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Chapter 9: Integrated MYOB
NEW CHAPTER 9
(Do not use Chapter 9 in the Vallely text)
Integrated MYOB
INTRODUCTION
In this chapter, a variety of transactions and events is presented for you to record in the Dee
Why Golf Range Pty Ltd (DWGR) company file. No instructions are provided and this will test
how well you have understood accounting transactions. By processing these transactions
through MYOB you will learn how to use specialised accounting software. You should refer
back to chapters 1 to 8 of the case text for instructions on how to enter transaction into MYOB.
ALL PRICES INCLUDE GST UNLESS OTHER INFORMATION PROVIDED.
To ensure that you start with the correct trial balance you are provided with a file that contains
all the transactions to the end of chapter 8 (DWGR214endCh8.ZIP).
Friday 4 January 2008
Handyman Jim mowed the grassed area in front of the sheltered hitting area to provide Barry
and Michael with an area where lessons could be held (the first lessons for Dee Why TAFE are
set to be held on Sunday 20/01/08 – the sales invoice to Dee Why TAFE was recorded in
Chapter 7). Jim gave Barry an invoice (number 109) for $75.00.
Barry cashed cheque 0007 for $200.00 to provide a cash float to use in the cash drawer of the
Pro Shop.
An invoice was received from Thompkins Solicitors, for legal advice on the council lease, the
establishment of the company, registration of the business name and for GST and an ABN.
Kathryn Thompkins is the solicitor Barry and Michael deal with on their legal matters. The
solicitors offer their clients 14 day accounts, with no discount for early settlement and a billing
limit of $4,000 before the client is required to make a payment. You are required to create a
card for this supplier and record the invoice no. 2953 for $1,650.00 (incl. GST – ABN 99 720
161 295).
The solicitor’s details are as follows:
- PO BOX 1020
- Parramatta, NSW 2150
- Phone 02 6590 1248
- Mobile 0565 901 248
- Fax 02 6590 1250
The shafts on backorder from Aussie Golf Imports Pty Ltd arrived, together with the supplier’s
invoice number 53268 for $462.00.
Saturday 5 January 2008
Barry and Michael entered into a rental agreement for a new Golf Technique Video System,
which consists of a three way video camera / TV / video system, which will allow Barry and
Michael to tape golfers from two side-on angles and from behind as part of the golf lesson. This
is the latest technology available from Germany and is being used extensively by instructors
with elite golfers. The split screen technology allows golfers to see their swing on TV from all
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Chapter 9: Integrated MYOB
three angles simultaneously or one at a time.
The rental agreement requires fortnightly payments made by periodical payment from the
business cheque account starting from the first day of the lease so that the lease is paid
fortnightly in advance. Create this payment as a recurring payment and record the first
payment. The details of the periodical payment are as follows:
Golf Technique Video Lease – $137.50 / fortnight (incl. GST)
Golf Pro Australia Pty Ltd.
PO Box 210
Redfern NSW 2016
Bank Ref 925-GPA
Barry and Michael decided to offer both individual lessons and group lessons using the golf
technique equipment. The charge for an individual lesson using the equipment is $88.00 per
hour and the lesson must be booked for a minimum of one hour (to give enough time to review
the video tapes). The group lessons are charged at the rate of $44.00 per person per hour and
must be booked for a minimum of 2 hours. Maximum group size is 4 people.
Create new service items for these types of golf lessons using what you think is an appropriate
item name and item number.
Monday 7 January 2008
The range golf balls ordered from Long-Flite Balls Pty Ltd on 17/12/07 arrived, together with
the supplier’s invoice number LFB 529106 for $8,250.00.
The goods arrived from Spike’s Golf Shoes Pty Ltd, with invoice number 92613 for $9,900.00.
The builders completed construction of the Pro-Shop and storeroom and following the final
inspection the handover was conducted today. Cheque number 0008 for $58,500 was paid to
Swan Constructions Ltd. Capitalise this expenditure to Buildings at Cost.
Tuesday 8 January 2008
No bookings were received for lessons – the golf range is still not open for business officially
and no transactions or events occurred.
Wednesday 9 January 2008
Michael placed an order for 25 boxes (1 Doz per box) of each type of golf ball (100 boxes in
total) with Long Flite Golf Balls Pty Ltd. Each box has a cost of $27.50 and the order totals
$2,750.00. The sales rep promised the goods would be delivered no later than next week.
Cheque 0009 was drawn for $57,390 to Glebe Earthworks Pty Ltd for the concrete slab for the
sheltered hitting area, pathways and other improvements to the land. Capitalise to Land
Improvements.
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Chapter 9: Integrated MYOB
Thursday 10 January 2008
Barry and Michael obtained a cover note for the buildings, contents and public liability
insurance on Wednesday the 9th of January 2008. Barry wrote cheque 0010 for $6,920 to BCH
Insurance Ltd to pay the invoice dated 10/1/08. The insurance policy is for twelve months and
will lapse on the 9th of January 2009. Post to Prepaid Insurance.
Barry wrote cheque 0011 for $75.00 to Handyman Jim Pty Ltd to settle the amount due on his
card.
Handyman Jim does the maintenance of the grounds each Monday morning before opening time
and cleans the Pro Shop every Wednesday night. He leaves a bill for $150.00 in Barry’s in-tray
each Wednesday night after the cleaning has been completed. The cleaning fee is $33.00 and
the balance is for range maintenance. Record a bill (number 2956) in the Purchases Command
Centre for this week’s work and save it as a recurring bill, as this bill will be recorded each
week.
Friday 11 January 2008
Barry transferred $95,000 from the investment account to the general cheque account. The East
Coast Bank requires that a minimum balance of $5,000 be maintained in the investment account
for the account to remain open.
The contractors completed the sheltered hitting area. Cheque 0012 was drawn for $34,900 to
Swan Constructions Ltd for the building of the posts, metal seating, bag racks and roof structure
of the golfer’s shelter. Capitalise to Buildings.
Saturday 12 January 2008
Michael purchased a fireproof safe for $750 from Manly Office Supplies Pty Ltd (invoice
#1924). Capitalise this expenditure.
Barry wrote cheque 0013 for $8,085.00 to Long-Flite Balls Pty Ltd to pay the bill for the range
golf balls delivered last Monday.
