AYB 339 Accountancy Capstone

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AYB 339 Accountancy Capstone

Integrated Case Study

Semester 1, 2024

ASSESSMENT ITEM 2: INTEGRATED CASE STUDY

(Weighting Total: 40%)

This assessment item assesses the following learning outcomes:

Knowledge and Technological Skills (KS)

1.1 Demonstrate and apply integrated discipline (including technical) knowledge across the broad field of business with depth in one or more core business disciplines

Higher Order Thinking (HO)

2.2   Exercise independent judgment and initiative in adapting and applying knowledge and skills for effective planning, problem solving and decision making in diverse contexts.

ASSESSMENT OVERVIEW

Part	Description	Marks	Pages
1	Enter year-end Adjusting Journals into MYOB and Print out a revised Profit and Loss Statement and Balance Sheet from MYOB in pdf format	5 marks	4-7
2	Prepare a Lease Schedule for the right-of-use (ROU) asset (being the leased premises) for Caesar’s Italian Restaurant Pty Ltd in Microsoft EXCEL	2 marks	7
3	Prepare the 2023 Annual Report for Caesar’s Italian Restaurant Pty Ltd in Microsoft Word	18 marks	8-11
4	Prepare the 2023 Company Income Tax Return of Caesar’s Italian Restaurant Pty Ltd	2 marks	12
5	Prepare the 2023 Tax Reconciliation for Caesar’s Italian Restaurant Pty Ltd	3 marks	13
6	Self-Reflection (2 tasks)	10 marks	14-15
7	Professional Approach		16
8	Academic Conduct		17
9	Submission Instructions		18

Notes:

§ Parts 7 and 8 outline various penalty marks which could be imposed, and Part 9 is a detailed summary of the submission requirements.

§ It is each student's responsibility to research the issues contained in the case study. QUT staff members will not be answering any questions or issues relating to this case study.

§ However, if clarification of a particular point is required, please send the e-mail directly to the unit coordinator, Stephen Marsden, and not to your facilitator.

Assignment Submission Guidelines

In both your QUT study and your professional life you will be expected to meet deadlines. In keeping with this expectation, assignments submitted after the due date and time of 23:59 pm on Friday 31 May 2024 will not be marked and a mark of zero will be awarded.

Students should note that this policy will be strictly applied. Please note that QUT's IT HelpDesk closes at 6:00 pm, so no assistance will be available to students should you encounter submission issues after this time.

Students are able to resubmit their assignment on multiple occasions right up until the deadline of 23:59 pm on Friday 31 May 2024. There is no limit to the number of submissions that you are allowed to make, as the latest version you submit will automatically override the previous version. However, please note that the last version submitted before 23:59 pm will be the one that we will mark.

This means that if you have uploaded the wrong version of the pdf file (or if you make changes to the version that you have uploaded), you are allowed to resubmit your assignment. The marker will mark the latest (and most current version) of the file that has been uploaded.

Please note that the submission link will automatically disappear on the Canvas site at midnight on the evening of Friday 31 May 2024.

All students are eligible to apply for the automatic 48-hour extension, meaning that the case study will be due by 23:59 pm on Sunday 2 June 2024.

No further submissions or resubmissions will be permitted after 23:59 pm. As such, it is the sole responsibility of each student to ensure that the complete (and final version) of the assignment is submitted by the due date and time.

Once the case study has been submitted, students are not able to attach or submit any additional documentation whatsoever. It is the responsibility of each student to ensure that the complete assignment is submitted by the due date and time.

Furthermore, please be advised that no submissions will be accepted by the facilitator or the unit co-ordinator via e-mail after the 23:59 pm deadline.

For all of these reasons, it is strongly recommended that students start working on the integrated case study as soon as possible. Due to the size of the assignment, please do not leave this assignment (or its submission) to the last minute.

Return of Integrated Case Studies to Students

Please note that this integrated case study should be viewed by students as a replacement for the final exam. Like a final exam, this case study will not be returned to students and no comments or feedback will be provided.

Instead, students wishing to review marks awarded for their case study will need to make an online appointment with the unit co-ordinator within two weeks of the results for the unit being released (similar to the other units in the degree).

