School based
ASSESSMENT
Candidate Name: Adrian Turnbull
Candidate #:
Centre Number: 100033
School: Excelsior High School
Territory: Jamaica
Principles of accounts
School Based Assessment
TURNBULL’S WHOLESALE
Candidate Name: Adrian TurnbullCandidate #:Centre Number: 100033School: Excelsior High SchoolTerritory: Jamaica
School based
ASSESSMENT
Candidate Name: Adrian Turnbull
Candidate #:
Centre Number: 100033
School: Excelsior High School
Territory: Jamaica
TABLE OF CONTENT
PRINCIPLES OF ACCOUNTS
TURNBULL’S WHOLESALE
AIMS OF THE PROJECT………………………………………………………1
DESCRIPTION OF BUSINESS……………………………………………….2
LIST OF TRANSACTIONS…………………………………………………..3-4
PURCHASE ORDER……………………………………………………………..5
CREDIT NOTE………………………………………………………………………6
BANK STATEMENT………………………………………………………………7
CASH DEPOSIT…………………………………………………………………….8
CASH RECEIPT…………………………………………………………………….9
STATEMENT OF AFFAIRS………………………………………………….10
BOOKS OF ORIGINAL ENTRY
OPENING JOURNAL ENTRIES……………………………………………11
SALES JOURNAL……………………………………………………………….12
PURCHASE JOURNAL……………………………………………………….13
RETURN INWARDS JOURNAL…………………………….……………..14
RETURN OUTWARDS JOURNAL………………………..………………15
GENERAL JOURANL………………………………………………………….16
SALES JOURNAL……………………………………………………………….17
CASHBOOK………………………………………………………………………..18
UPDATED CASHBOOK……………………………………………………….19
LEDGERS
SALES LEDGER…………………………………………………………………20
PURCHASE LEDGER…………………………………………………………21
GENERAL LEDGER………………………………………………….……22-24
SALES & PURCHASE CONTROL A/C…………………………………25
TRIAL BALANCE………………………………………………………………..26
BANK RECONSILIATION……………………………………………………27
TRADING PROFIT AND LOSS A/C……………………………………..28
BALANCESHEET……………………………………………………………….29
PERFORMANCE OF BUSINESS………………………………………….30
RATIOS………………………………………………………………………….31-35
GRAPHS AND CHARTS………………………………………………….36-38
RECOMMENDATON………………………………………………………….39
CONCLUSION…………………………………………………………………..40
AIMS OF THE PROJECT
The aim of this Principles of accounts School assessment is to improve and get a better understanding of making use of analytical skills and working with figures and making comparisons.
To receive a thorough manipulation of an actual business, by applying accounting principles.
To manage a more practical usage of the accounts that we would normally apply theatrically.
1
Descriptions of Business
Turnbull’s Wholesale is located at 169 Bedward Garden, Kingston 7. Turnbull’s Wholesale is a sole trader business, owned operated by Adrian Turnbull consisting of 7 employees. This business will be retailing Tin foods, Beverages, Kitchen supplies, meat kinds, Hair products, school items, Dry goods such as rice, flour, sugar etc. Turnbull’s Wholesale will be opened from 8 am to 7 pm on Mondays to Saturdays while on Sundays it will opened from 7 am to 4 pm. The business will be started off with a capital of $180610, stock of $12000, cash in hand and bank $510 and $9000 respectively. This business will start operating on January 1 2014 to January 31 2014.
2
List of Transactions
On January 1, 2014 started a grocery business employing shop assistance with the following list of balance Assets and liabilities.
