PART 1: Enter Year-End Adjusting Journal Entries into MYOB & Print out arevised Profit and Loss Statement and Balance Sheet from MYOB –in pdf format – (5 Marks) a. Students are required to prepare and enter adjusting general journal entriesdirectly into the MYOB data file to take into account all of the relevant andnecessary adjustments (please include cents in all of your journal entries).The MYOB data file is available on the AYB 339 Blackboard site for students todownload. The MYOB data file was created using MYOB AccountRight Enterprise(Educational Version 19). This version of MYOB is available in the student labs in bothB and Z blocks.However, students can use any version of MYOB to open the data file and makeadjustments (provided it is version 19 or higher).It will not be possible to open this MYOB data file if you use the MYOB trial versionsavailable on the MYOB website or any version of MYOB lower than this version.The data file has been created in MYOB 19 for Windows. However, for thosestudents who have an Apple Mac computer or laptop, the data file may be able to beconverted and opened in Mac AccountEdge Pro. If students are having any issuesconverting the data file, please contact the QUT IT Helpdesk.These entries must be entered, produced and printed out using MYOB.Make sure you use MYOB. Students cannot use other packages like Handisoft,Xero, Solution 6, MYOB Accountants Office etc.When you open up the MYOB data file, please use the “Administrator” User ID. Youcan leave the “Password” field blank, as shown below. b. Adding Account Names to the Chart of AccountsPlease note that students are expected to add additional accounts in the MYOB datafile provided on the AYB 339 Blackboard site, as several of your adjusting generaljournal entries will be made to these new accounts (eg. depreciation expense). c. Do Not Record any Journal Entries for DTA’s and DTL’sDespite the fact that some transactions in this case study give rise to temporarydifferences, please do not record any deferred tax assets (DTA’s) and deferred taxliabilities (DTL’s). d. Dating your Adjusting General Journal Entries 30 June 2021Please date all of your adjusting general journal entries 30 June 2021.Please also include a brief narration of the adjustment in the memo field in MYOB. e. Printing Adjusting General Journal Entries at 30 June 2021 in pdf formatMake sure that you only print out your adjusting journal entries and not all of the otherjournal entries already residing in the MYOB data file that has been provided to you.Simply select the General Journal function and the date range: 30 June 2021 to30 June 2021. e. Accounting Depreciation Journal EntriesFor accounting purposes, each depreciable asset listed on page 20 of this casestudy should be depreciated over their useful lives based on the following straight-line rates (rate shown in the final column). Depreciable Asset AccountingUseful Life Depreciation Rate(Straight-Line %) Leasehold Improvements: Fit-out (consisting of floor covering, ducted air-conditioning, lighting and signage) 40 years 2.5% pa. Property, Plant and Equipment: Cash registers Desktop computers Photocopying machine Furniture – consisting of shelving andfreestanding items 10 years4 years5 years10 years 10% pa.25% pa.20% pa.10% pa. Computer Software: MYOB AccountRight and retail point-of-salesoftware 5 years 20% pa. Leased Premises (Right-of-Use Asset): Leased premises at 11 Elland Road, Carindale 3 years 33.33% pa. There are 7 individual assets listed above (as per the bullet points).Instead of putting through seven (7) separate depreciation/amortisation journal entries,students are asked to only record four (4) journal entries in MYOB for each of thefollowing classes of assets, namely: leasehold improvements (1 asset); property, plant and equipment (total of 4 assets); computer software (1 asset); and leased business premises, being the right-of-use asset (1 asset).This means that you should only enter four (4) depreciation/amortisation journalentries into MYOB.As AASB 16 Leases will be applying to Toy Warehouse Pty Ltd, students are referredto Item 15 of this case study document for more information about the “right-of-useasset” (being the leased premises).For taxation purposes, being a small business entity (SBE), Toy Warehouse Pty Ltdwill depreciate those eligible depreciating assets under Division 328 using thesimplified depreciation regime (refer to the rules on pages 31 and 32). f. Print out a Revised Profit and Loss Statement and Balance Sheet from MYOB asat 30 June 2021 Finally, students are required to print out a revised Profit and Loss Statement andBalance Sheet from MYOB for Toy Warehouse Pty Ltd for the year ended 30 June2021 taking into account their adjusting general journal entries and include it in theirsubmission.In MYOB, your print range for the Profit and Loss Statement should be 1 August 2020to 30 June 2021.For the Balance Sheet, please print this report out as at 30 June 2021.Please include cents when printing out both reports. [Total for Part 1 = 5 marks] PART 2: Prepare a Lease Schedule for the Right-of-Use (ROU) Asset (beingthe leased premises) for Toy Warehouse Pty Ltd in MicrosoftEXCEL – (2 marks) a. Prepare a Lease Schedule for the ROU Leased PremisesPrepare and print a lease