ASSESSMENT REQUIREMENTS FOR EACH PART

PART 1: Enter Year-End Adjusting Journal Entries into MYOB & Print out a revised Profit and Loss Statement and Balance Sheet from MYOB – in pdf format - (5 Marks)

a. Students are required to prepare and enter adjusting general journal entries directly into the MYOB data file to take into account all of the relevant and necessary adjustments (please include cents in all of your journal entries).

The MYOB data file is available on the AYB 339 Canvas site for students to download. The MYOB data file was created using MYOB AccountRight (Educational Version 19.5).

However, students can use any version of MYOB to open the data file and make adjustments (provided it is Version 19 or higher).

It will not be possible to open this MYOB data file if you use the MYOB trial versions available on the MYOB website or any version of MYOB lower than this version. However, any higher version than 19.5 should be able to open this data file (provided you upgrade it).

Please note that the data file has been created in MYOB 19.5 for Windows. For those students who have an Apple Mac computer or laptop, I have provided a link to the MYOB Help Site which may allow students to install the software on an Apple Mac. Please note that I am not a Mac user, so if there are any problems, unfortunately, I am not able to assist you.

These entries must be entered, produced and printed out using MYOB.

Make sure you use MYOB. Students cannot use other packages like Handisoft, Xero, Solution 6, MYOB Accountants Office etc.

When you open up the MYOB data file, please use the "Administrator" User ID. You can leave the “Password" field blank, as shown below.

b. Adding Account Names to the Chart of Accounts

Please note that students are expected to add additional accounts in the MYOB data file provided on the AYB 339 Canvas site, as several of your adjusting general journal entries will be made to these new accounts (eg. depreciation expense).

c. Dating your Adjusting General Journal Entries 30 June 2023

Please date all of your adjusting general journal entries 30 June 2023.

Please also include a brief narration of the adjustment in the memo field in MYOB.

d. Printing Adjusting General Journal Entries at 30 June 2023 in pdf format

Make sure that you only print out your adjusting journal entries and not all of the other journal entries already residing in the MYOB data file that has been provided to you.

Simply select the General Journal function and the date range: 30 June 2023 to 30 June 2023.

e. Accounting Depreciation Journal Entries

For accounting purposes, each depreciable asset listed on page 20 of this case study should be depreciated over their useful lives based on the following straight-line rates (rate shown in the final column).

There are 11 individual assets listed above (as per the bullet points).

Instead of putting through eleven (11) separate depreciation/amortisation journal entries, students are asked to only record five (5) journal entries in MYOB for each of the following classes of assets, namely:

§ leasehold improvements (1 asset);

§ property, plant and equipment (total of 7 assets);

§ computer software (1 asset)

§ liquor licence (1 asset); and

§ leased business premises, being the right-of-use asset (1 asset).

This means that you should only enter five (5) depreciation/amortisation journal entries into MYOB.

As AASB 16 Leases will be applying to Caesar’s Italian Restaurant Pty Ltd, students are referred to Item 12 of this case study document for more information about the "right-of-use asset" (being the leased premises).

For taxation purposes, being a small business entity (SBE), Caesar’s Italian Restaurant Pty Ltd will depreciate those eligible depreciating assets under Division 328 using the simplified depreciation regime (refer to the rules on pages 29 and 30).

e. Print out a Revised Profit and Loss Statement and Balance Sheet from MYOB as at 30 June 2023

Finally, students are required to print out a revised Profit and Loss Statement and Balance Sheet from MYOB for Caesar’s Italian Restaurant Pty Ltd for the year ended 30 June 2023 taking into account their adjusting general journal entries and include it in their submission.

In MYOB, your print range for the Profit and Loss Statement should be 1 August 2022 to 30 June 2023.

For the Balance Sheet, please print this report out as at 30 June 2023.

Please include cents when printing out both reports.

[Total for Part 1 = 5 marks]

PART 2: Prepare a Lease Schedule for the Right-of-Use (ROU) Asset (being the leased premises) for Caesar’s Italian Restaurant Pty Ltd in Microsoft EXCEL –  (2 marks)

a. Prepare a Lease Schedule for the ROU Leased Premises

Prepare and print a lease schedule (using Microsoft EXCEL) for Caesar’s Italian Restaurant Pty Ltd in respect of the right-of-use leased premises at 15 Robinson Road at Hendra over the life of the three-year lease. In doing so, please calculate interest on a monthly basis.

