Case Study – Clementi’s Fitness
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Assessment 2 – MYOB
Case Study –Maxwell Fitness
The objective of this assignment:
This assessment is designed to introduce you to the use of double-entry
computer accounting software for a small business. It covers many of the
common transactions of everyday business, including GST. It is more than a
data entry exercise, requiring you to carefully record each transaction
carefully, understand how the software records such transactions in both the
general and subsidiary ledgers and uses such information to create reports.
IMPORTANT:
IMPORTANT ASSIGNMENT GUIDELINES:
It is the responsibility of students to read the assignment format and
submission requirements carefully before starting the assignment.
Should a submitted assignment fail to comply with any of the following
two requirements, it will not be accepted for marking and will result in a
grade of zero (0) for the entire assignment.
Requirement 1:
It is required that when setting up the company details using MYOB software,
you need to put your name as part of the company name (e.g., Maxwell
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Fitness - your name). For example, if your name is Jonathan Kapukotuwa,
then the company name will be Maxwell Fitness – Jonathan Kapukotuwa,
If the MYOB program does not allow you to type your full name, try to
put in as many letters of your name as possible.
Failure to include your name as part of the company name will result in
eceiving zero (0) for your the entire assignment.
Requirement 2:
All session reports must be submitted with your assignment.
(Please note MYOB automatically records all transactions in a session report.
A session commences each time you access MYOB and concludes when you
exit MYOB. Each session report must be printed before you exit MYOB.
To ensure against loss of session reports it is recommended that students
print session reports to a PDF file on a regular basis in addition to printing to a
printer.)
General Information:
In completing this assignment, you are required to record each transaction
carefully, understand how the software records these transactions in both the
general and subsidiary ledgers and uses such information to create reports.
Maxwell Fitness (ABN XXXXXXXXXX), 470 Brisbane Street, North
Melbourne, 3051.
The owner, Adeline Ridley, has worked in the fitness industry for many years,
purchasing this Maxwell Fitness business in XXXXXXXXXXThe business operates
from a rented shopfront where she has a five-year rental agreement at a set
price of $1,760 per calendar month (including GST). Rent is usually paid on
the first of each month for the relevant month.
Maxwell Fitness has two income streams – selling two popular products –
Rowing machines and Exercise bikes and secondly providing fitness training
for groups. Maxwell Fitness’s principal customers for inventory sales are
medium-sized organisations who have office-based gyms but from time to
time, the business also sells to the public.
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Maxwell Fitness has operated the business using a manual accounting
system since purchasing the business in 2018. As Maxwell Fitness’s
accountant, you recommend the business convert from a manual recording
system to a computerised accounting recording system using MYOB from
April 2020.
All purchases of inventory are from local suppliers who supply inventory to
Maxwell Fitness free of charge.
Specific Information:
Maxwell Fitness purchases all its inventory on credit and sells inventory on
credit to her business customers. From time to time, she sells inventory for
cash to the public, and all fitness classes are also strictly on a cash basis.
Customer account balances as at: March 31st, 2020
Name Address Date of
Last
Invoice
Account
Balance
Offline
Education
Organisation
542 City Road, Melbourne
ABN XXXXXXXXXX
March 18th $5,610
Village Fair 601 Subu
Street, South
Melbourne
ABN XXXXXXXXXX
March 27th $6,765
All credit customers are offered the following terms: 2.5%/ 15 days, net 30.
Suppliers account balances as at: March 31st, 2020
Name Address Terms Account
Balance
Rower Gears
Ltd.
1 Scull Street, Brunswick
ABN XXXXXXXXXX
3%/ 15 days, net
30.
$5,505
Cycle Bazaar 14 Gove Street, Northcote
ABN XXXXXXXXXX
2%/ 15 days, net
30.
$3,834
Each of the above account balances for suppliers represents deliveries of
inventory received on March 24th.
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Goods and Services Tax: Sales and Purchases
Maxwell Fitness charges GST on all sales and is charged GST on all
purchases of inventory. For all business expenses other than bank interest
and Wages, the GST rate is 10 %.