Sonja Trager from the Heritage Golf Club had a one hour video lesson with Michael. She also
purchased a pair of brown leather shoes. She paid in cash.
Karen Ritchie deposited the cash from Sonja Trager to the bank.
Sunday 13 January 2008
Three young men from the North Beach Golf Club had a one hour group lesson with Nigel
Scott. One of the men needed to hire clubs for the lesson and they each paid in cash.
Monday 14 January 2008
Barry wrote cheque 0014 $1,650.00 to Kathryn Thompkins (the solicitor) to settle the account
for their legal fees.
Karen purchased milk, biscuits and coffee and tea costing $21.40 from petty cash. Record this
expenditure to General Office expenses as GST Free.
Check the To Do List – Recurring Transactions and record the periodic payment for the
computer rental.
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Chapter 9: Integrated MYOB
The golf balls ordered from Long-Flite Balls Pty Ltd on 9/01/08 were partially delivered,
together with the supplier’s invoice number LFB 530019 for $2,337.50. Long Flite only
delivered 20 boxes of the Hard Super Spin golf balls and only 15 boxes of the Soft Max Long
golf balls, but the other types of balls ordered were delivered in full.
Tuesday 15 January 2008
Michael purchased a kettle and sandwich maker for the lunchroom from Al’s Appliances for
$52.90 using the MasterCard. Expense this amount to General Office expenses.
Wednesday 16 January 2008
Renumber the Prepaid Insurance account to 1-1500 and add a new account 1-1400 to the
Accounts List called Prepaid Advertising (tax code GST).
Michael wrote cheque number 0015 for $2,500 out to Northern Beaches Advertising Pty Ltd for
an advertising campaign in the local newspaper. An advertisement will appear in the newspaper
every Saturday for the next six weeks. Record this payment to the Prepaid Advertising account.
Jean Campbell purchased a box of Super Spin hard golf balls and paid by cheque.
Barry wrote cheque 0016 for $150.00 to pay the outstanding cleaning and maintenance invoice
to Handyman Jim, leaving it in an envelope in the in-tray for Jim to collect that evening.
Nigel Scott, Kathy Brambles and Barry ran group lessons for students from Mona Vale SHS
from 1pm to 3pm. Mona Vale has arranged with Barry for thirty students to have lessons each
Wednesday afternoon plus a bucket of 80 balls each and use of hire clubs. The lessons start at
1pm, with three groups of five hitting their practice balls during the first hour, while the other
three groups of five having their lesson and then swapping over at 2pm. Set up a recurring
invoice for these lessons, balls and club hire and then record the invoice.
Thursday 17 January 2008
Barry wrote cheque 0017 for $1001.66 to settle the December MasterCard account.
Barry faxed a purchase order to Aussie Golf Imports Pty Ltd to purchase two sets of yardage
markers for the driving range (to indicate the distances from the sheltered hitting area –
($375.00). He also ordered twelve practice green hole-markers for the putting green ($336.00).
Record a purchase order and use the Range Operating Costs expense account for this order.
Barry wrote cheque 0018 for $295.00 to Telstra for the phone and fax connection to the Pro-
Shop. Record this expense 30% to the Telstra – Fax expense account and 70% to Telstra –
Office Phone expense account.
Karen Ritchie cleared the excess cash and cheques from the safe and deposited it to the bank.
Make sure you use the correct format in the ID# field. (Check the MYOB text.)
Use recurring bill to record invoice number 3006 for $150.00 from Handyman Jim.
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Chapter 9: Integrated MYOB
Friday 18 January 2008
The rubber and grass mats arrived from Aussie Golf Imports Pty Ltd together with invoice
59850 for $6,600.
Handyman Jim installed the artificial grass and rubber mats. He left invoice 3004 for $415.80.
Record this invoice on his supplier card. Capitalise this expenditure to Buildings.
Nigel held lessons for five of the members from the Regal Golf Club. The first lesson was an
individual lesson from 8:00am to 9:00am. The second lesson was also an individual lesson and
went from 9:30am to 10.00 am. The last lesson was a three member group lesson using the Golf
Technique Video System and went from 10:30 am to 12:30pm. All five members paid by cash.
Michael wrote and mailed cheque 0019 for $2,290.75 to Long-Flite Balls Pty Ltd to pay the bill
for the range golf balls delivered on the 14th January.
Saturday 19 January 2008
Two members from the Heritage Golf Club booked lessons at the Driving Range with Kathy
Brambles. In the first lesson, from 10.30 to 11.30am, Kathy used the Golf Technique video
equipment, while the second lesson was a normal individual lesson from 12 noon – 12.30. Both
members paid cash.
Barry called in to the driving range on Saturday night, cleared the safe, depositing the cash and
cheques to the night deposit box at the East Coast Bank.
Check the To Do List – Recurring Transactions and record the periodic payment for the video
equipment.
Sunday 20 January 2008
Kathy Brambles and Nigel Scott took the first week of lessons for the Dee Why TAFE from
1pm – 4pm. – the sales invoice to Dee Why TAFE was recorded in Chapter 7.
Monday 21 January 2008
The second instalment ($55,000) of the business loan was transferred to the cheque account by
the bank. Record the receipt of this money, directly to the cheque account, using LN 27/01 as
the source document reference.
Barry Ritchie purchased milk and biscuits costing $9.45 from petty cash. Record this as GST
Free. Michelle Fryer purchased a Budget Golf Package and paid by cheque. As the opening day
is only a few days away, Barry gave Michelle a 10% discount on her purchase.
Tuesday 22 January 2008
Barry wrote cheque number 0020 for $565.80 for outstanding invoices to Handyman Jim,
leaving it in an envelope to be collected that evening.
The golf balls on backorder from Long Flite Golf Balls arrived today, together with the
supplier’s invoice number LFB 530654 for $371.25. Long Flite apologised for the delay and
took 10% off the purchase price.
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Chapter 9: Integrated MYOB
Scott Green brought in his three metal woods for a re-groove and a new grip each. He is having
repairs and Sure Grips fitted and paid by cheque.
Received the first payment from Mona Vale SHS for $1,425.60 for the student’s weekly
lessons.
Karen Ritchie cleared the excess cash and cheques from the safe and deposited it to the bank.