Please include cents when completing your lease schedule in EXCEL.

[Total for Part 2 = 2 marks]

§ Students must use Microsoft Word to prepare the annual report. Students are not permitted to use any other electronic account preparation software packages (eg. Handisoft, Xero, Solution 6, MYOB Accountants Office etc). However, you can draft the financial statements in EXCEL and export (convert) them into Microsoft Word.

§ When preparing the external financial statements, please round all figures from your MYOB management accounts to the nearest whole dollar. In other words, please do not include cents when preparing the external financial statements.

a. Students are required to prepare the Annual Report for Caesar’s Italian Restaurant Pty Ltd for the year ended 30 June 2023. The annual report should include the following documents (in the following order):

- the external financial statements excluding the Statement of Cash Flows, but including all of the notes to the accounts;

- the Directors' Declaration; and

- the Accountant's Compilation Report.

There is no need to prepare a Directors' Report or an Auditor’s Independence Declaration, as the financial report was not audited.

For the Accountant's Compilation Report, please use the name of the firm that you created and used throughout the semester for your PBLs.

Please do not include your MYOB profit and loss statement and balance sheet as your external financial statements. The MYOB profit and loss statement and balance sheet are management accounts, and are not a set of external financial statements.

b. Which Accounting Standards Apply?

For the purposes of this assignment, please assume that Caesar’s Italian Restaurant Pty Ltd wishes to prepare general purpose financial statements.

Please ensure that the 2023 financial statements (and notes to the accounts) are prepared in accordance with the recognition, measurement and disclosure requirements of all of the AASB Accounting Standards.

However, please do not apply the following four (4) AASB Accounting Standards:

- AASB 8 Operating Segments;

- AASB 107 Statement of Cash Flows;

- AASB 124 Related Party Disclosures; and

- AASB 133 Earnings Per Share.

All other AASB Accounting Standards (including their recognition, measurement and disclosure requirements) must be complied with. This includes the suite of financial instruments standards (including AASB 7, AASB 9 and AASB 139, where applicable as well as AASB 16).

Finally, even though Caesar’s Italian Restaurant Pty Ltd is eligible to apply the simplified disclosure regime, it does not wish to apply the simplified disclosures (SDS) contained in AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities.

Furthermore, even though we are applying the tax-effect accounting principles contained in AASB 112 Income Taxes, students do not need to calculate deferred tax expense (comprising deferred tax assets and deferred tax liabilities).

In other words, instead of calculating both current tax expense and deferred tax expense (as required under AASB 112), students are only asked to calculate and disclose current tax expense (ie. the amount due and payable to the ATO for the current year).

c. Statement of Profit or Loss and Other Comprehensive Income

When preparing the external financial statements for Caesar’s Italian Restaurant Pty Ltd, please ensure that you prepare and include a one-statement Statement of Profit or Loss and Comprehensive Income in accordance with AASB 101 Presentation of Financial Statements.

When drafting the first part of the Statement of Profit or Loss and Other Comprehensive Income, Marco and Gino have requested that you classify expenses by function instead of by nature.

Please show only those expenses on the face of the Statement of Profit or Loss and Other Comprehensive Income that are specifically required to be disclosed on the face under AASB 101. Students are advised to refer to the relevant paragraphs contained in AASB 101 for more information about disclosure of expenses by function.

Furthermore, please group relevant individual expenses in the MYOB profit and loss statement on the face of the income statement under the following headings: "administrative expenses", "depreciation and amortisation", employee benefits", "finance costs and "other expenses".

As is the case with classifying expenses by function, please use your discretion as to what individual expenses should be included in each of the above five expense headings.

d. Statement of Changes in Equity

For the Statement of Changes in Equity, please use the minimum disclosure requirements required under AASB 101 Presentation of Financial Statements.

e. Balance Sheet

For the Balance Sheet, please use the minimum disclosure requirements required under AASB 101 Presentation of Financial Statements.

f. “Real” and “Model” Financial Statements

Students are advised (and encouraged) to download the 2023 financial report of an Australian listed public company (preferably a retailer) and review the content, structure and format of the financial report.

Furthermore, some accounting firms have published model financial statements for companies on their websites that students should consider referring to. For example, a generic Google search on the term "model financial accounts Australia" will list several hyperlinks to a range of accounting firms websites where these model financial statements can be downloaded in pdf format.