All sales are on credit, except where specifically stated, and all business
expenses are paid for with cash unless stated otherwise.
Employee: Fitness Classes
• Maxwell Fitness has only one part-time/casual employee, Josie Barker.
Josie Barker conducts fitness classes for groups. For each class,
Josie’s gross wage is $100 per class, regardless of the number of
participants. PAYG tax is withheld at 15%.
• Josie Barker is paid in a
ears twice per month - on the 12th and 26th.
• Wages Payable as at March 31, 2020 is $510.
Inventory: March 31st 2020
The following is a list of inventories on hand and the suppliers as at 31st
March 2020.
Quantit
y on
hand
Item
Code
Description Last
Cost
Price
Last
Sale
Price
Supplier
15 RM Rowing Machine $440 $700 Rower Gears Ltd.
6 EB Exercise Bike $260 $450 Cycle Bazaar
Each of the above items of inventory are quoted net of GST. On each item,
an additional 10% GST is charged on the sales price, and 10% GST is paid
on the cost price.
Exercise Classes:
Maxwell Fitness conducts regular fitness classes in-house to groups of no
more than 20 per group. Client groups pay Maxwell Fitness $440 per class
which lasts for one hour.
The price of $440 includes GST.
Bank Loan: ANZ bank
Maxwell Fitness pays $1,157.50 per month for the bank loan. This amount
includes interest and principal payments where the monthly interest is fixed at
$357.50.
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Prepaid Advertising:
On January 1st, 2020, Maxwell Fitness paid $1,650 in advance for 6 months
advertising. The amount paid included GST.
Trial Balance as at March 31st, 2020.
General Ledger Accounts Debit Credit
Cheque Account 19,456
Inventory 8,160
Prepaid Advertising 750
Accounts Receivable 12,375
Accounts Payable 9,339
Motor Vehicle 25,000
Accumulated Depreciation on MV’s. 5,625
Office Equipment 12,000
Acc. Depreciation on Office Equipment 3,200
Owner’s Capital 40,131
GST Collected 1,125
GST Paid 849
Bank Loan - ANZ Bank, City Branch 18,400
PAYG Withholding Payable 90
Wages Payable 510
Accrued Energy Bill – TRU Energy 170
$78,590 $78,590
Transactions during April 2020:
1 Paid Rent for business premises for April - $1,760 (Including GST).
1 Bank loan and interest paid - $1,157.50.
1 Purchases of inventory from both suppliers: from Rower Gears Ltd –
10 Rowing machines, and from Cycle Bazaar - 12 Exercise Bikes. All
inventory was received within 24 hours.
2 Paid Tru Energy for March energy bill - $ XXXXXXXXXXIncluding GST)
2 Credit Sales of inventory to Village Fair – 6 Rowing machines and 4
Exercise Bikes.
3 Received payment from all Customers for amounts owing on March
31st. Discounts for early settlement were made to customers paying
inside the discount period.
3 Paid all suppliers in full for March account balances. Discount needs
to be applied for payments within the discount period.
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4 Credit sales to Offline Education Organisation – 10 Rowing machines
and 7 Exercise Bikes.
4 Cash customers paid for 20 hours of Fitness classes. All classes will
e completed over the next 12 days. (Since the classes will be
completed in April, this transaction can be accounted
ecorded as
income directly rather than unearned income).
5 Paid for motor vehicle fuel - $99 (Including GST) for the month of April
8 Paid for office stationery expenses - $ XXXXXXXXXXIncluding GST) for the
month of April.
9 Paid for accounting fees - $ XXXXXXXXXXIncluding GST) for the month of
April.
12 Wages paid to Josie (the fitness instructor) for 10 classes completed
in April as well as the wages owing for March . (Note: Do not use the
employee section of MYOB, instead record the wages expense and
PAYG tax withheld as a cash payment. Use the spend money section
to pay wages).
14 Adeline (owner) withdraws cash drawings of $1,500.00.
23 Adeline takes home an exercise bike as drawings