A Step by Step Approach to Preparing Financial Reports and Processing Journal Entries [manual and using MYOB Accounting Plus v18] Copyright Notice: Copyright 2008 Marian Brown. All rights reserved. No part of this material may be reproduced or copied in any form or by any means (graphic, electronic or mechanical, including photocopying or by information retrieval systems) without permission in writing from Marian Brown. Written by: Marian Brown Dip T [Commerce], MICB Cert IV Workplace Training and Assessment, Cert IV in Financial Services [Bookkeeping] MYOB Certified Consultant for 13 years MYOB Accredited Author, MYOB Publisher, MYOB Accredited Trainer MBS Training Services Pty Ltd sales@mbsts.com.au www.mbsts.com.au Publishers: Software Publications Pty Ltd [ABN 75078026150] Head Office Sydney Unit 10, 171 Gibbes Street Chatswood NSW 2067 Phone: 1 800 146 542 Web address: www.softwarepublications.com.au ISBN 1-74123-878-1 Printed September 2008 This book is dedicated to my Year 10 commercial teacher, Delmai Winnett who taught me my bookkeeping basics and encouraged me to further my accounting studies. Copyright Marian Brown 2008 A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB] Table of Contents
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Unit 8: Handling Bad Debts and Balance Day Adjustments in the next accounting period In this Unit you will learn how to: Handle Bad Debts in the 2010 financial year Handle Balance Day Adjustments in 2010 financial year This unit covers the following performance criteria in BSBADM408A: 2.2 Expense and revenue accounts are adjusted for prepayments and accruals in accordance with organisational policy and procedures and accounting requirements. 2.3 Bad and doubtful debts are recorded in accordance with organisation policy and procedures and accounting requirements. Copyright Marian Brown 2008 A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB] 2010 Entries Unit 8 117
Notes on July 2009 procedures [Balance Day Adjustments] On June 30 you entered balance day adjustments to account for prepaid and accrued income and expenses. On 1 July, you need to reverse these entries as follows. Prepaid Expenses Advertising costs [$495.00 inc GST ie $450.00 ex GST] were paid for 12 months August to July. The business needs to account for 1/12 th of the amount [$37.50] which is paid for the next financial year to report the correct amount for the 2009 financial year. You made the following entry in Unit 4. June 30 Prepaid Expenses 37.50 Advertising 37.50 {Account for advertising paid for July] The Advertising account now looks like this. [Unit 6] 610 ADVERTISING 31/7/08 Cash Payments CPJ 450.00 450.00 Dr 30/6/09 Prepaid Expenses GJ 37.50 412.50 Dr Drawings GJ 636.36 1,048.86 Dr Profit and Loss A/c GJ 1,048.86 0.00 However $37.50 advertising should be accounted for in July and the Prepaid Expenses account should be 0. You therefore need to reverse the above entry see next page. 118 Unit 8 2010 entries A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB] Copyright Marian Brown 2008
You need to enter this reversed entry July 1 Advertising 610 37.50 Prepaid Expenses 145 37.50 (Reverse adjustment on 30 June) This journal should be posted to the Advertising account to look like this for the 2010 financial year. 610 ADVERTISING 30/6/09 Profit and Loss A/c GJ 1,048.86 0.00 1/7/09 Prepaid Expenses GJ 37.50 37.50 Dr This journal should be posted to Prepaid Expenses to look like this for the 2010 financial year. 145 PREPAID EXPENSES 30/6/09 Advertising GJ 37.50 37.50 Dr 1/7/09 Advertising GJ 37.50 0.00 Now the ledger reports the correct information. Copyright Marian Brown 2008 A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB] 2010 Entries Unit 8 119
