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
[email protected]
www.mbsts.com.au
Publishers:
Software Publications Pty Ltd [ABN 75078026150]
Head Office – Sydney
Unit 10, 171 Gibbes Street
Chatswood NSW 2067
Phone:
Web address:
ISBN
1 800 146 542
www.softwarepublications.com.au
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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This material is designed to provide basic information on how to use MYOB Accounting/Accounting Plus
v18. Because business circumstances can vary greatly, the material is not designed to provide specific GST
or business advice for particular circumstances. Also, because aspects of the GST are complex and detailed,
the material is not designed to comprehensively cover all aspects of the GST. Further, the laws
implementing GST and rulings and decisions under those laws may change.
Before you rely on this material for any important matter for your business, you should make your own
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Table of Contents
A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB] © Copyright Marian Brown 2008
⌦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 1/12th 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.
GENERAL JOURNAL
Date
June
30
Particulars
Ref
Prepaid Expenses
Debit
Credit
37.50
Advertising
37.50
{Account for advertising paid for July]
The Advertising account now looks like this. [Unit 6]
610 ADVERTISING
Date
Particulars
Ref
31/7/08
Cash Payments
30/6/09
Prepaid Expenses
GJ
Drawings
GJ
Profit and Loss A/c
GJ
CPJ
Debit
Credit
450.00
37.50
636.36
1,048.86
Balance
Dr/Cr
450.00
Dr
412.50
Dr
1,048.86
Dr
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
GENERAL JOURNAL
Date
July
1
Particulars
Ref
Advertising
610
Prepaid Expenses
Debit
Credit
37.50
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
Date
Particulars
Ref
30/6/09
Profit and Loss A/c
GJ
1/7/09
Prepaid Expenses
GJ
Debit
Credit
Balance
1,048.86
0.00
37.50
Dr/Cr
37.50
Dr
This journal should be posted to “Prepaid Expenses” to look like this for the 2010 financial
year.
145 PREPAID EXPENSES
Date
Particulars
Ref
Debit
30/6/09
Advertising
GJ
37.50
1/7/09
Advertising
GJ
Credit
37.50
Balance
Dr/Cr
37.50
Dr
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)
Record the reversed journal entry under the original entry.
(ii)
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.
GENERAL JOURNAL
Date
June
30
Particulars
Ref
Debit
Credit
1,000.00
Sales
Prepaid Income
1,000.00
(Account for income not yet earned)
GENERAL JOURNAL
Date
Ref
Debit
Debit
Credit
Balance
Dr/Cr
1,000.00
1,000.00
Cr
Credit
Balance
Dr/Cr
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
July
Particulars
Credit
1
265 PREPAID INCOME
Date
Particulars
30/6/09
Sales
Ref
GJ
410 SALES [tyres, accessories]
Date
Particulars
31/7/08
Accounts Receivable
120
Unit 8 – 2010 entries
Ref
Debit
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 1st 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.
GENERAL JOURNAL
Date
June
30
Particulars
Ref
Debit
Credit
1,000.00
Lease of Premises
Accrued Expenses
1,000.00
(Account for Lease Payment in July]
GENERAL JOURNAL
Date
July
Particulars
Ref
Debit
Credit
Debit
Credit
Balance
Dr/Cr
1,000.00
1,000.00
Cr
Credit
Balance
Dr/Cr
1
260 ACCRUED EXPENSES
Date
Particulars
30/6/09
Lease of Premises
Ref
GJ
640 LEASE OF PREMISES
Date
Particulars
Ref
Debit
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
Cash Payments [lease]
CPJ
2,000.00
0.00
1/7/09
1/7/09
Note:
1,000.00
?
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.
GENERAL JOURNAL
Date
June
30
Particulars
Ref
Accrued Income
Debit
Credit
400.00
Insurance Refund
400.00
(Account for Insurance Refund not yet received)
GENERAL JOURNAL
Date
July
Particulars
Ref
Debit
Credit
Credit
1
148 ACCRUED INCOME
Date
Particulars
Ref
Debit
30/6/09
Insurance Refund
GJ
400.00
Debit
Balance
Dr/Cr
400.00
Dr
Credit
Balance
Dr/Cr
440 INSURANCE REFUNDS
Date
Particulars
Ref
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
Note:
122
Cash Receipts [refund owing]
CRJ
400.00
?
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.
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)
Open the MYOB data file used in the previous units: “BrocksPFR18.MYO”.
(ii)
To reverse entries in MYOB you must change the security preferences.
(a)
Select “Setup” in the Menu Bar.
(b)
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)
Display the Transaction Journal [“General” TAB] for 30 June 2009 to
30 June 2009.
(iv)
Locate the balance day adjustment entry for Advertising.
(v)
Click on the
(vi)
To reverse, select “Edit” in the Menu Bar and select “Reverse General
Journal Transaction”.
© Copyright Marian Brown 2008
to call up the entry.
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