Assets Premises $130,000, Fixtures and fittings $25,000, Stock $12,000
Debtors: M. Lyn $3,000, James $2,600 Creditors: R. Graham $1,500
Cash at Bank: $9000, Cash in hand: $510
During January the following transactions took place:
January 1. Sold goods to M. Lane on credit $2,700
3. Purchase on credit from R. Graham goods $1800 less 10% trade discount
6. Cash sales $1504
7. Paid R. Graham the amount due on January 1, by cheque, less 5% cash discount
9. Paid sundry expense in cash $290
10. Purchased goods on credit from R. Gordon $5720 less 5% Trade discount
11. Receive a credit note from R. Gordon for goods returned with value of $452
13. Purchased by cheque a refrigerator for business use $7000
15. Paid wages and salaries by cheque $2000
3
17. Sent Credit Note to M. Lane for goods returned with value of $300
18. Cash sales $4664
24. Withdraw cash from till for is personal use $400
26. Receive cheque for $2500 from M. Lyn less %5 cash discount
28. Paid sundry expense $850 in cash
29. Sold goods to C. Browne on credit on credit $4900. Paid Transportation cost $450 by cheque
30. J. James is bankrupt. He can pay only 0.70 cents of every dollar by cheque. Write off the rest as bad debt
31. Put $3000 in the bank from cash received
Note: Closing stock in hand at January 3, 2014 was valued at $10,400
Additional:
- Sundry expense owing $150- Wages paid in advance $250
- Decide to make a provision for bad debt of 5% on debtors per annum
- Provision for Depreciation to be charged i. Fixtures and fittings 5% (per annum)ii. Refrigerator 10%(per annum)
4
TURNBULL’S WHOLESALE
Purchase Order
Name: Turnbull’s wholesale
Address: 169 Bedward Garden Kgn 7
Tel: 856-5078 Fax: 188-4321
Supplier: R. Gordon Address: 2 short road
No. Description Quantity Unit Price Total Cost1 Crate of Red Stripe Bear 2 2860 $5720.00
2 Less 5% Trade Discount - $286.00
$5434.00
R. Gordon
Authorised Signature
5
TURNBULL’S WHOLESALE
Credit Note
Name: R. Gordon Customer Name: Turnbull’s wholesale Address: 2 Shortroad
Address: 169 Bedward Garden Tel: 123-4567
Kgn 7 Fax: 1800-611
Our Invoice No.: Date of Invoice: Jan. 11, 2014.
No. Description Quantity Unit Price Total
Bag of Banana Chips 2 $226
Total: $452
A. Gordon
Authorised Signature
Finance Department
6
TURNBULL’S WHOLSESALE
NATIONAL COMMERCIAL BANK
OLD HOPE ROAD
CROSS ROADS. KINGSTON
Address: 169 Bedward Garden
Kingston 7.
DATE PARTICULARS DR CR BALANCEJan 1 Balance c/d 9000Jan 7 Cheque 1425 7575Jan 13 Cheque 7000 575Jan 10 Credit Transfer -
R. Binns750 1325
Jan 12 Standing Order – Insurance
500 825
Jan 15 Cheque 2000 -1175
Jan 20 Interest Earned 150 -1025Jan 26 Deposit 2375 1350Jan 28 Stamp duty 50 1300Jan 31 Deposit 3000 4300Jan 31 Bank Charges 340 3960
7
TURNBULL’S WHOLESALE
8
9
TURNBULL’S WHOLESALE
Statement of Affairs as at December 2014
$ $Non-current assets
Premises 130,000Fixtures & Fittings 25,000
155000
Current assetsStock of Goods 12000Debtors 5600Bank 9000Cash 510
27110
Less-current liabilitiesCreditors 1500Working Capital 25610
180610
