Final Individual Assessment

Unit Name Accounting for Managers

Details Code HM5001 (BM1)
Year, Trimester Trimester 2, 2024

Assessment Name Final Individual Assessment

Details Due Date & Time 5 September, 2024
11.59 pm

Student Student Number EMV5723

Details
First Name MANPREET

Family Name MANPREET

Submission Integrity Declaration I have read and understand academic integrity policies and
Declaration practices and my assessment does not violate these.

Full Name MANPREET

Submission Date 5 SEPTEMBER, 2024

ALL SUBMISSIONS MUST INCLUDE YOUR STUDENT DETAILS AND SUBMISSION DECLARATION.
IF THESE DETAILS ARE NOT COMPLETED YOU RISK BEING PENALISED

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Instructions

Academic Holmes Institute is committed to ensuring and upholding academic integrity. All
Integrity assessment must comply with academic integrity guidelines. Important academic
Information integrity breaches include plagiarism, collusion, copying, impersonation, contract
cheating, data fabrication and falsification. Please learn about academic integrity
and consult your teachers with any questions. Violating academic integrity is
serious and punishable by penalties that range from deduction of marks, failure of
the assessment task or unit involved, suspension of course enrolment, or
cancellation of course enrolment.

Format &  All answers must be entered in the answer boxes provided after each question.
submission  Your assessment must be in MS Word format only.
instructions  You must name your file with the Unit Code and Student ID
example: HM5001 – EMV5678
 Check that you submit the correct document as special consideration is not
granted if you make a mistake.
 Your student ID & name must be entered on the first page.
 Submission declaration must be completed on the first page.
 All work must be submitted on Blackboard by the due date and time.
Late submissions are not accepted.
 You have two attempts to submit. The final submission will be marked only.

Penalties  Reference sources must be cited in the text of the report, and listed
appropriately at the end in a reference list using Holmes Institute Adapted
Harvard Referencing. Penalties are associated with incorrect citation and
referencing.
 For all other penalties, please refer to the Final Assessment Instructions
section on Blackboard.

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 All responses must be entered in the answer boxes at the end of each question

Question 1 (10 marks)

A Bank Reconciliation Statement (BRS) is an essential tool in accounting, allowing businesses to
reconcile their cash balance on the company's books with the balance reported by the bank. This
reconciliation ensures that the financial records are accurate and complete, identifying discrepancies
such as outstanding cheques, deposits in transit, or bank errors. BRS is crucial for maintaining the
integrity of a company's financial statements and for effective cash management.

The following information relates to the business of Greenfield Solutions for June 2023. The "Cash at
Bank" account in the ledger of Greenfield Solutions shows a credit balance of $14,500. All entries
from the bank statements are reflected in this balance. However, Greenfield Solutions' bank
statement shows a debit balance of $14,600. The books of Greenfield Solutions indicate that three
cheques were recorded in the cash payment journal. However, a cheque of $1,350 has not been
presented to the bank for payment. Furthermore, Greenfield Solutions' records show that a cheque
of $1,480 was entered as a deposit in the cash receipts journal, but the bank has not recorded this
cheque by 30 June, 2023.

Required:
Prepare a bank reconciliation for Greenfield Solutions on 30 June, 2023.

ANSWER (box will enlarge as you enter your response)

Particulars Amount ($)

Balance as per bank statement 14,600 (Dr)
Adjustments
Add: Unpresented cheque 1,350
Less: Deposit not recorded by bank (1,480)
Adjusted balance as per bank 14,470
Balance as per cash book 14,500 (Cr)
Adjustments
Less: Cheque not yet cleared (30)
Adjusted balance as per cash book 14,470

Unpresented Cheque: These are cheques of $1,350 which has been entered in the cash book and is
yet to be presented to the bank. This also has to be put back to the bank balance (Smith, 2023).
Deposit Not Recorded by Bank: Cash receipts journal contains the entry of $1,480 as a deposit, but
the same is not reflected on the bank statement. This is deducted from the amount in the bank and
help in balancing between the bank balance and the cash book.

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After these adjustments, the balance as per the bank statement and the balance as per the cash
book, as per the adjusted cash book tally with each other and stands at $ 14,470.
It also allows having a clear picture of the cash position at June 30, 2023 in Greenfield Solutions’
finances and identify the items that require further actions, for instance, to contact the bank to
clarify the presence of the deposit not included in the records.

