IT Applications for Financial Accounting

Question 1 (Case study – Email from Manager, Smith Chartered Accountants)
From: Client Accounting & Reporting Manager – Smith & Co. LLP
To: Finance Intern – Smith & Co. LLP
Subject: Set-up and Financial Report Preparation for HSC Trading Group LTD.
Date: March 2018
Dear Sarah,
We have an existing client, HSC Trading Group Ltd, who has been trading for a number of years now. The most recent record of transactions have just been sent to me by the Managing Director, Mr Silver, and we are to prepare their accounts for the trading period, 12 months to 31st March 2018.

Attached is a statement of opening position with additional notes, schedules of the trading period, including major customers, vendors, with quantities of products bought and sold, unit prices of products bought and sold, together with other schedules showing gross sales and purchase values.

As our firm is now using the SAGE accounting software, I would appreciate your input to do the following:
1) Set-up the company in Sage Accounting 5 Marks
2) Extract the Sales Nominal Ledger for All Products 10 Marks
3) Extract the Trial Balance for the period. 10 Marks
4) Extract the Trading, Profit or Loss Account (P &L) 30 Marks
5) Extract the Statement of Financial Position (BS) 30 Marks
6) Examine and discuss the “Risks” in the use of Electronic
accounting systems providing relevant references. 10 Marks

Mode of Presentation (5 marks for presentation)
Respond to the email, with the work required in report format, which will have a cover page, title page showing the trading company name and trading period for which the report covers. Provide a table of contents to include the learning requirements and a sound introduction stating the purpose of the financial reports and the general nature of client business.

Please use the Sage function to extract reports and append to your report, ensuring the screen views are proportionate in size to the page.

Transaction schedules

UNIT PRICES (£)
COST PRICE SELLING PRICE
3 PRODUCTS ALPHA 2.8 6.4
BETA 3.12 8.7
SIGMA 4.15 12.2

UNIT QUANTITIES, GROSS VAT VALUE SALES
2017 – 2018 ALPHA Value + VAT BETA Value + VAT SIGMA Value + VAT
April 1124 8,632 2100 15,681 1918 28,080
May 1310 10,061 1894 19,773 771 11,287
June 1344 10,322 1709 15,274 2157 31,578
July 1485 11,405 2196 22,926 2075 30,378
August 1172 9,001 1522 15,890 626 9,165
September 603 4,631 1302 13,593 2144 31,388
October 1372 10,537 1743 18,197 2198 32,179
November 1375 10,560 1917 18,197 760 11,126
December 1534 11,781 1301 13,582 2370 34,697
January 227 1,743 2088 21,799 2011 29,441
February 1587 12,188 1933 20,181 2266 33,174
March 1372 10,537 1748 18,249 1015 14,860
Note: The credit policy is for 50% of sales to be settled in month of sales and 50% the following month. All opening debtors balances were cleared (i.e. received) in April 2017 in line with the policy.

SUPPLIER INFORMATION

Yunshi Trading Partners(Wholesalers) , The Duncan Group
5 Triad Road, Plot 15 Drew Avenue
Yacuza State New Birmingham
Quandong Province Cheshire
People’s Republic of China (PRC) CH1 5TT, United Kingdom
Alpha & Sigma Products Beta Product

UNIT QUANTITIES BOUGHT INVENTORY/STOCK
2017 – 2018 ALPHA NET + VAT BETA NET + VAT SIGMA NET + VAT
April 1000 2800 3360 1200 3744 4493 1800 7470 8964
May 1400 3920 4704 1400 4368 5242 560 2324 2789
June 1000 2800 3360 1350 4212 5054 1600 6640 7968
July 1200 3360 4032 1000 3120 3744 1500 6225 7470
August 1000 2800 3360 1150 3588 4306 300 1245 1494
September 900 2520 3024 1305 4072 4886 2000 8300 9960
October 1850 5180 6216 1200 3744 4493 1650 6848 8217
November 1105 3094 3713 1600 4992 5990 560 2324 2789
December 950 2660 3192 1650 5148 6178 1680 6972 8366
January 1200 3360 4032 1500 4680 5616 1560 6474 7769
February 1400 3920 4704 1560 4867 5841 2000 8300 9960
March 1950 5460 6552 1200 3744 4493 600 2490 2988
Note: Payments to suppliers are made one month after purchase.( i.e. April purchases will be paid for in May)
 

data correctly into SAGE and present accurate report as per below. The report for each question must begin on a new page with the following headings:

Task – HSC Trading Group Ltd.

• SAGE 50 Company Accounts Set-Up. You should discuss how you have achieved
this.

• The company information provided should be used in setting up the company.

• Setup the various nominal accounts codes, and enter the data.

• Extract the reports required and appraise the performance of the company.

• Examine and discuss the risk of electronic accounting systems.

 

 

Sample Solution

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