Financed By:Capital 180610
10
BOOKS
OF ORIGINAL
ENTRY
TURNBULL’S WHOLESALE
Opening journal entries
Date Details Folio Debit CreditJan 1 Premises GL $130,000
Fixtures & Fittings GL $25,000Stock of Goods GL $12,000Debtors-M. Lyn GL $3,000-James GL $2,600Cash at Bank GL $9,000Cash in Hand GL $510Creditors GL $1,500Capital GL $180,610
$182,110 $182,110
11
TURNBULL’S WHOLESALE
Sales Journal
Date Details folio Debit CreditJan 1 M. Lane SL $2700Jan 29 C. Brown SL $4900Jan 31 Transfer to Sales a/c GL $7600
12
TURNBULL’S WHOLESALE
Purchases Journal
Date Details Folio Debit CreditJan 3 R. Graham PL $1620Jan 10 R. Gordon Pl $5434Jan 31 Transfer to Purchases
a/c GL $7054
13
TURNBULL’S WHOLESALE
Return Outwards Journal
Date Details Folio Debit CreditJan 11 R. Gordon PL $452Jan 31 Transfer to Return
Outwars a/lGL $452
14
TURNBULL’S WHOLESALE
Return Inwards Journal
Dates Details Folio Debit CreditJan 17 M. Lane SL $300Jan 31 Transfer to Return
Inwards a/cGL $452
15
TURNBULL’S WHOLSESALE
General Journal
Date DetailsFoli
o Debit($) Credit ($)
Premises GL 130000
Fixtures and Fittings GL 25000
Stock of Goods GL 12,000
Debtors:
M. Lyn SL 3000
J. James SL 2600
Cash at Bank CB 9000
Cash in Hand CB 510
R. Graham PL 1500
Capital PL 18610 182110 182110
Assets and Liabilities at this date entered to open the books GL
16
TURNBULL’S WHOLESALE
Sales Invoices
Name: Turnbull’s wholesale Customer: M. Lane Address: 169 Bedward Garden
Kingston 7
Tel: 856-5078 Fax: 1800-119
Invoice No.: 1
Date: 1 Jan 2014
No. Description Quantity Unit Price Total
Banana Chips 4 $250 $1,000
1 Case of soda 2 $850 $1,700
$2,700
17
TURNBULL’S WHOLESALE
Cashbook
Date Details Folio D.A Bank Cash Date Details Folio D.R Bank CashJan. 1 Balance B/F $9,000 $510 Jan. 7 Carriage Inwards GL $350Jan. 6 Sales GL $1,504 Jan. 7 R. Graham PL $75 $1,425Jan.18 Sales GL $4,664 Jan. 9 Sundry Expense GL $290Jan. 26 M. Lyn SL $125 $2,375 Jan. 13 Refrigerator GL $7,000Jan. 31 Cash C $3,000 Jan. 15 Wages GL $2,000Jan. 31 J. James SL $1,820 Jan. 24 Drawings GL $400
Jan. 28 Sundry Expense GL $850Jan. 29 Carriage Inwards GL $450Jan. 31 Bank C $3,000Jan. 31 Balance c/d $5,320 $1,788
$125 $16,195 $6,678 $75 $16,195 $6,678Feb. 1 Balance b/d $5,320 $1,788
18
TURNBULL’S WHOLESALE
Updated cash book as at 1 January 2014
Date Details Amount Date Details AmountJan. 1 Balance $5,320 Jan. Standing Order $500Jan. Credit Transfer $750 Jan. Stamp Duty $50
Jan. Bank Charges $340Jan. 31 Balance c/d $5,330
$6,220 $$6,220Feb. 1 Balance b/d $5,330
19
LEDGERS
TURNBULL’S WHOLESALE
Sales Ledger
Date Details amount Date Details Amount
M. Lane a/cJan. 1 Sales $2,700 Jan. 7 Return Inwards $300
Jan.31 Balance c/d $2,400$2,700 $2,700
Feb. 1 Balance b/d $2,400M. Lyn A/c
Jan. 1 Balance b/d $3000 Jan. 26 Bank $2375Jan. 26 Discount $125
Jan. 31 Balance c/d $500
$3,000 $3,000
Feb. 1 Balance b/d $502
C. Brown a/cJan. 29 Sales $4,900 Jan. 31 Balance c/d $4,900
$4,900 $4,900
Feb. 1 Balance b/d $4,900
J. James a/cJan. 1 Balance b/d $2,600 Jan. 30 Bank $1820
$780
$2,600 $2,600
20
TURNBULL’S WHOLESALE