schedule (using Microsoft EXCEL) for Toy Warehouse PtyLtd in respect of the right-of-use leased premises at 11 Elland Road, at Carindale overthe life of the three-year lease. In doing so, please calculate interest on a monthlybasis.Please include cents when completing your lease schedule in EXCEL. [Total for Part 2 = 2 marks] PART 3: Prepare the 2021 Annual Report for Toy Warehouse Pty Ltd in Microsoft Word – (18 marks) a. Students are required to prepare the Annual Report for Toy Warehouse Pty Ltdfor the year ended 30 June 2021. The annual report should include thefollowing documents (in the following order): the external financial statements excluding the Statement of Cash Flows, butincluding all of the notes to the accounts;the Directors’ Declaration;the Accountant’s Compilation Report; andthe detailed profit and loss statement.There is no need to prepare a Directors’ Report or an Auditor’s IndependenceDeclaration, as the financial report was not audited.For the Accountant’s Compilation Report, please use the name of the firm that youcreated and used throughout the semester for your PBLs.Please do not include your MYOB profit and loss statement and balance sheetas your external financial statements. The MYOB profit and loss statement andbalance sheet are management accounts, and are not a set of external financialstatements. b. Which Accounting Standards Apply?For the purposes of this assignment, please treat Toy Warehouse Pty Ltd as areporting entity. In other words, please prepare general purpose financial statementsfor Toy Warehouse Pty Ltd.In other words, please ensure that the 2021 financial statements (and notes to theaccounts) are prepared in accordance with the recognition, measurement anddisclosure requirements of all of the AASB Accounting Standards. Students must use Microsoft Word to prepare the annual report. Students are notpermitted to use any other electronic account preparation software packages (eg.Handisoft, Xero, Solution 6, MYOB Accountants Office etc). However, you can draftthe financial statements in EXCEL and export (convert) them into Microsoft Word. When preparing the external financial statements, please round all figures fromyour MYOB management accounts to the nearest whole dollar. In other words,please do not include cents when preparing the external financial statements. However, please do not apply the following four (4) AASB Accounting Standards: AASB 8 Operating Segments;AASB 107 Statement of Cash Flows;AASB 124 Related Party Disclosures; andAASB 133 Earnings Per Share.All other AASB Accounting Standards (including their recognition, measurementand disclosure requirements) must be complied with. This includes the suite offinancial instruments standards (including AASB 7, AASB 9 and AASB 139,where applicable as well as AASB 16).Finally, even though Toy Warehouse Pty Ltd is a reporting entity, it does notwish to apply the reduced disclosure requirements (RDR) contained in AASB1053 Application of Tiers of Australian Accounting Standards.Furthermore, even though we are applying the tax-effect accounting principlescontained in AASB 112 Income Taxes, students do not need to calculatedeferred tax expense (comprising deferred tax assets and deferred taxliabilities).In other words, instead of calculating both current tax expense and deferred taxexpense (as required under AASB 112), students are only asked to calculate anddisclose current tax expense (ie. the amount due and payable to the ATO for thecurrent year). c. Statement of Profit or Loss and Other Comprehensive IncomeWhen preparing the external financial statements for Toy Warehouse Pty Ltd, pleaseensure that you prepare and include a one-statement Statement of Profit or Loss andComprehensive Income in accordance with AASB 101 Presentation of FinancialStatements.When drafting the first part of the Statement of Profit or Loss and OtherComprehensive Income, Christie and Grace have requested that you classifyexpenses by function instead of by nature.Please show only those expenses on the face of the Statement of Profit or Loss andOther Comprehensive Income that are specifically required to be disclosed on the faceunder AASB 101. Students are advised to refer to the relevant paragraphs contained inAASB 101 for more information about disclosure of expenses by function.Furthermore, please group relevant individual expenses in the MYOB profit and lossstatement on the face of the income statement under the following headings:“administrative expenses”, “depreciation and amortisation”, employee benefits”,“finance costs and “other expenses”.As is the case with classifying expenses by function, please use your discretion as towhat individual expenses should be included in each of the above headings. d. Statement of Changes in EquityFor the Statement of Changes in Equity, please use the minimum disclosurerequirements required under AASB 101 Presentation of Financial Statements. e. Balance SheetFor the Balance Sheet, please use the minimum disclosure requirements requiredunder AASB 101 Presentation of Financial Statements. f. “Real” and “Model” Financial StatementsStudents are advised (and encouraged) to download the 2021 financial report of anAustralian listed public company (preferably a retailer) and review the content,structure