BSBFIA412- Report on Financial Activity

BSBFIA412 Case Studies Case Study 1 – Record Asset Valuation Packett Packaging Pty Ltd is a business that manufactures and sells cardboard boxes. You are employed by Packett Packaging as an assistant to the Accountant. Your duties include creating and maintaining asset registers for each of the business’ fixed assets, coding accounts as necessary. This financial year (2010-11), Packett Packaging purchased a motor vehicle for the purpose of sales. The details are on the next page. Fixed assets listPackett Packaging Pty Ltd Asset ID Asset description General Ledger account Date purchased Cost including GST Disposal Residual value Person responsible 1 Sales vehicle   1/7/2010 $66,000 N/A N/A (Your name) It is now 30 June 2011. In preparation for balance day, the Chief Financial Officer (CFO) requires you to: ? create new asset and accumulated depreciation accounts specifically for the asset using the chart of accounts as a guide ? calculate depreciation for each year by using straight line method then calculate total (accumulated) depreciate over 4 years ? disclose the asset information on the Asset Register ? complete the General Journal entries for the asset acquisition and depreciation ? follow authorisation policy   Case Study 2-Prepare a BAS Statement Packett Packaging Pty Ltd is a business that manufactures and sells cardboard boxes. You are employed by Packett Packaging as an accountant and details about the Company are as follows: Organisation name Packett Packaging Pty Ltd Established 01/07/2007   ABN/CAN 87 671 495 227/671 495 227   ABN Branch 347   Address 1357 Slippery Dip Trail, Ingleside, NSW, 2101   Postal Address PO Box 4589, Brookvale, NSW, 2100   Phone (02) 9905 0217   Fax (02) 9905 7210   Email       Your duties include identifying source documents and recording sales and purchases in the appropriate journals and completing a BAS statement by the ATO due date (the date set by your assessor in this scenario). It is now the end of Q4 of the 2010–2011 financial years. The BAS statement is due to the ATO before 28 July, but your CFO (assessor) requires the statement to be completed right away. You have found 2 missing invoices from this quarter that will need to reflect in the BAS statement Invoice 1 – Sales invoice TAX INVOICE From: Australian Paper Mills Pty Ltd ABN: 32 123 456 789 10/06/2011 To: Packett Packing Pty Ltd Qty Description Unit price GST Total 10 Packaging boxes   $300 $30 $3,300                     $3,300 Total price includes GST     Invoice 2 – Purchase Invoice TAX INVOICE From: Packett Packaging Pty Ltd ABN: 87 671 495 227 10/06/2011 To: Ken’s Discount Boxes Pty Ltd Qty Description Unit price GST Total 7 Packaging boxes   $560 $56 $4,312                     $4,312 Total price includes GST   You will need to record the transaction information contained in the source documents in the appropriate journals. The customer and supplier are both new, so you will need to create new cards in MYOB. Your CFO requires you to complete a BAS statement. Use the account information attached to collect the information necessary and fill in the form. Complete the following components of the BAS for the quarter ending June 2011. BAS calculation worksheet PAYG tax withheld – (W1, W2 and W5) GST requirements (using Option 1) G1, G2, G10 and G11 Summary Purchases by Packett Packing totalled $90,000/- Packett Packaging BAS details are summarised below. GST reporting frequency Quarterly GST accounting basis Accruals GST option Option 1 Calculation method Accounts Instalment reporting frequency Quarterly Instalment accounting basis Accruals Instalment option Option 1 PAYG instalment amount 0 Withholding reporting frequency Quarterly Other No FBT, WET, LCT, Fuel Tax Credits   Case Study 3-Provide financial feedback Organisational chart of accounts Packett Packaging Pty Ltd is a business that manufactures and sells cardboard boxes. You are employed by Packett Packaging as a financial analyst and your duties include providing a year-end report to management on the financial position of the organization. It is now the end of the financial year and you are required to analyze the Company’s financial data as follows   Data for financial ratios (to be used for item 1.0 Analysis of Financial Ratios)   $ Total Current Asset 130,596   Total Current Liabilities 83,896   Inventory 36,000   Net Credit Sales 260,000   Average Accounts Receivable 23,000   Owners’ Equity 114,568       Data from previous financial years (to be used for item 2.0 Variance Analysis of Financial performance from FY2008 – 2011)   FY2010-2011 ($) FY 2009–2010 ($) FY 2008–2009 ($) Cash at bank 68,907 