Purchases Ledgers
Date Details Amount Date Details AmountR. Graham a/c
Jan. 7 Bank $1,425 Jan. 3 Balance b/d $1,500Jan. 7 Discount $75 Jan. 3 Purchases $1,620Jan.31 Balance c/d $1,620
$3,120 $3,120Feb. 1 Balance b/d $1,620
R. Gordon a/cJan. 11 Return
Outwards$452 Jan. 10 Purchase $5,434
Jan. 31 Balance c/d $4,982$5,434 $5,434
Feb. 1 Balance b/d $4,982
21
TURNBULL’S WHOLESALE
General Ledger
Date Details Amount Date Details AmountCarriage Inwards a/c
Jan. 3 Cash $350 Jan. 31 Balance c/d $350$350 $350
Feb. 1 Balance b/d $350Sales a/c
Jan. 31 Transfer to trading A/c
$13,768 Jan. 6 Cash $1,504
Jan. 18 Cash $4,664Jan. 31 Total credit sale for
the month$7,600
$13,768 $13,768
Carriage Outwards a/cJan. 29 Bank $450 Jan. 31 Transfer to P&L A/c $450
$450 $450
Return Outwards a/cJan. 31 Transfer to
trading A/c$452 Jan. 31 Total return outwards
for the month$452
$452 $452
Refrigerator a/cJan. 31 Bank $7,000 Jan. 31 Balance c/d $7,000
$7,000 $7,000Feb. 1 Balance b/d $7,000
22
TURNBULL’S WHOLESALE
General Ledger
Date Details Amount Date Details AmountReturn Inwards a/c
Jan. 31 Total return inwards $300 Jan. 31 Balance c/d $300
for the month$300 $300
Stock a/cJan. 1 Balance B/F $12,000 Jan. 31 Balance c/d $12,000
$12,000 $12,000Feb. 1 Balance b/d $12,000
Sundry Expense a/cJan. 9 Cash $290 Jan. 31 Transfer to P&L
A/c$1,140
Jan. 28 Cash $850$1,140 $1,140
Premises a/cJan. 1 Balance B/F $130,000 Jan. 31 Balance c/d $130,000
$130,000 $130,000Feb. 1 Balance b/b $130,000
Discount Allowed a/c Jan. 31 Total Discount
allowed for the month$125 Jan. 31 Transfer to P&L
A/c$125
$125 $125
23
TURNBULL’S WHOLESALEGeneral ledger
Date Details Amount Date Details Amount
Fixtures & Fittings a/c
Jan. 1 Balance B/F $25,000 Jan. 31 Balance c/d $25,000
$25,000 $25,000Feb. 1 Balance b/d $25,000
Wages & Salaries a/c
Jan. 15 Bank $2,000 Jan. 31 Transfer to P&L A/c
$2,000
$2,000 $2,000Drawings a/c
Jan. 24 Cash $400 Jan. 31 Balance c/d $400$400 $400
Feb. 1 Balance b/d $400Bad Debt a/c
Jan. 30 J. James $780 Jan. 31 Transfer to P&L A/c
$780
$780 $780Purchases a/c
Jan. 31 Total credit purchases for the month
$7,054 Jan. 31 Transfer to trading A/c
$7,054
$7,054 $7,054
Capital a/c
Jan. 31 Balance c/d $180,610 Jan. 1 Balance B/F $180,000
$180,610 $180,000
Feb. 1 Balance b/d $180,000
24
TURNBULL’S WHOLESALE
Control Accounts
Date Details Amount Date Details AmountSales Legers Control a/c
Jan. 1 Balance B/F $5,600 Jan. Return Inwards $300Jan. Sales $7,600 Jan. Bank $4,195
Jan. Discount allowed
$125
Jan. Bad Debt $780Jan. 31 Balance c/d $7,800
$13,200 $13,200Feb. 1 Balance $7,800
Purchases Ledger Control a/cJan. Bank $1,425 Jan. 1 Balance B/F $1,500Jan. Return
Outwards$452 Jan. Purchases $7,054
Jan. Discount Received
$75
Jan. 31 Balance c/d $6,602
$8,554 $8,554
Feb. 1 Balance b/d $6,602
25
TURNBULL’S WHOLESALE
Trial Balance as at January 2014
Debit Credit
Carriage Inwards $350