Wednesday 23 January 2008
The yardage markers and twelve hole markers ordered from Aussie Golf Imports Pty Ltd
arrived, the supplier’s bill number was 62192 for $711.
The lighting system was completed and cheque 0021 was paid to the contractor, Bright Lights
Pty Ltd for $39,720.00. Capitalise this expenditure to Land Improvements.
Nigel, Kathy and Barry took the second week of lessons for the Mona Vale SHS from 1pm –
3pm. Record the sales invoice to Mona Vale SHS. Don’t forget to use the recurring invoice to
record this transaction.
Use recurring bill to record invoice number 3014 for $150.00 from Handyman Jim.
Friday 25 January 2008
Cheque 0022 for $5,500 was paid to the North Sydney Council for two months rent (December
and January) for the land at the Driving Range. The council invoices the DWGR every two
months in arrears. Record this expenditure to the Rent – Council Land expense account.
Saturday 26 January 2008
Jim Anderson, the member from the Heritage Golf Club who had the video lesson with Kathy
Brambles last Saturday morning, returned for another video lesson with Michael. They
reviewed the video and Michael fitted him with a new set of 3 Jaguar Sure Strike Woods, using
Cord Grips and Firebolt Graphite Reg Shafts. Michael offered Jim 10% discount for the sale
and did not charge him for the lesson. Jim paid for the clubs by cheque.
Sunday 27 January 2008
Kathy and Nigel took the second week of lessons for the Dee Why TAFE from 1pm – 4pm.
Record the sales invoice to Dee Why TAFE. Don’t forget to use the recurring invoice to record
this transaction.
The range officially opened to the public today and Barry and Michael offered 10% discount off
everything on opening day to attract customers to the new facility. As expected, the range was
very busy from 4pm until closing.
To assist with the recording of cash sales made during the day, a simple manual dissection sheet
was used to track how many and what types of buckets of balls were sold, together with any
other sales. Cash sales for the day were as follows:
Qty Unit Price Cash Received
(incl. GST) 222
(After Discount)
Chapter 9: Integrated MYOB
40 Ball Buckets 6 $6.00 32.40
80 Ball Buckets 20 $10.00 180.00
120 Ball Buckets 30 $12.00 324.00
Club Hire 15 $5.00 67.50
Jaguar One Putt Putter 2 $264.00 475.20
Spike’s Brown Leather Shoes 1 $165.00 148.50
Long Flite Super Spin – Hard (Doz) 3 $82.50 222.75
Long Flite Super Spin – Soft (Doz) 6 $82.50 445.50
Long Flite Max Long – Hard (Doz) 2 $82.50 148.50
Long Flite Max Long – Soft (Doz) 1 $82.50 74.25
Lessons – Michael 1 hour individual 3 $66.00 178.20
Lessons – Michael 1 hour video individual 2 $88.00 158.40
Repairs – Fit Firebolt Metal Flex Shafts 8 $11.00 79.20
Repairs – Fit Rubber Grips 8 $4.40 31.68
Day’s Cash Takings $2,566.08
A display of Jaguar irons and woods was accidentally knocked over by a visitor to the opening
day. As a result a set of Spit Fire woods was broken. Record this stock loss.
Michael received a cheque for $784.08 from Dee Why TAFE.
Debra Bradford cleared the excess cash and cheques from the safe and deposited it to the bank
night deposit box.
Monday 28 January 2008
Public Holiday – Golf Range Closed
Tuesday 29 January 2008
Barry wrote out the paycheques for the pay period ended Sunday 27/1/08. Kathy was paid for
12 hours of work, while Nigel was paid for 12 hours. The following is a summary of the
cheques written:
Gross Tax Net
$ $ $
Cheque 0006 – Debra’s wages 750.00 135.00 615.00
Cheque 0007 – Michael’s wages 1,000.00 214.00 786.00
Cheque 0008 – Kathy’s wages 360.00 75.00 285.00
Cheque 0009 – Barry’s wages 1,000.00 214.00 786.00
Cheque 0010 – Karen’s wages 750.00 135.00 615.00
Cheque 0011 – Nigel’s wages 360.00 75.00 285.00
$3,372.00
Barry used the internet banking service to transfer the funds (from the general cheque account to
the payroll cheque account) necessary to cover the paycheques written. Use the recurring
transaction to record this entry.
Wednesday 30 January 2008
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Chapter 9: Integrated MYOB
Joan Compton from Heritage Golf Club booked five individual lessons to be given by Kathy
Brambles every Monday morning from 8:30am – 9:30am. The first lesson is to commence on
Monday 4th February. Joan paid for all five lessons today by cheque.
Thursday 31 January 2008
Barry prepared and mailed cheque 0023 for Aussie Golf Imports Pty Ltd to settle the two bills
that were due for payment today.
Cash sales for the day were as follows. The 10% discount was still offered today on all cash
sales.
Qty Unit Price
(incl. GST)
40 Ball Buckets 15 $6.00
80 Ball Buckets 40 $10.00
120 Ball Buckets 29 $12.00
Equipment Hire 18 $5.00
Jaguar Free Stand Bag 2 $176.00
Spike’s White Leather Shoes 5 $165.00
Long Flite Super Spin – Soft (Doz) 3 $82.50
Long Flite Max Long – Hard (Doz) 4 $82.50
Lessons – Barry 1 hour individual 3 $66.00
Lessons – Barry 1 hour video individual 2 $88.00
Budget Golf Package 1 $2,750.00
Karen Ritchie cleared the excess cash and cheque from the safe and deposited it to the bank
night deposit box.
END CHAPTER 9
224
Chapter 10: End of Month Processes
NEW CHAPTER 10
(Do not use Chapter 10 in Vallely)
End of Month Processes
INTRODUCTION
In this chapter, you will perform bank reconciliations of the East Coast Bank accounts
(Cheque Account, Payroll Cheque Account and Investment Account). You will also process
adjusting entries to facilitate the preparation of financial statements for the months of December
and January and some reversing entries to prepare the general ledger, ready for the start of the
following month’s trading. When these tasks are completed, you will be ready to prepare a
number of reports, including the financial statements.