55,126 38,588 Petty cash 1,000 800 560 Stock on hand 36,942 29,553 20,687 Deposits 310 248 173 Trade debtors 23,437 18,749 13,124 Plant and equipment 68,410 54,728 38,309 Motor vehicle 66,000 52,800 36,960 Account depreciation – Plant and equipment 6,540 5,232 3,662 Bank loans 60,000.00 48,000 33,600 Trade creditors 79,000.00 12,000 8,400   Employee entitlement provision 15,000.00 12,000 8,400 GST collected 25,303 20,242 14,169 GST paid 37,171 25,082 17,557 Payroll liabilities 1,767.00 1,414 990 Owner capital/issued capital 16,000 12,800 8,960 Owner drawings 35,195 28,156 19,709 Retained earnings 70,684 56,547 39,583 Sales goods and services 191,818 159,854 111,898 Other sales 83,000 68,945 48,262 Interest received 0 40 28 COGS 81,818 65,454 45,818 Accounting and audit fees 4,772 3,818 2,672 Advertising and marketing 8,500 6,880 4,816 Bank charges 2,100 1,690 1,183 Computer expenses 12,727 10,182 7,127 Consultancy 954 763 534 Factory rental 9,090 7,272 5,090 Hire purchase/lease charges 1,909 1,527 1,070 Insurance general 954 763 534 Legal fees 4,090 3,709 2,596 Motor vehicle expenses 1,804 1,683 1,178 Postage/courier 8,685 6,948 4,864 Printing and stationary 681 569 398 Repairs and maintenance – Office 3,636 3,618 2,532 Salaries – Office/sales   7,940 5,558 Staff uniforms – O/S 1,431 1,309 916 Superannuation – Office/sales   71 51 Telephone expenses 9,545 7,636 5,348   Profit & Loss Statement – July 2010 through June 2011 (to be used for item 3.0 Analysis of Financial Performance)   ($) ($) Income            Sales of Goods & Services 199,818.18   Other Sales 86,181.82   Interest Received 50.00   Total Income   286,050.00 Cost of Sales  COGS 140,000.01   Total Cost of Sales   140,000.01 Gross Profit   146,049.99 Expenses       Accounting and Audit Fees 4,772.73   Advertising & Marketing 8,600.00   Bank Charges 2,112.50   Computer Expenses 12,727.27   Consultancy 954.55   Factory Rental 9,090.90   Hire Purchase/ Lease Charges 1,909.10   Insurance General 954.54   Legal Fees 4,636.36   Motor Vehicle Expenses 2,104.55   Postage/ Courier 8,685.45   Printing & Stationary 711.82   Repairs & Maintenance – Office 4,522.72   Salaries – Office/ Sales 9,925.79   Staff Uniform – O/S 1,636.37   Superannuation – Office/ Sales 81.00   Telephone Expenses 9,545.45   Total Expenses   82,971.10 Net Profit/ Loss   63,078.89         Statement of Cash Flow – July 2010 through June 2011 (to be used for item 4.0 Cash Flow Statement Analysis) Cash Flow from Operating Activities ($) ($) Net Income 63,078.89   Petty Cash -1,000.00   Stocks on Hand -36,942.00   Deposits -310.00   Trade Debtors -23,437.00   Plant & Equipment -68,410.00   Motor Vehicle -66,000.00   Acc. Dep. – Plant & Equipment 6,540.00   Bank Loans 60,000.00   Trade Creditors 79,000.00   Provision – Employee Entitlement 15,000.00   GST Collected 25,303.00   GST Paid -37,171.18   Payroll Liabilities 1,767.00   Net Cash Flows from Operating Activities   17,418.71 Cash Flow from Investing Activities     Net Cash Flows from Investing Activities --------------- 0.00 Cash Flow from Financial Activities     Owner Capital/ Issued Capital 16,000.00   Owner Drawings -35,195.00   Retained Earnings 70,684.00   Net  Cash Flow from Financial Activities   51,489.00 Net Increase/ Decrease for the period   68,907.71 Cash at the Beginning of the period   0.00 Cash at the End of the period   68,907.71   Key business concerns/task Although the organization has grown over recent years, the board of directors are very concerned about the current profitability of the business. Task A – Knowledge based questions 1. What are the key provisions of legislation, regulation and codes of practice relevant to financial operations Most regulatory requirements are carried out under the Corporation Act 2001-governed financial reporting-end of finacial year reports must be submitted with ASIC-must follow the international financial reporting standards according to the ASIC act 2001 (the AASB is appointed to oversee this and ensure all stadards are followed) -disclosure in operating and financial reports-Regulatory Guide 247.25 - section 299A - information must be contexualised to provide a full understanding of the financial report-Regulatory Guide 247.27 - Regulatory Guide 247.45 -Must follow the FRR and PGPA in regards to the minimum finacial reporting requirements and must comply with the australian acounting standards-must compile a business acticity statement and submit to the ATO-must produce financial reports and send to ASIC 2. What are the key techniques used for forecasting and analysis? 