This question requires you to use Xero accounting software (30-day free trial version, available at: https://www.xero.co

[answerhappygod]

This question requires you to use Xero accounting software
(30-day free trial version, available
at: https://www.xero.com/au/).
Mask Up is a new business that commenced on 1 March 2022. The
business is operated by Mr and Mrs Stitch, as a partnership. For
the purposes of this activity, the business is not registered for
GST. The business will purchase face masks from a manufacturer and
sell them to schools and other education providers in Australia.
The business will stock two different types of face masks:
disposable masks and reusable fabric masks.
The following transactions occurred during March 2022. Note: all
payments were made from the business bank account, and all money
received was deposited into the business bank account.
Date:
Details:
1 Mar
Mr and Mrs Stitch each deposited $100,000 into the business bank
account ($200,000 in total).
1 Mar
The business purchased and paid for 10,000 disposable masks at
$0.50 each and 8,000 fabric masks at $3.00 each from its supplier,
PPE Australia Ltd.
1 Mar
The business paid Allianz Insurance $1,200, for business
insurance for the period 1 March 2022 – 31 August 2022.
6 Mar
The business sold 2,000 disposable masks at $0.80 each, and 600
fabric masks at $6.00 each, to Sydney Grammar School. The school
paid via direct payment into the business bank account.
10 Mar
The business sold 8,000 disposable masks at $0.70 each, and
1,000 fabric masks at $5.00 each, to Bankstown High School. The
school purchased the masks on credit terms, with payment required
by 17 March 2022.
11 Mar
The business purchased 20,000 disposable masks at $0.55 each and
16,000 fabric masks at $3.00 each from its supplier, PPE Australia
Ltd. The stock was purchased on 14-day credit terms.
12 Mar
The business purchased (and paid for) stationery from
Officeworks for $89 (all of the stationery was used during
March).
12 Mar
The business sold 10,000 disposable masks at $0.80 each, and 500
fabric masks at $6.00 each, to Charles Sturt University. The
university paid via direct payment into the business bank account.
12 Mar
The business paid PPE Australia Ltd for the purchases made on 11
March 2022, by electronic funds transfer.
15 Mar
The business paid Facebook Ads $380 for some Facebook
advertisements that ran between 10 March – 14 March 2022.
15 Mar
The business purchased 10,000 disposable masks at $0.55 each and
5,000 fabric masks at $2.00 each from its supplier, PPE Australia
Ltd. The stock was purchased on 14-day credit terms.
16 Mar
The business sold 6,000 disposable masks at $0.80 each, and 500
fabric masks at $6.00 each, to Manly High School. The school
purchased the masks on credit terms, with payment required by 23
March 2022.
20 Mar
The business received $8,000 in the bank account from Bankstown
High School, for part payment of their account (in relation to the
sale made on 10 March).
23 Mar
The business sold 400 fabric masks at $6.00 each, to Newcastle
High School. The school purchased the masks on credit terms, with
payment required by 30 March 2022.
30 Mar
The business received the balance owing from Bankstown High
School, in relation to the sale made on 10 March.
30 Mar
The business sold 9,000 disposable masks at $0.70 each, and 400
fabric masks at $5.00 each, to Goulburn High School. The
school purchased the masks on credit terms, with payment required
by 30 April 2022.
30 Mar
The business received an invoice from Startrack Express Ltd, for
freight costs to deliver the orders to customers (from Mask Up) for
the month of March 2022. The amount payable is $380, and payment is
due on 13 April 2022.
30 Mar
The business received $2,400 in the bank account from Newcastle
High School, for payment of their account (in relation to the sale
made on 23 March).
31 Mar
The business paid Sydney Real Estate $2,000, for business rent
for the period 1 March 2022 – 31 March 2022.
31 Mar
The business was charged a bank fee of $20 for the month of
March 2022, with the amount deducted from the bank account.
31 Mar
The business received an invoice from Telstra, for business
telephone and internet costs for the month of March 2022. The
amount payable is $240, and the due date for payment is 20 April
2022.
Additional information:
Mr and Mrs Stitch have come to you for assistance, as they would
like to use Xero to prepare their accounting records, but are not
sure how to set this up. They also do not have any knowledge of the
perpetual inventory system and average-cost method (which is used
in Xero), and would like you to show them how the cost of goods
sold, gross profit and value of closing inventory is calculated
using this system and costing method. As you prepare to meet with
Mr and Mrs Stitch, you need to complete the following tasks.
Required:
i) Prepare an Excel worksheet for each of the product
lines for March 2022 (one worksheet for the disposable masks, and
one for the fabric masks) using the perpetual inventory system and
the average-cost method, to keep track of the number and dollar
values of units purchased, units sold, units on hand, cost of goods
sold and gross profit made. Paste a copy of your worksheets
into your assignment file (in Word). (5
marks)
ii) Set up a Xero file for Mr and Mrs Stitch’s business.
When you are setting up the file, some points to note
include:
The business is not registered for GST.
When adding the business bank account in Xero, use the account
name “Bank Account” followed by your student number – eg. “Bank
Account – 112 333 444”. You can select from any of the available
banks, and make up your own BSB and Account number.
The business will sell two different inventory items (disposable
masks and fabric masks). The standard selling price of each
item is: $0.80 for a disposable mask and $6.00 for a fabric mask.
Mr and Mrs Stitch would like Xero to be able to track (or
manage) inventory.
If required, new ‘accounts’ may be added in the ‘Chart of
Accounts’, based on the needs of the business.
After setting up the Xero file, record all of the transactions
for the month of March 2022 in the Xero file, including any
adjusting entries that may be needed as at 31 March 2022.
(9 marks)
When recording transactions in Xero:
Generate the following reports for March 2022. Include a
screenshot of each report in your assignment file (in
Word): (4 marks)
iii) Review other reports that are available in Xero.
Select two additional reports (other than those in part (ii) above)
that you think Mr & Mrs Stitch should review regularly as they
continue to operate and grow their business. Include a screenshot
of each of these two reports in your assignment file (in Word).
Explain how/why you think that this report will be helpful to Mr
& Mrs
Stitch. (3 marks)
iv) Review the above reports for the business’s first
month of operations. Prepare some discussion notes for your meeting
with Mr and Mrs Stitch (this can be in bullet point form –
outlining key aspects of what you plan to discuss with them).
Your discussion notes should address the
following: (5 marks)
v) During your meeting with Mr and Mrs Stitch (discussing
all of the above), Mr and Mrs Stitch express their hesitancy to use
Xero. They are hesitant after being made aware of the monthly
subscription price… they think that it is quite expensive. They
have asked you for your thoughts about the pros and cons of using a
manual accounting system (such as in Excel) compared to a
cloud-based system like Xero. Given your experience preparing
accounting records and preparing reports manually in Assessment
Task 2, and preparing accounting records and reports in Xero in
this assessment task, discuss the pros and cons of
each. (4 marks)