Sales $13,768Carriage Outwards $450Return Outwards $452Refrigerator $7,000Return Inwards $300Stock of Goods $12,000Sundry Expense $1,140Premises $130,000Discount Allowed $125Fixtures & Fittings $25,000Wages & Salaries $2,000Drawings $400Bad Debt $780Purchases $7,054Capital $180,610Bank $5,320Cash $1,788R. Graham $1,620M. Lane $2,400M. Lyn $500R. Gordon $4,982C. Brown $4,900Discount Received $75
$201,507 $201,507
26
TURNBULL’S WHOLESALE
Bank Reconciliation Statement as at January 2014
Details AmountBalance as per adjusted cashbook $5,330Add un-presented Cheques $450
$5,780
Less Late Lodgements $1,820Balance as per updated Bank reconciliation $3960
27
TURNBULL’S WHOLESALE
Trading Profit & Loss Account as at Jan 31 2014
$ $ $Sales 13,768Return Inwards 300
13,468Less Cost Of Goods SoldOpening Stock 12,000Add Purchase 7054
Carriage Inwards 350Gross Purchase 7,404Return Outwards 452Net Purchase 6,952Cost Of Goods Available For Sale 18,952Closing Stock 10,400Cost Of Goods Sold 8,552Gross Profit 4,916Add Other IncomeDiscount Received 75
4,991Less ExpenseProvision Bad Debt 33Carriage Outwards 450Discount Allowed 125Bad Debt 780Sundry Expense 1,290Wages & Salaries 1,750DepreciationFixtures & Fittings 104Refrigerator 58
4,590Net Profit 401
28
TURNBULL’S WHOLESALE
Balance Sheet as at 31 Jan 2014
Non-Current Assets $ $ $Premises 130,000Fixtures & Settings 25,000Less Depreciation 104
24,896Refrigerator at Cost 700
Less Depreciation 586,942
161,838Current AssetsStock 10,400Trade Debtors 7,800Less Provision for Bad Debt 33
7,767Cash at Bank 5320Prepaid Expense 250Cash 1,758
25,525Less Current LiabilitiesTrade Creditor 6,602Accrued Expense 150
6,75218,773
180,611Financed ByCapital 180,610Add Net Profit 401
181,011Less Drawings 400
180,611
29
Performance of business
The performance of Turnbull’s Wholesale was less than the performance expected of an average firm just starting up in that type of industry. In the analysing the financial statements of the business it was evident that the business performed poorly even though it made a profit and it was only for one
month. In the month of January the business mustered a net profit of $401, this profit may be attributable to the fact that the business is new, and is expected of a new business to have some forms of problem. Turnbull’s Wholesale sales were more than the expenses which Is always a good thing as a result the business had a better chance of making a profit which it did. The turnover ratio was 0.76 which means the stock is being converted into sales less than 1 time during the month of January also the gross mark-up was 57.8% which means the mark up on cost was only enough to arrive at the selling price which is not adequate to meet Turnbull’s Wholesale expenses. Turnbull’s wholesale took 18 days to collect outstanding funds from credit customers in the month of January.
30
RATIOS
Ratio Analysis and Interpretation of results
Working capital ratio:
Comparison made: Beginning vs ending
Working Capital= CA-Cl=27,110-25,610
This reveals that at the beginning of the month the working capital was $27110, however at the end it was reduced by $1,500 to $25,610 a decrease of 5.5%.