THE BANK RECONCILIATION
At the end of this chapter you will find five bank statements, one for each bank account
(cheque account, payroll cheque account and the investment account), for each of the months
the DWGR business has been operating to date (December and January). The bank
reconciliation is an important internal control, whereby you compare the transactions recorded
to a bank account in the firm’s general ledger to the record of transactions recorded by the bank
in their accounting system (the bank statement is prepared from the information stored in the
bank’s computer system). Differences can arise between the balance of funds in the firm’s bank
account in the general ledger and the balance in the bank’s records for a number of reasons:
- the bank has recorded receipts that are not recorded in the firm’s GL account (e.g.
interest earned);
- the bank has recorded withdrawals from the account that have not been recorded in the
firm’s GL account (e.g. bank fees, government duties, periodical payments);
- the firm has recorded a credit to the GL account that has not been recorded as a
withdrawal from the bank’s account (e.g. a cheque has been written and recorded by
the firm, but has not been recorded as a withdrawal by the bank because the recipient
of the cheque has not presented it as yet);
- the firm has recorded a debit to the GL account that has not been recorded as a deposit
to the bank’s account (e.g. the firm has prepared and recorded that a bank deposit has
been made, but because the deposit was made to a night deposit box the bank does not
record the deposit until the next working day);
- bank errors (e.g. a cheque is recorded as a withdrawal from the account for an
incorrect amount); and
- data entry errors in the firm’s GL account (e.g. a cheque is recorded for an amount that
is different to the amount for which it was written).
Performing a bank reconciliation in MYOB Accounting Plus (AP) is a fairly straightforward
process, which requires you to compare the entries recorded to the relevant firms’ GL account
(MYOB AP will display all of these entries in a window) to the entries displayed on the bank
statement (the bank’s record). Items like interest earned, bank fees and interest expense, which
have been recorded to the bank statement but not the GL account, can be recorded during the
bank reconciliation process.
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Chapter 10: End of Month Processes
Tips: It is recommended you exit MYOB AP before performing the bank reconciliations
and save a copy of the data file to another folder (or do a backup of the file when exiting) so
you can replace the data file should anything go wrong during the bank reconciliation process.
It is also worthwhile completing a data verification process before commencing the bank
reconciliations.
The Bank Reconciliation – East Coast Bank Investment Account
We will start with a simple reconciliation of the East Coast Bank Investment account (1-1115),
which has a balance in the GL on 31/12/07 of $100,000.00, to the bank statement displayed on
page 239, which shows a closing balance of $100,377.19 for the same date. As there are only a
few transactions for this particular bank account, you can see readily that there are two
transactions (interest earned of $382.19 and bank fees (Account Keeping Fee) of $5.00) that
could explain the difference between the GL record and the bank statement of $377.19. To
perform the bank reconciliation, click on the Banking Command Centre button and select
Reconcile Accounts from the flowchart area. In the Reconcile Accounts window (see Figure
10.1) the cursor will be in the Account field, click on the drop down arrow, click on the East
Coast Bank Investment A/c from within the Select from List window and click Use Account.
Figure 10.1: The Reconcile Accounts Window
In the ‘New Statement Balance:’ field enter the closing bank statement balance of $100,377.19
(if the bank statement balance was to be in overdraft, enter the amount as a negative). Press
Tab to move to the ‘Bank Statement Date:’ field, enter 31/12/07 as the date and press Tab
twice. The image in the window will now be updated (Figure 10.2), showing the transactions
recorded to this GL account between the last bank reconciliation and the date just entered. An
amount will also be displayed in the ‘Out of Balance:’ field (you cannot enter data to this field –
it simply tells you the amount by which the amount just entered as the bank statement balance
differs from the last reconciled bank statement balance, which in the case of the DWGR
business will be $0.00).
Looking at the bank statement on page 239, you can see that the credit transaction on 1-Dec of
$100,000 reconciles to the amount displayed in the Reconcile Accounts window as a deposit, so
click in the tick box (in the column down the left side of the window) for this amount. This will
make two changes to the information displayed in the window. First, it will change the
‘Calculated Statement Balance:’ field from $0 to $100,000.00. Second, it will change the ‘Out
of Balance:’ field from $100,377.19 (as shown in Figure 10.2) to $377.19. This indicates that
there is still a difference between the GL records for DWGR and the bank statement records of
the bank.
226
Chapter 10: End of Month Processes
Looking again at the bank statement on page 239, you can see that there are two entries that
have not been recorded to the GL account as yet, being the interest earned and the bank fee.
Figure 10.2: The Reconcile Accounts Window – Showing the Out of Balance Amount
As mentioned earlier, these amounts can be entered during the bank reconciliation process.
Click on the Bank Entry button to open the Bank and Deposit Adjustments window, which
allows you to record bank fees, interest charges, government stamp duty and debits tax and
interest earned. You should now complete this window, being careful to enter appropriate
source document references in the ID# fields (as displayed in Figure 10.3).
Figure 10.3: The Record Service Charges and Interest Earned Window
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Chapter 10: End of Month Processes
When you are happy with your data entry, click Record and when you return to the Reconcile
Accounts window, you will find that these two amounts have now been listed as recorded to the
East Coast Bank Investment A/c and they have been ticked to indicate they reconcile with the
amounts displayed on the bank statement.
In the Reconcile Accounts window, you should now observe that the ‘Calculated Statement
Balance:’ field shows a balance of $100,377.19 and as this agrees with the amount entered into
the ‘New Statement Balance:’ field, the ‘Out of Balance:’ field shows an amount of $0.00,
indicating the GL account and the bank statement are in agreement (reconciled). You should
now click the Reconcile button and when the alert message appears, print the Bank
Reconciliation report (this can be done at a later stage from the Index to Reports, under the
Banking tab). Once the report has been printed, click Reconcile again and when the same alert
message appears, click Reconcile. Again, the Reconcile Accounts window will be updated, this
time showing the reconciliation has been completed, updating the ‘Last Reconciled Date:’ field
to show 31/12/07 as the last time reconciliation was performed. (see Figure 10.4)
Figure 10.4: The Reconcile Accounts Window – Post Reconciliation
Once the GL account has been updated for amounts included on the bank statement, there could
still be differences between the GL record and the bank statement due to outstanding cheques
and / or outstanding deposits. The report just printed shows that there were no such outstanding
items, which means the GL account and the bank statement balances were equal (they should be
equal but opposite – remember the bank statement is printed from the bank’s accounting system,
so for the firm the investment account has a debit balance, being an asset of the firm, but to the
bank it is a liability, hence the bank records deposits as credits and withdrawals as debits).