3. What are the key features of the options, methods and practices for deductions, benefits and depreciations 4. List current business taxation requirements for preparing corporate accounting reports 5. List current financial legislation and statutory requirements relating to taxable transactions and reporting requirements 6. What are the ethical requirements associated with preparing financial reports for corporate entities, including conflict of interest, confidentiality, and disclosure requirements . List industry-standard methods and formats used to present financial data in your organisation 8. Describe the conversion and consolidation procedures that you use to compile financial information Task B – Record Asset Valuation 1. Read through Case Study 1-Record Asset Valuation.2. Review Packet Packaging’s organisations chart of accounts.3. Using the General Journal and Asset Register templates provided with this assessment, record the asset acquisition (including any GST liability).4. Use new asset and depreciation account names and codes compatible with the structure and coding of the organization’s chart of accounts.5. Disclose the details of the asset on the Asset Register. Correctly note credit and debit entries. 6. Identify a discrepancy. Follow organizational policy to gain authorization to correct error. You notice a discrepancy. Another employee has created the following unauthorised.entry for the acquisition of the sales vehicle, What is the discrepancy in this case? To gain authorization to correct the error. 7. Submit all documents to your assessor. Ensure you keep a copy of all work submittedfor your records Task C – Prepare a BAS Statement 1. Read Case Study 2-Prepare a BAS Statement2. Identify the relevant information from the two invoices provided and record the financial data in appropriate journals, accounting for GST liabilities 3. Submit all documents to your assessor. Ensure you keep a copy of all work submitted for your records.4. Identify information from the case reports to prepare BAS statement. Note that purchase of stock sold is $90,000 GST included.5. Download the BAS worksheet from the Moodle – showing quarterly options for payment.6. Complete the BAS form (only fill in fields where data is required and available), including:a. BAS calculation worksheetb. PAYG tax withheld – (W1, W2 and W5)c. GST requirements (using option 1) G1, G2, G10 and G11d. Summary7. Submit the completed BAS to your assessor. Ensure you keep a copy of all work submitted for your records. Task D – Provide financial feedback 1. Read Case Study 3-Provide financial feedback.2. Familiarise yourself with the organisation’s chart of accounts, Financial Statement templates, etc.3. View financial reports (for financial year to 30 June 2011):a. Balance Sheetb. Profit and Lossc. Cash Flowd. Profit and Loss Budget analysis4. Use data within reports to calculate standard financial analysis ratios. Calculate all those required by business policy.5. A key priority of the business is to increase profit for the next financial year. Management is concerned about high cost of goods sold and whether current profit margins on sales are sustainable. Unforeseen technological change and subsequent obsolesce of current stock has seen the company heavily discounting hard drive sales, for example. A secondary but related concern is low cash flow from operational activity. The business currently has a superb and valuable relationship with its suppliers, who are able to provide the Technology Solutions with stock very quickly. The board is keen to maintain this relationship, as they do not intent to risk any supplier relationship unnecessarily. The board is also enthusiastic about achieving results assoon as possible within the next financial year. Any recommendation with a longer timeframe should be set as a lower priority. In order to address the concerns of the board, management requests you to prepare a report on the year-end financial position of Packett Packaging. The report should contain:a. An Executive Summaryb. An analysis of financial ratiosc. A variance analysis of financial positiond. An analysis of financial performancee. A cash flow statement analysisf. Prioritised recommendations 6. Submit report to your assessor. Ensure you keep a copy of all work submitted for your records. Your assessor will be looking for:• a report completed to organisational requirements from the scenario provided• evidence-based recommendations that refer to data and analysis as support• clear and practical recommendations that are compatible with other recommendations and the organisation’s requirements; measurable and within a definite and appropriate time span; specific; and concise • financial reports that conform to templates in organisational policy