and format of the financial report.Furthermore, some accounting firms have published model financial statements forcompanies on their websites that students should consider referring to. For example,a generic Google search on the term “model financial accounts Australia” will listseveral hyperlinks to a range of accounting firms websites where these modelfinancial statements can be downloaded in pdf format.A copy of the 2021 annual report (containing the 2021 financial statements) of TheReject Shop Ltd has been placed on the AYB 339 Blackboard site to assist students.Please make sure that you find general purpose model financial statements, and notspecial purpose model financial statements. Several accounting firms provide modelfinancial statements for proprietary companies. However, in most cases, specialpurpose financial statements are presented, and not general purpose financialstatements.A reminder that in the case of Toy Warehouse Pty Ltd, we are asking that generalpurpose financial statements be prepared.Furthermore, when preparing the external financial statements for Toy WarehousePty Ltd, please do not include the references to AASB paragraphs in the left-handmargin of the financial statements (or notes to the accounts) like the model sets ofaccounts do.Students should also prepare a Director’s Declaration for Christie and Grace to sign.You can assume that both Christie and Grace believe that as at 3 September 2021(being the date that the Directors’ Declaration is to be signed) there are reasonablegrounds to believe that the company will be able to pay its debts as and when they falldue and payable.Please remember to draft and include the appropriate Accountant’s CompilationReport in the annual report. As mentioned in Item (a) on page 8, there is no need toprepare a Directors’ Report for Toy Warehouse Pty Ltd. When presenting the external financial statements (including the detailed notes to theaccounts) for Toy Warehouse Pty Ltd, please round each figure to the nearest wholedollar. In other words, do not include cents in your external financial statements. g. Date of Declarations and Reports and Comparative FiguresAll declarations and reports should be dated 3 September 2021.Comparative figures are not required in the financial statements, as thecompany only commenced trading on 1 August 2020. [Total for Part 3 = 18 marks] PART 4: Prepare the 2021 Company Income Tax Return of Toy Warehouse Pty Ltd – (2 marks) a. Students are required to prepare the company’s Income Tax Return for ToyWarehouse Pty Ltd for the year ended 30 June 2021A blank copy of the 2021 company tax return has been placed on the AYB 339Blackboard site for you to download and complete.Students can either complete the tax return by printing off the pdf version and manuallyhandwriting the figures in and then scanning it back into pdf. Alternatively, if you haveAdobe Acrobat DC which allows the pdf form to be edited, you can complete the taxreturn electronically.However, please note that students cannot use a tax software package such asHandiTax, Xero, Solution 6, MYOB Accountants Office to complete the company taxreturn.Please make sure that you use your figures contained in your external financialstatements to include in the relevant items (labels) of the company tax return.The company’s tax file number (TFN) is: 733 000 152.The business and postal address of Toy Warehouse Pty Ltd is:11 Elland Road Phone: (07) 3398 1714Carindale, QLD, 4152. Facsimile: (07) 3398 1715Do not complete the BSB and account details on the second page of the tax return.For the purposes of the tax agent declaration (on the last page of the tax return), yourtax agent reference number is 57203-006. Please put your name and contact details inthis box.The income tax return should be dated 3 September 2021. It will be signed by Christieas she is the company’s public officer.Please type (or write) Christie’s name. However, please leave the signature panelblank. In other words, do not sign the tax return as Christie.There is no need to prepare the dividend franking account for the company or thedividends and interest schedule. Both of these schedules normally form part of theincome tax return. However, students are not required to prepare these schedules. [Total for Part 4 = 2 marks] PART 5: Prepare the 2021 Tax Reconciliation for Toy Warehouse Pty Ltd – (3 marks) a. Students are required to prepare a One-Page Tax Reconciliation for ToyWarehouse Pty Ltd for the year ended 30 June 2021Christie and Grace also ask you to prepare a one-page tax reconciliation showing theadjustments made to the accounting net profit before income tax to arrive at thecompany’s taxable income for the year ended 30 June 2021..Students should start the tax reconciliation with the accounting net profit/(loss) beforeincome tax and then list each relevant adjustments to arrive at the company’s taxableincome for the year ended 30 June 2021. No marks will be given where adjustmentsare aggregated.This one-page tax reconciliation should be included immediately behind the last pageof the company’s tax return.Furthermore, when presenting your tax reconciliation, there is no need to refer or quotesections of the ITAA (1936), ITAA (1997), cases or taxation rulings.Students are asked to start with