When you do the bank reconciliations for the payroll cheque account and the general cheque
account, you will find that there are outstanding cheques and deposits. Once the bank statement
balance is adjusted for the amount of outstanding items, the GL and bank should have equal but
opposite balances.
You should now perform a bank reconciliation of the East Coast Bank Investment A/c as at the
31/01/08 and the January bank statement on page 238. Simply follow the same process as just
outlined. When you have completed this, we will reconcile the Payroll Cheque Account for the
month of January 2008.
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Chapter 10: End of Month Processes
The Bank Reconciliation – East Coast Bank Payroll Cheque Account
We will now reconcile the East Coast Bank Payroll A/c, which has a balance in the GL on
31/1/08 of $100.00, to the bank statement displayed on page 241, which shows a balance on the
same date of $3,183.00. Because we have no payroll transactions in December, we have no
bank statement. As before, we will use the Reconcile Accounts window. Select East Coast
Bank Payroll A/c in the ‘Account:’ field, enter $3,183.00 in the ‘New Statement Balance:’
field, enter 31/1/08 in the ‘Bank Statement Date:’ field and then click on each line item that
corresponds to an entry displayed on the bank statement. The tick in the left hand column
indicates the amount has been reconciled. It is important to look carefully at the cheque
numbers to ensure the correct cheque number has been reconciled, as there can often be cheques
drawn for the same amount (particularly in the case of paycheques). Bank reconciliations
should be performed regularly (at least weekly) and cheques that remain outstanding for more
than a few weeks should be investigated by the issuer of the cheque (hence the importance of
reconciling the correct cheques). You should now complete the reconciliation process ready for
printing the bank reconciliation report.
Figure 10.5 displays the Reconcile Accounts window after the bank reconciliation has been
completed. Notice that the four cheques that were not presented remain listed in the window.
During the month of February, the paycheques and transfers for the month of February will be
recorded to the East Coast Bank Payroll A/c using the Payroll Command Centre. At the end of
February, the Reconcile Accounts window will display the four outstanding cheques from
January and the transfers and cheques recorded for the month of February. When the bank
statement for February is available and the reconciliation is performed, the four outstanding
cheques from January will most likely have been presented in February and can be ticked off as
reconciled.
Figure 10.5: The Reconcile Accounts Window – Post Reconciliation of the East Coast
Bank Payroll A/c
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Chapter 10: End of Month Processes
The Bank Reconciliation – East Coast Bank Cheque Account
We will now reconcile the East Coast Bank Cheque Account, which has a balance in the GL on
31/12/07 of ($1,388.00), to the bank statement displayed on page 242, which shows a balance
on the same date of $1,422.98 DR i.e. overdrawn as at 31 December 2007. As before, we will
use the Reconcile Accounts window. Select East Coast Bank Cheque Account in the
‘Account:’ field and as the cheque is in overdraft, you need to enter the bank statement balance
as a negative, so enter -$1,422.98 in the ‘New Statement Balance:’ field. All of the transactions
for December and January will be listed in the window until you enter 31/12/07 in the ‘Bank
Statement Date:’ field. Once you have completed this field and moved to another field, the
transaction list will be reduced to show only the December transactions. Click on each line
item that corresponds to an entry displayed on the bank statement.
The December bank statement shows bank account keeping fees, state government debits
tax (SGDT) and interest charges (for the account being overdrawn during the month of
December). You can enter these during the reconciliation process by using the Bank Entry
button. Figure 10.6 shows that the account keeping fee ($25.00) and SGDT ($6.50) can be
combined and entered in aggregate ($31.50) to the Bank Fees and Charges account in the GL.
If the owners or managers would like these amounts shown separately in the GL account, you
can process separate bank entries by completing the Bank and Deposit Adjustments window
twice for Servers Charges.
The interest charge needs to be recorded as a separate bank entry, as the amount is posted to
a different GL account (Interest Expense). You need to look carefully at amounts of interest on
the bank statement, as the interest could be interest earned (revenue to the firm) or interest
charged (for being in overdraft). The Interest Earned panel in the Record Service Charges and
Interest Earned window (see Figure 10.6) is used exclusively for the interest displayed as a
credit on the bank statement, whereas interest charges are displayed as a debit by the bank and
should be recorded using the Service Charges panel. Thus, for entering the Interest for
December 2005, you will need to click Bank Entry to bring up the Bank and Deposit
Adjustments window again making sure you select the correct Expenses Account.
Figure 10.6: The Record Service Charges and Interest Earned Window –East Coast Bank
Cheque Account
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Figure 10.7: The Reconcile Accounts Window – East Coast Bank Cheque Account –
December 2007
When you have completed the bank reconciliation for the general cheque account for December
you should complete the reconciliation for the month of January. You will notice that there are
some outstanding cheques and a deposit at the end of January.
Figure 10.8: The Reconcile Accounts Window – East Coast Bank Cheque Account –
January 2008 (Note: not all entries are displayed)
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Chapter 10: End of Month Processes
Figure 10.9: The Reconcile Accounts Window – Post Reconciliation - January 2008
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Chapter 10: End of Month Processes
ADJUSTING AND REVERSING ENTRIES
Barry and Michael want to be able to examine the financial reports on a monthly basis. While
the income figures for December and January will be well short of a normal month’s trading,
due to the limited amount of trading that took place in these months, it is important to ensure the
revenues and expenses have been correctly allocated to each month, as this will affect the
various asset and liability accounts (e.g. accrued wages, prepaid rent, unearned revenue) carried
forward on the balance sheet for the start of trading in February. The way in which adjusting
entries are recorded in December and January will also affect the reversing entries to be posted
on the 1st of February 2008.
It is assumed that readers of this book are familiar with the role of adjusting and
reversing entries and how to go about determining the amounts of any entries that might need to
be recorded. Some guidelines are provided in the pages that follow, but detailed instructions are
not included. The journal entries are recorded in the General Journal (use the Record Journal
Entry function in the Accounts Command Centre). Use the information that follows and record
general journal entries on 31st December 2007 and 31st January 2008 before producing the
financial statements for the months of December and January.