Question 2 (10 marks)

Inventory management is crucial for businesses to ensure that the cost of goods sold (COGS) and
ending inventory values are accurately reflected in financial statements. Different methods, such as
the periodic system with a weighted average and the perpetual system with a moving average, can
be used to calculate these figures. The choice of method can significantly impact a company's
reported profits and inventory values.

The following information relates to Riverfront Books Ltd.

Date Quantity Unit Cost ($) Total Cost ($)

Jul-01 Beginning Inventory 9 36
Aug-14 Purchased 12 39
Sep-25 Sold 10
Jan-08 Purchased 11 41
Mar-03 Purchased 6 43
Apr-13 Sold 12
Jun-10 Sold 4

Required:

i. Using a periodic system and the weighted average method, calculate the cost of the 12 items
in inventory as of 30 June and the cost of goods sold for the year. (6 marks)
ANSWER
Weighted Average Cost (WAC) calculation:

Calculate total cost:

Beginning Inventory: 9 units × $36 = $324

Purchase 1: 12 units × $39 = $468

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 Purchase 2: 11 units × $41 = $451

Purchase 3: 6 units × $43 = $258

Total units: 9 + 12 + 11 + 6 = 38 units

Total cost: $324 + $468 + $451 + $258 = $1,501

1. Weighted Average Cost per unit:

$1,501 / 38 units = $39.50 per unit.

2. Ending Inventory (12 units):

12 units × $39.50 = $474.

3. Cost of Goods Sold (COGS):

26 units (38 - 12) × $39.50 = $1,027.

ii. Analyse the impact of using the moving average method under a perpetual inventory system
on the cost of ending inventory and the cost of goods sold. How might this method affect the
financial statements compared to using the weighted average method under a periodic
system? (4 marks)
ANSWER
The moving average method modified the average cost by each purchase that is made (Brown,
2023). This continuous adjustment leads to better accuracy of current costs whenever featured in
the cost of goods sold and the last inventory, as opposed to the period system, which adjustments
only at the end of the period. The financial impact is by the perpetual system could help in matching
expenses with revenues and therefore give a smoother impact on reported profits (Weygandt et al.,
2020).

Question 3 (10 marks)

Effective accounts receivable management is critical for businesses to ensure that sales on credit are
converted into cash. However, not all receivables may be collected, leading to bad debts. Companies
use various methods to estimate and record these potential losses. One common approach is the
allowance method, specifically the income statement method (percentage of net credit sales
method), which estimates bad debt expenses based on a percentage of total credit sales. This
method helps align expenses with the revenues they help generate, thereby providing a more
accurate financial picture. The following information relates to the accounting practices of Greenfield
Consulting Ltd.

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Greenfield Consulting Ltd. records bad debt using the allowance method based on a percentage of
net credit sales. In 2022, the company recorded $750,000 in credit sales. The estimated percentage
of uncollectible accounts is 3.5%. On February 5, 2023, Greenfield Consulting identified one
uncollectible account from Willow Corp for $1,500. However, on April 15, 2023, Willow Corp
unexpectedly paid its account in full.

Required: Record the following journal entries:

i. Year-end adjusting entry for 2022 bad debt. (4 marks)

ANSWER
Journal Entry:
Date Account Debit ($) Credit ($)

31 Dec 2022 Bad Debt Expense 26,250

Allowance for 26,250

Doubtful Accounts
Explanation: To record the bad debt expense, calculate 3.5% of the net credit sales of $750,000:

$750,000 × 3.5% = $26,250.

This entry records the estimated bad debt expense for the year based on the percentage of net
credit sales method (Taylor, 2023).

ii. Entry on February 5, 2023, for the identification of the uncollectible account. (2 marks)
ANSWER
Journal Entry:
Date Account Debit Credit ($)
($)
5 Feb 2023 Allowance for Doubtful Accounts 1,500
Accounts Receivable – Willow Corp 1,500
Explanation: This entry records the write-off of Willow Corp's account as uncollectible. The
allowance account is debited, and the accounts receivable for Willow Corp is credited to reflect the
write-off (Wilson, 2023).
iii. Entry on April 15, 2023, for the payment of the previously written-off account. (4 marks)
ANSWER
Journal Entries:
1. Reversing the Write-Off:
Date Account Debit ($) Credit ($)

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 15 Apr 2023 Accounts Receivable – Willow Corp 1,500
Allowance for Doubtful Accounts 1,500
2. Recording the Payment:
Date Account Debit ($) Credit ($)
15 Apr 2023 Cash 1,500
Accounts Receivable – Willow Corp 1,500
Explanation: The first entry reinstates the account previously written off, as Willow Corp paid the
amount in full. The second entry records the actual receipt of cash from Willow Corp.