Reversing Balance Day Adjustments You are required to: (i) (ii) Record the reversed journal entry under the original entry. Post the entry to the General Ledger accounts to report the correct information for the 2010 financial year. Prepaid Income $1,000 [ex GST] has been paid and recorded in Sales for work not yet done. The business wishes to report the exact sales amount. June 30 Sales 1,000.00 Prepaid Income 1,000.00 (Account for income not yet earned) July 1 265 PREPAID INCOME 30/6/09 Sales GJ 1,000.00 1,000.00 Cr 410 SALES [tyres, accessories] 31/7/08 Accounts Receivable SJ 15,200.00 15,200.00 Cr Cash Receipts CRJ 1,900.00 17,100.00 Cr 1/6/09 Cash Sales CRJ 20,000.00 37,100.00 Cr 30/6/09 Prepaid Income GJ 1,000.00 36,100.00 Cr Trading A/c GJ 36,100.00 0.00 120 Unit 8 2010 entries A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB] Copyright Marian Brown 2008
Accrued Expenses The Lease of Premises is paid on the 1 st of the following month, therefore the lease payment of $1,100.00 inc GST [however only the $1,000 is accounted for here] needs to be accounted for in June. June 30 Lease of Premises 1,000.00 Accrued Expenses 1,000.00 (Account for Lease Payment in July] July 1 260 ACCRUED EXPENSES 30/6/09 Lease of Premises GJ 1,000.00 1,000.00 Cr 640 LEASE OF PREMISES 31/7/08 Cash Payments CPJ 1,000.00 1,000.00 Dr 30/6/09 Accrued Expenses GJ 1,000.00 2,000.00 Dr Profit and Loss A/c GJ 2,000.00 0.00 1/7/09 1/7/09 Cash Payments [lease] CPJ 1,000.00? Note: When the Lease payment is made in July [accounting for GST] this $1,000 will cancel the $1,000 from the reversed entry so that the amount is not accounted for a second time in the 2010 records. Copyright Marian Brown 2008 A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB] 2010 Entries Unit 8 121
Accrued Income An Insurance Refund of $400 [no GST involved] is owing and not yet received, however the payment has been made to repair the motor vehicle. June 30 Accrued Income 400.00 Insurance Refund 400.00 (Account for Insurance Refund not yet received) July 1 148 ACCRUED INCOME 30/6/09 Insurance Refund GJ 400.00 400.00 Dr 440 INSURANCE REFUNDS 31/7/08 Cash Receipts CRJ 210.00 210.00 Cr 30/6/09 Accrued Income GJ 400.00 610.00 Cr Profit and Loss A/c GJ 610.00 0.00 1/7/09 29/7/09 Cash Receipts [refund owing] CRJ 400.00? Note: When the insurance refund is received in July this $400 will cancel the $400 from the reversed entry so that the amount is not accounted for in 2010 records. 122 Unit 8 2010 entries A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB] Copyright Marian Brown 2008
Reversing Entries in MYOB Accounting (i) (ii) Open the MYOB data file used in the previous units: BrocksPFR18.MYO. To reverse entries in MYOB you must change the security preferences. (a) (b) Select Setup in the Menu Bar. Select Preferences. (c) Select the Security TAB and select the first option to lock the file. (d) Click on OK to return to the Command Centre. (iii) (iv) Display the Transaction Journal [ General TAB] for 30 June 2009 to 30 June 2009. Locate the balance day adjustment entry for Advertising. (v) (vi) Click on the to call up the entry. To reverse, select Edit in the Menu Bar and select Reverse General Journal Transaction. Copyright Marian Brown 2008 A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB] 2010 Entries Unit 8 123
(vii) Date the entry: 1/7/09. Your entry will look like this. (viii) Click on Record to record the reversal. You now know that this transaction is automatically posted to the General Ledger. (ix) You are now required to call up the 3 remaining balance day adjustments and reverse and record the entries in the same manner on 1 July 2009. (x) On completion, unlock your data file so that you can correct errors in the future. Follow the steps in (ii) on the previous page, deselecting the option. Exit MYOB. 124 Unit 8 2010 entries A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB] Copyright Marian Brown 2008