Tips: Be very careful when considering the calculations for the adjusting entries.
Remember, the GST collected or GST paid is accounted for at the time the sale or
purchase transaction is recorded. As the amounts recorded to the various asset,
liability, revenue or expense accounts are GST exclusive, you must review the
entries made to the relevant accounts in terms of the GST exclusive amounts
recorded and make your adjusting entries on this basis. When making the adjusting
entries change the tax code from GST to NT.
Warning: Before starting this process save a copy of your data file to another
folder as well as backup your file.
The December Adjusting Entries
During the month of December there were very few transactions or events that would require
adjusting entries to be performed, as most of the month was spent preparing the site of the
driving range. Some non-current assets were acquired during the month and some consideration
should be given to the question of depreciation of these assets. When considering an adjusting
entry, you can add accounts to the Accounts List if you feel it is necessary to facilitate the entry
to be recorded.
Rent – Council Land: – the payment made in January was for two months rent as the council
requires the rent to be paid every two months in arrears. Review the recording of the payment
made in January. An adjusting entry needs to be recorded on 31st December 2007 as follows:
Rent paid was $5,500 ($5,000 GST exclusive) on 25th January 2008 for 2 months, it was paid in
arrears.
Original Entry 25th January: Rent – council land Debit; GST Paid Debit: Cheque account
Credit
Record the appropriate adjusting entry for the 31st December 2007.
Rent – Computer: – Paid monthly in advance including the day of payment. One payment was
made in December, on the 14 December for $143 GST inclusive. Computer was used from 14
December.
Calculate the amount to be adjusted and Record the appropriate adjusting entry for the 31 st
December 2007 making sure you apportion the correct number of days to this month.
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Office Supplies and Stationery: – the goods purchased for $352 GST inclusive ($320 GST
exclusive) before Christmas were still packed away in boxes and none had been used by 31 st
December 2007, therefore they are in fact an unused asset.
Original entry: Debited to Office Supplies and Stationery expense account.
Record the appropriate adjusting entry for the 31st December 2007.
Amortisation / Depreciation: – during the month of December a number of long term assets
were acquired. Some expenditures were also incurred (such as the land improvements) on
assets that were still under construction at the end of December. The usual practice is that
depreciation commences from the date the assets have been installed in place ready for
their intended use. The following comments should be considered before deciding whether to
record depreciation or amortisation for the month of December:
- Land Improvements: – the expenditure of $5,000 was for the protective fencing used
during the construction period and forms only part of the total expenditure on the land
improvements, which were not completed until mid- January.
- Office Furniture and Office Equipment: – Michael Bradford contributed a number
of assets as part of his contribution to the formation of the company. He contributed a
refrigerator valued at $800.00, table and chairs valued at $500.00 and various items of
office furniture valued at $2,000.00. As at 31st December 2007 none of these assets
were in place as the Pro Shop building was still under construction. A fax / copier was
purchased in December, but is still not in use (the phone was not connected as at 31 st
December 2007). The shop counters installed on the last day of the month were not in
use as the building contractors were still not completely finished in the Pro Shop.
- Storeroom Equipment: – Michael Bradford contributed bag racks as part of his
contribution to the formation of the company. While the bag racks were installed in
the storeroom on the 31st of December 2007, the storeroom was largely inaccessible
due to the building contractors.
- Range Equipment: – the tractor, ball collector and hire clubs were delivered by
Aussie Golf Imports Pty Ltd late in the afternoon on Wednesday the 31 st of December
2007 and were still unpacked at the close of trade that day.
Depreciation commences from the date the assets have been installed in place ready for their
intended use, land improvements were not completed until mid-January, no depreciation.
Office furniture and equipment, none were in place or ready for use as the pro-shop was still
under construction, no depreciation. The storeroom was installed 31st December but
inaccessible, therefore not ready to use, no depreciation. The range equipment was delivered
31st December but still unpacked at end of day, no depreciation.
The January Adjusting Entries
In the month of December you recorded a number of adjusting entries, some of these need to be
reversed as they are accruals. Review the entries you made and decide which ones need to be
reversed and record the reversals.
Before performing any adjusting entries for January end, it is important that you save and
print an Unadjusted Trial Balance for January as this option will not be available after
you perform the adjustments. However, you will first need to perform your reversing
entries at the beginning of January before you print this.
In the month of January, there were a number of transactions and events that require adjusting
entries to be performed. The following additional information is provided to assist you to
determine whether an adjusting entry is necessary. When considering an adjusting entry, you
can add accounts to the Accounts List if you feel it is necessary to facilitate the entry to be
recorded. When calculating daily amounts for the adjusting entries, there are 366 days in the
year. For weekly, fortnightly or monthly calculations simply use the normal amount (52 weeks,
26 fortnights, 12 months).
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Chapter 10: End of Month Processes
Rent – Council Land: – the payment made in January is for two months rent as the council
requires the rent to be paid every two months in arrears. To determine whether an adjusting
entry is appropriate in January, you need to review the recording of the payment made in
January, the adjusting entry that you recorded in December and whether it was reversed in
January.
Rent – Computer: – one payment was made during the month of January. To determine
whether an adjusting entry is appropriate in January, you need to review the recording of these
expenditures in January, the adjusting entry that you recorded in December and whether it was
reversed in January.
Rent – Video Equipment: – two payments were made during the month of January. To
determine whether an adjusting entry is appropriate in January, you need to review the
recording of these expenditures in January and consider whether an adjusting entry needs to be
recorded on 31st January 2008.
Prepaid Advertising: – one payment was made in January for a six week advertising
campaign. To determine whether an adjusting entry is appropriate in January, you need to
review the recording of this expenditure in January and consider whether an adjusting entry
needs to be recorded on 31st January 2008.
Prepaid Insurance: – one payment was made on the 10th of January 2008 for an insurance
policy that runs from 10/01/08 – 09/01/09 (see previous chapters for the details of the
transaction). To determine whether an adjusting entry is appropriate in January, you need to
review the recording of this expenditure in January and consider whether an adjusting entry
needs to be recorded on 31st January 2008.