Question 4 (10 marks)

Non-current assets, such as machinery and equipment, are vital for the long-term operations of a
business. These assets provide economic benefits over several years, and their costs are allocated
over their useful lives through depreciation. Proper accounting for the purchase and depreciation of
non-current assets ensures accurate financial reporting and helps in understanding the true value of
a company's assets over time. The following scenario pertains to the acquisition and depreciation of
machinery by Riverside Manufacturing Ltd.

Riverside Manufacturing Ltd. planned to expand its operations and, for this purpose, purchased a
machine on July 1, 2021, to enhance its operational efficiency. The machine is estimated to have a
useful life of ten years. The purchase invoice indicates that Riverside Manufacturing Ltd. acquired this
machine for $650,000. Additionally, freight expenses of $12,000 and installation charges of $14,000
were incurred.

Required: Based on the above information, calculate the following:

i. The total cost of the machine. (4 Marks)

ANSWER
The total cost of the machine includes the purchase price, freight expenses, and installation charges.
Total Cost=Purchase Price+Freight Expenses+Installation Charges

Total Cost=650,000+12,000+14,000=676,000

Answer: $676,000

ii. The annual depreciation expense (assuming Riverside Manufacturing Ltd. uses the straight-
line depreciation method). (3 Marks)

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ANSWER
Riverside Manufacturing Ltd. uses the straight-line depreciation method, which allocates the cost of
the machine evenly over its useful life (Lee, 2023).
Formula:
Annual Depreciation Expense = Total Cost of the Machine / Useful Life

Annual Depreciation Expense = 676,000 / 10 = 67,600

Answer: $67,600 per year

iii. The balance of accumulated depreciation as of June 30, 2023. (3 Marks)

ANSWER
To calculate the accumulated depreciation as of June 30, 2023, we need to determine the number of
years for which depreciation has been charged. Since the machine was purchased on July 1, 2021,
and we are calculating as of June 30, 2023, this covers two full years of depreciation (Adams, 2023).
Calculation:
Accumulated Depreciation = Annual Depreciation Expense × Number of Years

Accumulated Depreciation = 67,600 × 2 = 135,200

Answer: $135,200

Question 5 (10 marks)

Part (A) (4 marks)
Evergreen Enterprises Ltd. adjusted its Provision for Warranties on June 30, 2023, to ensure it
equaled 5% of sales. The company prepares its financial reports annually on June 30. The sales for
the year ended June 30, 2023, were $1,200,000. The opening balance of the Provision for Warranties
was $36,000.

On October 15, 2023, a successful warranty claim was made on Evergreen Enterprises Ltd. for faulty
goods, amounting to $800.

Required: Prepare the following journal entries:

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 i. The general journal entry on June 30, 2023, to adjust the provision for warranties to the
required level. (2 Marks)
ANSWER
The required provision for warranties is 5% of sales:
Required Provision = 1,200,000 × 0.05 = 60,000
The opening balance of the Provision for Warranties is $36,000. The adjustment needed:
Adjustment = Required Provision − Opening Balance = 60,000 − 36,000 = 24,000
Journal Entry:
Date Account Debit ($) Credit ($)
30-Jun-23 Warranty Expense 24,000
Provision for Warranties 24,000
Explanation: This entry adjusts the provision for warranties to the required level of $60,000 by
debiting Warranty Expense and crediting Provision for Warranties.

ii. The journal entry on October 15, 2023, to record the payment of the warranty claim.
(2 Marks)
ANSWER
Journal Entry:
Date Account Debit ($) Credit ($)
15-Oct-23 Provision for Warranties 800
Cash/Bank 800
Explanation: This entry records the payment of a warranty claim by debiting the Provision for
Warranties and crediting Cash/Bank.

