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BSBFIA412- Report on Financial Activity

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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 submitted
for your records

Task C – Prepare a BAS Statement

1. Read Case Study 2-Prepare a BAS Statement
2. 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 worksheet
b. PAYG tax withheld – (W1, W2 and W5)
c. GST requirements (using option 1) G1, G2, G10 and G11
d. Summary
7. 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 Sheet
b. Profit and Loss
c. Cash Flow
d. Profit and Loss Budget analysis

4. 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 as
soon 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 Summary
b. An analysis of financial ratios
c. A variance analysis of financial position
d. An analysis of financial performance
e. A cash flow statement analysis
f. 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

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