Trade debtors: - The trade debtors account balance should have a balance equal to the sum of
all of the individual amounts owed to the business by the customers to whom the business offers
sales terms that involve delayed settlements. You should print a Receivables – Aging Summery
report as at 31/1/08 (from the Sales tab in the Index to Reports) to scrutinise the individual
debtor balances.
Bad and Doubtful Debts: – use the provision method and allow for 3% of all credit sales. To
calculate the amount you should print a detailed General ledger report for the appropriate
income accounts to identify the credit transactions for the month of January (select only the
income accounts and input the dates as 1 January to 31 January, 2008). From the printed list
manually identify the credit sales.
Interest Expense: – the bank loan has an interest rate of 8% p.a. Interest is calculated on the
daily balance outstanding and is charged to the loan on the last day of the month. Calculate the
interest expense on the two loan instalments and record an accrual to an Interest Payable
account. You need to add this liability account to the Chart of Accounts in the Current Liability
section (Tax Code N-T).
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Chapter 10: End of Month Processes
Wages: – the last pay processed was on Tuesday the 29 January 2008 for the week ended
Sunday the 27th of January 2008. During the period 28/1/08 – 31/1/08, Kathy Brambles worked
for 2 hours, Nigel Scott worked for 6 hours, Barry and Karen Ritchie were not rostered on either
of these days, Michael and Debra Bradford had both completed 22 hours of their 40 hour roster
for the week. Record a wages accrual for these wages incurred but not paid in January. You
will need to create a Wages Payable liability account under the payroll Liabilities heading in the
Current Liabilities section of the Chart of Accounts.
Telephone and Electricity Accounts: – the accounts from Telstra and North Shore Energy Ltd
for the month of January were both received in the first week of February. Both of these
accounts are payable by mid-February. The Telstra account indicates that the amount payable
for services provided in January is $346.50 (phone $269.20 and fax $77.30). The North Shore
Energy Ltd account indicates that $185.40 is payable. You can add additional accounts to the
Accounts List if you believe this is necessary.
Office Supplies and Stationery: – the goods purchased before Christmas were unpacked and
put in a stationery cupboard in the office area of the Pro Shop in January. Barry estimates that
there is still $90.00 (excluding GST) of stationery on hand at the end of January.
Individual Lessons: - On 30th January Joan Compton from Heritage Golf Club booked five
individual lessons with Kathy Brambles and paid for all lessons. Review the recording of this
transaction in January and consider whether an adjusting entry needs to be recorded on 31 st
January 2008.
Amortisation / Depreciation: – the following table provides a summary of the assets acquired
and the expenditures incurred on the land and buildings at the driving range during the months
of December and January and the dates from which depreciation should commence.
Information about the useful life and residual value for each asset is also provided. Barry and
Michael decided to use the straight-line method of depreciation.
Tips: The date to commence depreciation varies from asset to asset. When calculating the
depreciation, perform a pro-rata calculation based on the number of days the assets
were in use for during the month (including the day stated in the table). The assets
also have varying useful lives and residual values. You are required to input the
necessary information from the following table into the depreciation schedule of your
workbook submitted for the previous assignment. Calculations should be rounded to
two decimal places (i.e. in dollars and cents). A journal entry is required for each
class of asset, so determine the individual depreciation for each asset and then
aggregate these values to determine the total depreciation for that class of asset.
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Table 10.1: Amortisation / Depreciation Information
Asset Asset
Depn. Start Acquisition Asset Residual
Date Cost Useful Life Value
Land Improvements
Land Improvements 9/01/2008 57,172.73 20 years $ nil
Lighting System 23/01/2008 36,109.09 20 years $ nil
$93,281.82
Buildings
Pro Shop & Storeroom 7/01/2008 53,181.82 20 years $ nil
Roof Structure 11/01/2008 31,727.27 20 Years $ nil
Grass & Rubber Mats + Installation 18/01/2008 6,378.00 5 years $ nil
$91,287.09
Office Furniture & Equipment
Refrigerator 7/01/2008 800 10 years $ nil
Table & Chairs 7/01/2008 500 10 years $ nil
Office Furniture & Equipment 7/01/2008 2,000.00 10 years $ nil
Fax / Copier 7/01/2008 652.30 5 years $ nil
Shop Counters 7/01/2008 6,600.00 10 years $ nil
Pro Shop Carpet 7/01/2008 1,230.00 5 years $ nil
Fireproof Safe 12/01/2008 681.82 20 years $ nil
$12,464.12
Storeroom Equipment
Bag Racks 7/01/2008 5,000.00 10 years $ nil
$5,000.00
Range Equipment
Tractor 2/01/2008 7,500.00 10 years $2,500.00
Ball Collector 2/01/2008 2,000.00 10 years $ nil
Hire Clubs 2/01/2008 5,250.00 5 years $50.00/set
$14,750.00
The February General Journal Transactions
You need to review the adjusting entries you have just recorded and identify which ones need to
be reversed. It is usual to reverse only accrual adjusting entries (e.g. accrued wages or accrued
electricity) as deferrals (e.g. prepaid insurance) are normally carried forward and further
adjustments are made in the future months as the economic benefits of the asset are consumed
or the obligations in the liability are performed. Reversing accruals can save the user from
having to dissect a future cash flow into expense / payable or revenue / receivable components.
You should now record the reversing entries you think need to be recorded in the General
Journal on the 1st February 2008.
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Chapter 10: End of Month Processes
FINANCIAL STATEMENTS AND REPORTS
See the Assignment Submission Requirements to determine which reports you need to produce
To produce, click on Reports on the menu bar and select Index to Reports from the drop down
menu). You will need to select the appropriate tab and then click Customise to select the report
parameters you wish to specify.
THE BANK STATEMENTS
The bank statements you require to complete the bank reconciliations are contained on the next
five pages.