A copy of the 2023 annual report (containing the 2023 financial statements) of The Reject Shop Ltd has been placed on the AYB 339 Canvas site to assist students.

Please make sure that you find general purpose model financial statements, and not special purpose model financial statements. Several accounting firms provide model financial statements for proprietary companies. However, in most cases, special purpose financial statements are presented and not general purpose financial statements.

A reminder that in the case of Caesar’s Italian Restaurant Pty Ltd, we are asking that general purpose financial statements be prepared.

Furthermore, when preparing the external financial statements for Caesar’s Italian Restaurant Pty Ltd, please do not include the references to AASB paragraphs in the left-hand or right-hand margin of the financial statements (or notes to the accounts) like the model sets of accounts do.

Students should also prepare a Director’s Declaration for Marco and Gino to sign. You can assume that both Marco and Gino believe that as at 12 September 2023 (being the date that the Directors' Declaration is to be signed) there are reasonable grounds to believe that the company will be able to pay its debts as and when they fall due and payable.

Please remember to draft and include the appropriate Accountant’s Compilation Report in the annual report. As mentioned in Item (a) on page 8, there is no need to prepare a Directors' Report for Caesar’s Italian Restaurant Pty Ltd.

When presenting the external financial statements (including the detailed notes to the accounts) for Caesar’s Italian Restaurant Pty Ltd, please round each figure to the nearest whole dollar. In other words, do not include cents in your external financial statements.

g. Date of Declarations and Reports and Comparative Figures

All declarations and reports should be dated 12 September 2023.

Comparative figures are not required in the financial statements, as the company only commenced trading on 1 August 2022.

[Total for Part 3 = 18 marks]

a. Students are required to prepare the company’s income tax return for Caesar’s Italian Restaurant Pty Ltd for the year ended 30 June 2023

A blank copy of the 2023 company tax return has been placed on the AYB 339 Canvas site for you to download and complete.

Students can either complete the tax return by printing off the pdf version and manually handwriting the figures in and then scanning it back into pdf. Alternatively, if you have Adobe Acrobat DC which allows the pdf form to be edited, you can complete the tax return electronically.

However, please note that students cannot use a tax software package such as HandiTax, Xero, Solution 6, MYOB Accountants Office to complete the company tax return.

Please make sure that you use your figures contained in your external financial statements to include in the relevant items (labels) of the company tax return.

The company's tax file number (TFN) is: 845 721 468.

The business and postal address of Caesar’s Italian Restaurant Pty Ltd is:

15 Robinson Road

Hendra, QLD, 4011.

Phone: (07) 3161 3658

Do not complete the BSB and account details on the second page of the tax return.

For the purposes of the tax agent declaration (on the last page of the tax return), your tax agent reference number is 57609-006. Please put your name and contact details in this box.

The income tax return should be dated 12 September 2023. It will be signed by Marco as he is the company's public officer.

Please type (or write) Marco's name. However, please leave the signature panel blank. In other words, do not sign the tax return as Marco.

There is no need to prepare the dividend franking account for the company or the dividends and interest schedule. Both of these schedules normally form part of the income tax return. However, students are not required to prepare these schedules.

[Total for Part 4 = 2 marks]

a. Students are required to prepare a One-Page Tax Reconciliation for Caesar’s Italian Restaurant Pty Ltd for the year ended 30 June 2023

Marco and Gino also ask you to prepare a one-page tax reconciliation showing the adjustments made to the accounting net profit before income tax to arrive at the company's taxable income for the year ended 30 June 2023.

Students should start the tax reconciliation with the accounting net profit/(loss) before income tax and then list each relevant adjustments to arrive at the company’s taxable income for the year ended 30 June 2023. No marks will be given where adjustments are aggregated.

This one-page tax reconciliation should be included immediately behind the last page of the company's tax return.

Furthermore, when presenting your tax reconciliation, there is no need to refer or quote sections of the ITAA (1936), ITAA (1997), cases or taxation rulings.

Students are asked to start with the accounting net profit before income tax (from your income statement - after your MYOB adjustments from Part 1) and make individual adjustments which:

(a) are not tax-deductible, which result in an increase to taxable income;

(b) are assessable for taxation purposes, which result in an increase to taxable income; and

(c) are tax-deductible, which result in a decrease to taxable income.