the accounting net profit before income tax (from yourincome statement – after your MYOB adjustments from Part 1) and make individualadjustments which:(a) are not tax-deductible, which result in an increase to taxable income;(b) are assessable for taxation purposes, which result in an increase to taxableincome; and(c) are tax-deductible, which result in a decrease to taxable income.The last line in your tax reconciliation should be the company’s 2021 taxable income(which should equal the 2021 taxable income figure in the company’s tax return).As we are not asking students to calculate deferred tax expense (comprising DTA’sand DTL’s), there is no need to prepare a deferred tax worksheet.Finally, please round all figures in the tax reconciliation to the nearest whole dollar. [Total for Part 5 = 3 marks] PART 6: Self-Reflection – (10 Marks)This reflection asks students to attend to the following two (2) tasks.Please provide your response to the two questions raised by Christie and Grace on yourgroup’s firm letterhead that you used during the semester. (i) Concerns as to the Rising Levels of Inventory on Hand at 30 June 2021When you present your 2021 financial statements to Christie and Grace, theyexpress some concern over the high levels of stock on hand at year-end.Being a retailer, having excess stock on hand is of a particular concern, particularlyas inventory is one of the largest assets of every retailer.As such, Christie and Grace request that you specifically address the following two (2)issues:(a) Using the figures contained in your external financial statements, pleasecalculate the days inventory ratio of Toy Warehouse Pty Ltd at 30 June 2021,and compare the company’s actual days inventory ratio to the budgeted daysinventory ratio on page 16 of the business plan. Please use the followingformula:Days inventory = [ closing inventories x 365 ]cost of good sold For the numerator, please use the closing inventory figure at 30 June 2021,and not the average inventories figure as some accounting textbooks use.(b) Please explain to Christie and Grace three (3) specific risks/concerns to thebusiness if inventory levels (and the days inventory ratio) continue to rise overtime? (4 marks) You must use 11 point Arial font with 1.5 line spacing in your letter to Christie andGrace.There is no need for a bibliography.The maximum number of words for part (i) 400.(ii) Solvency Statement and Whether Toy Warehouse Pty Ltd is Solvent at 30 June2021?Finally, Christie and Grace are reviewing the Directors’ Declaration that you havedrafted and included as part of your 2021 annual report.They note that one of the requirements is that you are asking them to consider andsign is the statement that:“whether, in the Directors’ opinion, as at the date of the declaration,there are reasonable grounds to believe that the company will be ableto pay its debts as and when they fall due”.As such, Christie and Grace request that you specifically address the following three(3) issues:(a) Using the figures contained in your external financial statements, pleasecalculate the current ratio of Toy Warehouse Pty Ltd at 30 June 2021, andcompare the company’s actual current ratio to the budgeted current ratio onpage 16 of the business plan. Please use the following formula:Current ratio = current assetscurrent liabilities (b) Before signing this declaration, Christie and Grace ask you to outline whatspecific factors that directors should take into account in deciding whether thecompany is at risk of being insolvent. Please provide four (4) specific criteriathat Christie and Grace should consider. Please cite any relevant references orsources used within your covering letter.(c) Finally, based on the above criteria that you have provided in Part (b) andtaking into account your calculation in part (a), please provide your opinion toChristie and Grace as to whether you believe that Toy Warehouse Pty Ltd issolvent or not? (6 marks) You must use 11 point Arial font with 1.5 line spacing in your letter to Christie andGrace.There is no need to include a bibliography.The maximum number of words for part (ii) is 600. [Total for Part 6 = 10 marks] PART 7: Professional Approach to PresentationThis assessment expects a professional approach to presentation similar to that expected inan Accounting firm when delivering documents to a client.For this reason, you must satisfy the following professional presentation requirements or youmay incur penalties. A professional approach also means that it is the responsibility of each student to ensurethat the complete assignment is submitted by the due date and in the correct format (seebelow). Once submitted, students are not able to attach or submit any additional documentationwhatsoever as in a client situation, you would be unable to deliver additional informationto a client and late information will be regarded as being late and may not be useful. As students will be submitting all parts of the case study via QUT’s Turnitin, students areasked to collate all of the various documents and save them into one pdf document toupload into Turnitin. Please name your file “Your Student Name – Integrated Case Study.pdf”. Please save the documents in pdf format in the order
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