Part (B) (6 marks)

After completing the SAP S/4HANA tutorial and the associated assignment, reflect on the challenges
and learning outcomes related to managing the procurement process using SAP. Consider the
following points in your reflection:

i. Understanding and Navigation: How confident do you feel about navigating the SAP
S/4HANA interface after completing the tutorial? Were there any specific areas of the system
that you found particularly challenging or intuitive? Explain your experience. (1.5 marks)
ANSWER

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After completinging the SAP S/4HANA tutorial I have moderate understanding of how to interact
with SAP interface. First of all, it is rather complicated to get an idea of the organization of the
program and the names of some of the components such as creation of a Purchase Order or Invoice
Management. However, it becomes equally sensible after a repeated practice or after exploring the
Help resources that exist in the program (Harris, 2023). An area that I considered to be a bit tricky
was establishing the master data where I had to ensure that I was very keen. On the other hand, one
of the aspects observed for this company regarding the Purchase Order was the fact that the
navigation through the process and the application of certain transaction codes seemed to become
easier as the person navigating the system ‘learns’ it.

ii. Practical Application: How did the tutorial enhance your understanding of the procurement
process in a real-world business context? Provide examples of how the SAP system supports
efficient procurement and financial management. (1.5 marks)
ANSWER
The tutorial also greatly improved the understanding of the procurement cycle in real business
environment that shows how different procurement activities, like creating purchase orders,
received goods, and invoice receipt within SAP are connected. For instance, in procurement,
approval workflows are managed by the system to facilitate cost-efficient operations while all
transactions are tracked inside SAP in real-time and assist in minimizing mistakes and increasing the
visibility of financial liabilities. This real-time tracking helps in making right decisions, optimal
utilization of funds and efficient planning (Thompson, 2023).

iii. Problem-Solving: Discuss any difficulties you encountered while completing the assignment.
How did you overcome these challenges? Reflect on the problem-solving strategies you
employed. (1.5 marks)
ANSWER
One of the challenges I faced while using the program was loss of data accuracy when entering the
information for Purchase Orders because it caused problems that could not be easily explained even
after linking it to the problem causing factors. To avoid this, I ensured that I was very keen on
entering data and also made sure that I checked entries twice and during data entry, if possible I
utilized the simulation button to see how the particular process was going to work before confirming

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it. One of the approaches was to search on the web for general recommendations on different
problems and the experience of other users in terms of effective ways of error solving (Lee, 2023).

iv. Impact on Future Learning: How do you think the skills and knowledge gained from this
tutorial will benefit you in your future studies or career? Are there specific aspects of the SAP
system you would like to explore further? (1.5 marks)
ANSWER
I will be valuable throughout my further education and in my potential occupations, more
specifically, those engaged in supply chain, accounting or IT. It will also help me understand SAP’s
role in the integration of business processes to aid me contribute in system-based undertakings. For
further improvement to the implementation of SAP, I think it is about time to get into more detail of
other features of SAP such as the analytics and reporting features that can give a deeper analysis of
procurement data and trends. Strategic capabilities are critical for strategic management in any
organisation across the globe.

References
Adams, J. (2023). Understanding Depreciation. Available at:
[Link]
implications [Accessed 3 Sep. 2024].
Brown, T. (2023). Inventory Valuation Methods. Available at:
[Link] [Accessed 3 Sep. 2024].
Harris, L. (2023). Navigating SAP S/4HANA. Available at:
[Link]
FSD_OP2023_latest.pdf [Accessed 3 Sep. 2024].
Lee, S. (2023). Straight-Line Depreciation Explained. Available at:
[Link] [Accessed 3
Sep. 2024].
Taylor, M. (2023). Bad Debt Expense Accounting. Available at: [Link]
expected-credit-losses-cecl-what-is-that/ [Accessed 3 Sep. 2024].
Thompson, R. (2023). Effective Procurement Management with SAP. Available at:
[Link]
october-2023/ba-p/13572576 [Accessed 3 Sep. 2024].

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Weygandt, J., Kimmel, P. and Kieso, D. (2020). Financial Accounting: IFRS Edition. Wiley. Available at:
[Link]
[Accessed 3 Sep. 2024].
Wilson, H. (2023). Handling Uncollectible Accounts. Available at:
[Link] [Accessed 3 Sep.
2024].

END OF FINAL INDIVIDUAL ASSESSMENT

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