Accounting System - Special Journal & Subsidiary Ledger

Question: What is accounting systems? Describe about special journals subsidiary ledgers. Answer: The company under review is the JB Hi Fi and is the leading retailer of the consumer electronics. The company manufactures the video games and also the blu-rays, DVDs and the CDs. The company is the leading chain store which is headquartered in Melbourne. In the smaller accounting treatment, the book keeper may go on to record the various journal entries. In a company, the general leader accountant is duty bound to record the journal entry and ensure the control over the manner in which the journal entries have been recorded. In respect of the format of the journal entry, at a minimum, the accounting journal entry must include the following: Each account has one credit and one debit The date on which the journal entry has been passed The period of accounting during which the journal entry was prepared The name of the person which is making that entry is present The managerial authorisations are present Journal Entry Fraud: It is very much common for the accountants to commit frauds by the use of various journal entries than through the use of the common transactions that exists. This could include the supplier invoices and the creation of the customer invoices. The main reason behind the same is that there are many of the common transactions that would have the controls of the systems built around them and this is designed for many of the different reasons. There are a very lesser number of controls over the journal entries that makes the creation of the fraudulent transactions easier. These are the transactions that are very difficult for the recording of the amounts that are not material and these are not likely to spot the transgressions. The following are the accounting journals prepared by the company: Cash and bank Accounts receivables Plant and equipment Land and building Accumulated depreciation Depreciation expense Office supplies expense Expense accounts Accounts payables Loans and borrowings Short term investments Long term investments Shareholders equity Retained earnings Provisions Revenue Cost of sales Income tax expense Other assets Other liabilities The following is the statement of the cash flows provided in the annual report of the company: Particulars (Amounts in $ in thousands) Receipts from customers 40,12,130 38,32,979 Payment to suppliers and employees -37,67,211 -37,23,982 Interest and bill discounts received 552 402 Interest and other finance costs paid -5,689 -7,496 Income taxes paid -59,886 -60,577 Net cash inflow from operating activities 1,79,896 41,326 Acquisition of non-controlling interests -2,400 -3,000 Payments for plant and equipment -42,466 -35,914 Proceeds from sale of plant and equipment 496 674 Net cash (outflow) from investing activities -44,370 -38,240 Proceeds from issues of equity securities 3,125 21,523 Proceeds / (repayment) of borrowings -40,113 54,063 Payments for debt issue costs -484 -64 Payment for shares bought back -4,970 -25,830 Share issue and buy-back costs -24 -118 Dividends paid to owners of the Company -87,174 -77,183 Net cash (outflow) from financing activities -1,29,640 -27,609 Net increase / (decrease) in cash and cash equivalents 5,886 -24,523 Cash and cash equivalents at the beginning of the financial year 43,445 67,368 Effects of exchange rate changes on cash and cash equivalents -200 600 Cash and cash equivalents at end of year 49,131 43,445 1. Depreciation expense: this is found in the statement of profit or loss. 2. Amortisation expense: this is found in the statement of profit or loss. 3. Employee benefit expense: this is found in the statement of profit or loss. 4. Financial service fees revenue: this is found in the statement of profit or loss. 5. Lease and occupancy expenses: this is found in the statement of profit or loss. The following is the statement of profit or loss: (Amounts in $ in thousands) Particulars 2015 2014 Revenue 36,52,136 34,83,775 Cost of sales -28,53,883 -27,27,794 Gross profit 7,98,253 7,55,981 Other income 631 520 Sales and marketing expenses -3,74,084 -3,55,694 Occupancy expenses -1,60,216 -1,48,969 Administration expenses -27,711 -27,600 Other expenses -35,414 -32,716 Finance costs -5,927 -8,845 Profit before tax 1,95,532 1,82,677 Income tax expense -59,021 -54,230 Profit for the year 1,36,511 1,28,447 Attributable to: Owners of the Company 1,36,511 1,28,359.00 Non-controlling interests 88.00 Earnings per share Basic (cents per share) 137.91 128.39 Diluted (cents per share) 136.46 126.89 The following is the Balance sheet of the company: (Amounts in $ in thousands) Assets 2,015.00 2,014.00 Current assets: Cash and cash equivalents 49,131.00 43,445.00 Trade and other receivables 81,480.00 70,745.00 Inventories 4,78,871.00 4,58,625.00 Other current assets 7,416.00 5,332.00 Total current assets 6,16,898.00 5,78,147.00 Non-current assets: Plant and equipment 1,76,208.00 1,81,564.00 Deferred tax assets 17,363.00 14,909.00 Intangible assets 84,541.00 85,218.00 Other financial assets 3.00 3.00 Total non-current assets 2,78,115.00 2,81,694.00 Total assets 8,95,013.00 8,59,841.00 Liabilities Current liabilities: Trade and other payables 3,25,604.00 3,02,979.00 Provisions 40,585.00 36,840.00 Other current liabilities 4,566.00 4,111.00 Current tax liabilities 9,474.00 8,184.00 Other financial liabilities 107.00 79.00 Total current liabilities 3,80,336.00 3,52,193.00 Non-current liabilities: Borrowings 1,39,461.00 1,79,653.00 Provisions 6,073.00 8,699.00 Other non-current liabilities 25,664.00 24,638.00 Other financial liabilities - 25.00 Total non-current liabilities 1,71,198.00 2,13,015.00 Total liabilities 5,51,534.00 5,65,208.00 Net assets 3,43,479.00 2,94,633.00 Equity: Contributed equity 56,521.00 58,383.00 Reserves 17,636.00 16,265.00 Retained earnings 2,69,322.00 2,19,985.00 Total equity 3,43,479.00 2,94,633.00 The following are the required journal entries: Transaction Particulars Debit Credit Cash receipt from customers Cash Sales Cash paid to suppliers Accounts payable Cash Dividend paid Dividend expense Cash Payment for plant and equipment Plant and equipment Cash Depreciation expense Depreciation expense Accumulated depreciation Amortisation expense Amortisation expense Asset Employee benefit expense Employee benefit expense Profit and loss account Financial service fees revenue Cash/Accounts receivables Financial service fees revenue Lease and occupancy expenses Lease and occupancy expenses Profit and loss References: Accounting Basics for Students. (2016).Basic Accounting Journal Entries. Accountingtools.com. (2016).Accounting Journal Entries Accounting Tools.