Ratio: 27,110
25,610
= 1:1
Solvency Ratios:
(a) Current Ratio = CA CLComparison Made = Beginning vs Ending CA = 27,110 25,525 CL = 1,500 6,752 18:1 4:1
This means that at the beginning of the month current assets could cover current liabilities 18 times. However at the end of the month this was reduced to 4 times.
31
Acid-Test of quick ratio:
Comparison being made: Beginning vs ending
Acid-Test Ratio: CA-STOCK 27,110-12,000 25,525-10400
CL 1,500 6,752
10:1 2:1
This means current assets without at the beginning of the month could cover current liabilities 10 times. However at the end of the month it is reduced to 2 times.
Gross Profit % Sales: GP X 100
Net Sales
= 4,916 X 100
13,468
= 36.5%
This means that for every $100 of sales 36.5% or $36.50 goes to cover expenses and contribute to any net profit.
Net profit % of Sales: Net Profit X 100
Net Sales
= 401 X 100
= 2.9%
This means that for every $100 of sales, the business owner is gaining 2.9% or $2.9.
32
Gross Mark-Up: GP X 100
COGS
= 4,916 x 100
8,552
=57.8%
This means that the mark up on cost was only enough to arrive at the selling price. This is definitely not adequate to meet the Turnbull’s Wholesale expenses.
Turn Over Ratio: COGS
Average Stock
= 8,552
10400 + 12,000/2
= 0.763 or 0.76
This means that the stock is being converted into sales less than 1 time during the month of January.
33
Debtors to Creditor Ratio:
This measures the length of time taken for debtors to pay the business and the business in turn its creditors.
Debtors Sales Ratio = Trade Debtors X 31
Credit Sales
= 7,800 X 31
13,768
= 17.5 days or 18 days
This means that it takes 18 days for the Turnbull’s wholesale to collect outstanding funds from credit customers in the month of January.
Creditors to Debtors Ratio:
This measures the length of time taken for the business to pay its suppliers.
Credit Sales Ratio = Creditors X 31
Purchases
= 6,602 X 31
7,054
= 29 days
This means that it takes Turnbull’s Wholesale 29 days to pay the suppliers.
34
Expense as a percentage of Sales:
= Expense X 100
Sales
= 4,590 X 100
13,768
= 33%
This means 33% of sails is an individual expense to Turnbull’s Grocery.
Return on Capital Employed Ratio (ROCE)
= Net Profit X 100
Capital Employed
= 401 X 100
180,610
= 0.22%
This means that Turnbull’s Wholesale receives a net profit of only 22c per $100.
35
TURNBULL’S WHOLESALE
Gross Profit
Net Profit
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
4916
401
Area Chart showing Gross profi t vs Net Profi t
36
TURNBULL’S WHOLESALE
1
0 2000 4000 6000 8000 10000 12000 14000
7054
13468
Bar Chart showing Sales vs Purchases
Sales Purchases
37
TURNBULL’S WHOLESALE
4590; 25%
13768; 75%
Pie Chart showing Sales vs expenses
Expenses Sales
38
Recommendations
After all these analysis, I have noticed that the business the business was not successful even though it made a profit.
In order to improve Turnbull’s Wholesale return the business will maximise the sale of goods by cash as this will and I will lessen all expenses. By doing this there will a greater chance of the business being more successful as a result of the business gaining profit. Turnbull’s Wholesale will limit the amount of credit sale to increase the frequency of earnings on sales and also provide discount to creditors to less the amount of days it takes for the business to collect outstanding funds from our credit customers. The business will also try lessen the expenses which will help Turnbull’s wholesale by increasing the net profit.
39
Conclusion
This school based assessment improved and gave me a better understanding of making use of analytical skills and working with figures and making comparisons. By applying accounting a thorough manipulation of an actual business was received and a more practical usage of the accounts was managed.
40