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Chapter 10: End of Month Processes
The East Coast Bank Investment A/c December Bank Statement
East Coast Bank Ltd 465-852 123458
258 Crement Road
Dee Why, NSW 2099
Dee Why Driving Range Pty Ltd From: 01-Dec-07
123 Templeton Road
Dee Why NSW 2099 To: 31-Dec-07
Page No: 1
Date Transaction Description Debit Credit Balance
1-Dec Transfer 465-852 123456 100,000.00 100,000.00 CR
31-Dec Interest 382.19 100,382.19 CR
31-Dec Account Keeping Fee 5.00 100,377.19 CR
31-Dec Closing Balance 100,377.19 CR
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Chapter 10: End of Month Processes
The East Coast Bank Investment A/c January Bank Statement
East Coast Bank Ltd 465-852 123458
258 Crement Road
Dee Why, NSW 2099
Dee Why Driving Range Pty Ltd From: 01-Jan-08
123 Templeton Road
Dee Why NSW 2099 To: 31-Jan-08
Page No: 1
Date Transaction Description Debit Credit Balance
1-Jan Opening Balance 100,377.19 CR
11-Jan Transfer 465-852 123456 95,000.00 5,377.19 CR
31-Jan Interest 230.04 5,607.23 CR
31-Jan Account Keeping Fee 5.00 5,602.23 CR
31-Jan Closing Balance 5,602.23 CR
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Chapter 10: End of Month Processes
The East Coast Bank Payroll A/c January Bank Statement
East Coast Bank Ltd 465-852 123457
258 Crement Road
Dee Why, NSW 2099
Dee Why Driving Range Pty Ltd From: 01-Jan-07
123 Templeton Road
Dee Why NSW 2099 To: 31-Jan-08
Page No: 1
Date Transaction Description Debit Credit Balance
20-Jan Transfer 465-852 123456 2,977.00 2,977.00 CR
24-Jan 0003 75.00 2,902.00 CR
25-Jan 0001 591.00
615.00 2,2,706.00
2,287.00 CR
73.00
25-Jan 0002 786.00 1,501.00 CR
26-Jan 0004 786.00 715.00 CR
26-Jan 0005 615.00 100.00 CR
31-Jan Transfer 465-852 123456 3,372.00 100.00 -
3,472.00 CR
31-Jan 0008 285.00 3,187.00 CR
31-Jan 0009 786.00 2,401.00 CR
31-Jan Closing Balance 2,401.00 CR
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Chapter 10: End of Month Processes
The East Coast Bank Cheque A/c December Bank Statement
East Coast Bank Ltd 465-852 123456
258 Crement Road
Dee Why, NSW 2099
Dee Why Driving Range Pty Ltd From: 01-Dec-07
123 Templeton Road
Dee Why NSW 2099 To: 31-Dec-07
Page No: 1
Date Transaction Description Debit Credit Balance
1-Dec Transfer 465-852 584758 60,000.00 60,000.00 CR
1-Dec Transfer 465-852 585256 51,700.00 111,700.00 CR
1-Dec Transfer 465-852 123458 100,000.00 11,700.00 CR
3-Dec 0002 275.00 11,425.00 CR
4-Dec 0001 5,500.00 5,925.00 CR
5-Dec 0003 200.00 5,725.00 CR
14-Dec Transfer Payment 654-MBG 143.00 5,582.00 CR
24-Dec 0004 143.00
6,970.00 - 1,388.00 DR
31-Dec Account Keeping Fee 25.00 - 1,413.00 DR
31-Dec Interest 3.48 - 1,416.48 DR
31-Dec State Government Debits Tax 6.50 - 1,422.98 DR
31-Dec Closing Balance - 1,422.98 DR
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Chapter 10: End of Month Processes
The East Coast Bank Cheque A/c January Bank Statement
East Coast Bank Ltd 465-852 123456
258 Crement Road
Dee Why, NSW 2099
Dee Why Driving Range Pty Ltd From: 1-Jan-08
123 Templeton Road
Dee Why NSW 2099 To: 31-Jan-08
Page No: 1
Date Transaction Description Debit Credit Balance
1-Jan Opening Balance -1,422.98 DR
4-Jan 005 8,745.00 -10,167.98 DR
4-Jan 007 200.00 -10,367.98 DR
5-Jan 006 344.96 -10,712.94 DR
7-Jan Transfer Payment 900-GPA 137.50 -10,850.44 DR
8-Jan 008 58,500.00 -69,350.44 DR
10-Jan 009 57,390.00 -126,740.44 DR
11-Jan Transfer-465- 852 123458 95,000.00 -31,740.44 DR
12-Jan Deposit 253.00 -31,487.44 DR
14-Jan Transfer Payment 654 -MBG 143.00 -31,630.44 DR
16-Jan Loan Proceeds 90,000.00 58,369.56 CR
15-Jan 012 34,900.00 23,469.56 CR
16-Jan 010 6,920.00 16,549.56 CR
16-Jan 011 75.00 16,474.56 CR
16-Jan 013 8,085.00 8,389.56 CR
19-Jan 016 150.00 8,239.56 CR
17-Jan Deposit 186.50 8,426.06 CR
19-Jan Deposit 484.00 8,910.06 CR
21-Jan 015 2,500.00 6,410.06 CR
20-Jan Transfer -465-852 123457 2,977.00 3,433.06 CR
21-Jan Transfer Payment 900 –GPA 137.50 3,295.56 CR
21-Jan Loan Proceeds 55,000.00 58,295.56 CR
21-Jan Deposit 312.00 58,607.56 CR
24-Jan Deposit 3,945.30 62,552.86 CR
25-Jan Deposit 7,695.60 70,248.46 CR
25-Jan 018 295.00 69,953.46 CR
25-Jan 019 2,290.75 67,662.71 CR
27-Jan Deposit 4,603.50 72,266.21 CR
29-Jan Deposit 784.08 73,050.29 CR
29-Jan Transfer -465-852 123457 3,372.00 69,678.29 CR
31-Jan Account keeping fee 25.00 69,653.29 CR
31-Jan Interest 20.75 69,632.54 CR
31-Jan State Government Debits Tax 95.10 69,537.44 CR
31-Jan Closing Balance 69,537.44 CR
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Chapter 10: End of Month Processes
CONCLUSION
Well that brings us to the end of the book. As stated in the preface, the goal of this book was
not to make you a sophisticated user of MYOB AP. We have covered many accounting issues
as we have worked our way through this case study and along the way I hope you have come to
acquire an introductory understanding of the MYOB Accounting Plus program and an
appreciation of the power of integrated accounting information systems to produce the
information that managers and owners of small to medium sized businesses need to make sound
business decisions. I hope you found this a useful and interesting learning experience.
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