The last line in your tax reconciliation should be the company's 2023 taxable income (which should equal the 2023 taxable income figure in the company's tax return).

As we are not asking students to calculate deferred tax expense (comprising DTA's and DTL's), there is no need to prepare a deferred tax worksheet.

Finally, please round all figures in the tax reconciliation to the nearest whole dollar.

[Total for Part 5 = 3 marks]

For the 11-month period from 1 August 2022 to 30 June 2023, Odette Knight (the contract bookkeeper) has been using MYOB to process transactions for Caesar’s Italian Restaurant Pty Ltd. She has been presenting Marco and Gino with quarterly Profit and Loss Statements and Balance Sheets of the business.

However, despite the fact that they acknowledge that Odette has done a great job as their bookkeeper, Marco and Gino confide in you that they both struggle to read and understand the figures as finance is not their background. They confide in you that they have no idea as to how the business has been going from a financial perspective.

You explain that the when the business commenced you assisted in developing several budgeted key financial indicators (as part of the balanced scorecard which are designed to provide guidance as to how "success" is to be measured.

This balanced scorecard is contained on page 19 of the business plan.

Please note that the business plan has been updated and revised and reloaded onto the Canvas site.

You point out to both Marco and Gino that the financial quadrant outlined several key financial ratios that could be used to measure the financial performance and financial position of the restaurant. You have identified that the key five (5) financial ratios are as follows:

§ Gross profit margin (based on sales of food and beverages) of between 62% and 64%;

§ Net profit margin (based on net profit before tax divided by total revenue) of between 9% and 11%;

§ Current ratio (based on current assets divided by current liabilities) of 2:1 times;

§ Return on assets of between 11% and 13% (based on net profit before tax divided by total assets); and

§ Debt ratio not exceeding 40% (based on outstanding balance of the Bank of Brisbane loan divided by total assets).

You remind Marco and Gino that these were budgeted financial ratios that were developed before the restaurant had opened. The formulas for each of the abovementioned ratios are outlined on page 18 of the business plan.

On the other hand, the figures contained in your adjusted MYOB data file (after you have made your year-end adjustments) represent the actual figures for the restaurant for the 11-month period 1 August 2022 to 30 June 2023.

Comparison of the two sets of figures (actual and budgeted) will enable calculation of actual financial ratios and allow them to be compared to the budgeted financial ratios contained in the business plan.

Comparing these ratios will allow for conclusions to be drawn as to how the restaurant is tracking financially, what ratios are exceeding budgets and which ratios are below budget and therefore may indicate potential warning signs for the business.

Required:

(a) For the five financial ratios identified on the previous page, please calculate each ratio using actual figures contained in your adjusted MYOB data file (ie. after entering your year-end journal entries in Part 1). When calculating each ratio, please show the formula and your workings.

Secondly, once you have calculated the five actual ratios, please compare them to the budgeted ratios contained in the table on page 19 of the business plan (and reproduced on the previous page) and identify whether they are above or below the relevant budgeted ratio in the business plan.

Thirdly, for those ratios that are better than the budgeted ratios in the business plan, please explain to Marco and Gino what this means and why it is good. Conversely, for those ratios that are worse than the budgeted ratios, please briefly explain to Marco and Gino what this means, and the associated risk or concern with a deteriorating ratio.

Please limit your conclusion to one to two paragraphs per financial ratio.

Remember to base the calculation of your financial ratios on the adjusted figures contained in the MYOB data file after making your journal entry adjustments in Part 1.

Please present your answer above in the form of a letter addressed to Marco and Gino using your group firm's letterhead. (7.5 marks)

(b) Finally, for each of the five ratios that you have calculated, Marco and Gino ask you to present each actual ratio compared to the budgeted ratio in a highly visual format (eg. using appropriate graphs). Please incorporate the five graphs into a landscape financial dashboard (one page maximum). (2.5 marks)

Note for Students:

You must use 11 point Arial font with 1.5 line spacing for part (a).

There is no need for a bibliography or list of references.

The maximum number of words for Part 6 self-reflection is 1,000 (excluding your calculations used in the formulas for part (a)).

[Total for Part 6 = 10 marks]