Sales Account looks like this in the General Ledger.
410 SALES [tyres, accessories]
Date
Particulars
Ref
31/7/08
Accounts Receivable
Cash Receipts
Debit
Credit
Balance
Dr/Cr
SJ
15,200.00
15,200.00
Cr
CRJ
1,900.00
17,100.00
Cr
However $1,000.00 needs to the deducted so that the account looks like this. [There is
no GST issue in this entry.]
410 SALES [tyres, accessories]
Date
Particulars
Ref
31/7/08
Accounts Receivable
Cash Receipts
30/6/09
Prepaid Income
Credit
Balance
Dr/Cr
SJ
15,200.00
15,200.00
Cr
CRJ
1,900.00
17,100.00
Cr
16,100.00
Cr
GJ
Debit
1,000.00
Therefore the following journal entry must be created.
[Complete the ? fields from the information above.]
GENERAL JOURNAL
Date
June
30
Particulars
?
[decrease income]
Prepaid Income [see Chart of Accounts]
[increase a liability]
Ref
Debit
Credit
?
1,000.00
{?
Solution can be found on page 63.
56
Unit 4 – Process Journal Entries
A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB] © Copyright Marian Brown 2008