balance sheets
Case Study – Clementi’s Fitness 1 Assessment 2 – MYOB Case Study –Maxwell Fitness The objective of this assignment: This assessment is designed to introduce you to the use of double-entry computer accounting software for a small business. It covers many of the common transactions of everyday business, including GST. It is more than a data entry exercise, requiring you to carefully record each transaction carefully, understand how the software records such transactions in both the general and subsidiary ledgers and uses such information to create reports. IMPORTANT: IMPORTANT ASSIGNMENT GUIDELINES: It is the responsibility of students to read the assignment format and submission requirements carefully before starting the assignment. Should a submitted assignment fail to comply with any of the following two requirements, it will not be accepted for marking and will result in a grade of zero (0) for the entire assignment. Requirement 1: It is required that when setting up the company details using MYOB software, you need to put your name as part of the company name (e.g., Maxwell 2 Fitness - your name). For example, if your name is Jonathan Kapukotuwa, then the company name will be Maxwell Fitness – Jonathan Kapukotuwa, If the MYOB program does not allow you to type your full name, try to put in as many letters of your name as possible. Failure to include your name as part of the company name will result in receiving zero (0) for your the entire assignment. Requirement 2: All session reports must be submitted with your assignment. (Please note MYOB automatically records all transactions in a session report. A session commences each time you access MYOB and concludes when you exit MYOB. Each session report must be printed before you exit MYOB. To ensure against loss of session reports it is recommended that students print session reports to a PDF file on a regular basis in addition to printing to a printer.) General Information: In completing this assignment, you are required to record each transaction carefully, understand how the software records these transactions in both the general and subsidiary ledgers and uses such information to create reports. Maxwell Fitness (ABN 53 004 085 616), 470 Brisbane Street, North Melbourne, 3051. The owner, Adeline Ridley, has worked in the fitness industry for many years, purchasing this Maxwell Fitness business in 2018. The business operates from a rented shopfront where she has a five-year rental agreement at a set price of $1,760 per calendar month (including GST). Rent is usually paid on the first of each month for the relevant month. Maxwell Fitness has two income streams – selling two popular products – Rowing machines and Exercise bikes and secondly providing fitness training for groups. Maxwell Fitness’s principal customers for inventory sales are medium-sized organisations who have office-based gyms but from time to time, the business also sells to the public. 3 Maxwell Fitness has operated the business using a manual accounting system since purchasing the business in 2018. As Maxwell Fitness’s accountant, you recommend the business convert from a manual recording system to a computerised accounting recording system using MYOB from April 2020. All purchases of inventory are from local suppliers who supply inventory to Maxwell Fitness free of charge. Specific Information: Maxwell Fitness purchases all its inventory on credit and sells inventory on credit to her business customers. From time to time, she sells inventory for cash to the public, and all fitness classes are also strictly on a cash basis. Customer account balances as at: March 31st, 2020 Name Address Date of Last Invoice Account Balance Offline Education Organisation 542 City Road, Melbourne ABN - 50 999 555 666 March 18th $5,610 Village Fair 601 Suburb Street, South Melbourne ABN - 92 555 888 111 March 27th $6,765 All credit customers are offered the following terms: 2.5%/ 15 days, net 30. Suppliers account balances as at: March 31st, 2020 Name Address Terms Account Balance Rower Gears Ltd. 1 Scull Street, Brunswick ABN - 50 596 794 363 3%/ 15 days, net 30. $5,505 Cycle Bazaar 14 Gove Street, Northcote ABN - 20 888 560 222 2%/ 15 days, net 30. $3,834 Each of the above account balances for suppliers represents deliveries of inventory received on March 24th. 4 Goods and Services Tax: Sales and Purchases Maxwell Fitness charges GST on all sales and is charged GST on all purchases of inventory. For all business expenses other than bank interest and Wages, the GST rate is 10 %. All sales are on credit, except where specifically stated, and all business expenses are paid for with cash unless stated otherwise. Employee: Fitness Classes • Maxwell Fitness has only one part-time/casual employee, Josie Barker. Josie Barker conducts fitness classes for groups. For each class, Josie’s gross wage is $100 per class, regardless of the number of participants. PAYG tax is withheld at 15%. • Josie Barker is paid in arrears twice per month - on the 12th and 26th. • Wages Payable as at March 31, 2020 is $510. Inventory: March 31st 2020 The following is a list of inventories on hand and the suppliers as at 31st March 2020. Quantit y on hand Item Code Description Last Cost Price Last Sale Price Supplier 15 RM Rowing Machine $440 $700 Rower Gears Ltd. 6 EB Exercise Bike $260 $450 Cycle Bazaar Each of the above items of inventory are quoted net of GST. On each item, an additional 10% GST is charged on the sales price, and 10% GST is paid on the cost price. Exercise Classes: Maxwell Fitness conducts regular fitness classes in-house to groups of no more than 20 per group. Client groups pay Maxwell Fitness $440 per class which lasts for one hour. The price of $440 includes GST. Bank Loan: ANZ bank Maxwell Fitness pays $1,157.50 per month for the bank loan. This amount includes interest and principal payments where the monthly interest is fixed at $357.50. 5 Prepaid Advertising: On January 1st, 2020, Maxwell Fitness paid $1,650 in advance for 6 months advertising. The amount paid included GST. Trial Balance as at March 31st, 2020. General Ledger Accounts Debit Credit Cheque Account 19,456 Inventory 8,160 Prepaid Advertising 750 Accounts Receivable 12,375 Accounts Payable 9,339 Motor Vehicle 25,000 Accumulated Depreciation on MV’s. 5,625 Office Equipment 12,000 Acc. Depreciation on Office Equipment 3,200 Owner’s Capital 40,131 GST Collected 1,125 GST Paid 849 Bank Loan - ANZ Bank, City Branch 18,400 PAYG Withholding Payable 90 Wages Payable 510 Accrued Energy Bill – TRU Energy 170 $78,590 $78,590 Transactions during April 2020: 1 Paid Rent for business premises for April - $1,760 (Including GST). 1 Bank loan and interest paid - $1,157.50. 1 Purchases of inventory from both suppliers: from Rower Gears Ltd – 10 Rowing machines, and from Cycle Bazaar - 12 Exercise Bikes. All inventory was received within 24 hours. 2 Paid Tru Energy for March energy bill - $170.00 (Including GST) 2 Credit Sales of inventory to Village Fair – 6 Rowing machines and 4 Exercise Bikes. 3 Received payment from all Customers for amounts owing on March 31st. Discounts for early settlement were made to customers paying inside the discount period. 3 Paid all suppliers in full for March account balances. Discount needs to be applied for payments within the discount period. 6 4 Credit sales to Offline Education Organisation – 10 Rowing machines and 7 Exercise Bikes. 4 Cash customers paid for 20 hours of Fitness classes. All classes will be completed over the next 12 days. (Since the classes will be completed in April, this transaction can be accounted/recorded as income directly rather than unearned income). 5 Paid for motor vehicle fuel - $99 (Including GST) for the month of April 8 Paid for office stationery expenses - $220.00 (Including GST) for the month of April. 9 Paid for accounting fees - $770.00 (Including GST) for the month of April. 12 Wages paid to Josie (the fitness instructor) for 10 classes completed in April as well as the wages owing for March . (Note: Do not use the employee section of MYOB, instead record the wages expense and PAYG tax withheld as a cash payment. Use the spend money section to pay wages). 14 Adeline (owner) withdraws cash drawings of $1,500.00. 23 Adeline takes home an exercise bike as drawings