Chapter 3: Banking 3.

99

Revision Exercise 3
You have been asked to manage the books for Fred’s Fresh Foods. The company opened for
business for the first time on April 1, 2014.
Fred’s Fresh Foods has no opening account balances – its first transaction is the deposit of
money in the Cheque Account by the owner on April 1.

Opening a QuickStart data file

1 Copy the QuickStart data file named Fresh.MYO from your DVD to your MYOB Data folder, and
then rename it as Fresh - Your Name.MYO.
2 Start MYOB AccountRight Plus, and then open the Fresh – Your Name.MYO data file.

Editing Company Information

1 Choose Setup from the menu bar, select Company Information, change the Company Name to
Fred’s Fresh Foods - Your Name, and then click on OK to return to the Command Centre window.

Recording cash receipts and payments

The following transactions occurred between April 1 and April 3, 2014.
All transactions in the following table are to be made using the Cheque Account.

Date Transaction
1/04/2014 Deposited cash in the Cheque Account to commence business, $10,000.00.
ID# = CR000001.
Payment Method = Cash.
Memo = Capital contribution from owner.
Allocation Account = 3-1100 Capital; Tax = N-T.
Applied Payment Details are not required.
2/04/2014 Paid cash for second-hand truck (private sale), $3,500.00.
Cheque No. = 1; Payee = Uncle Tony.
Memo = Bought truck for cash.
Allocation Account = 1-2710 Motor Vehicles at Cost; Tax = N-T.
2/04/2014 Paid for petrol and oil, $35.20 (inc. GST).
Cheque No. = 2; Payee = Ample Service Station.
Memo = Paid petrol and oil.
Allocation Account = 6-2100 Petrol & Oil; Tax = GST.
3/04/2014 Bought fresh fruit and vegies for cash, $450.00.
Cheque No. = 3; Payee = Bulk Fruit.
Memo = Paid fruit & vegies.
Allocation Account = 1-1300 Merchandise Inventory; Tax = FRE.

1 Record the transactions using the details supplied in the table above, and then return to the Command
Centre window.
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Recording an undeposited cash receipt

The Undeposited Funds account, first seen in the Practice Exercise, is quite simple to use.
Individual receipts are recorded in the Undeposited Funds account, and at the end of each day,
the receipts are totalled and transferred from the Undeposited Funds account to the Cheque
Account in one deposit. This means that when Fred’s Fresh Foods receives its bank statement, it
will see that the deposits in the bank statement match the deposits in the Cheque Account.
Since the transfer of receipts from the Undeposited Funds account to the Cheque Account only
occurs when the actual deposit at the bank takes place, any receipts not actually deposited would
not appear as outstanding deposits in the reconciliation report. Instead, the monies not deposited
would be found as the balance in the Undeposited Funds account.
You will now record the first of the receipts on April 4 in the Undeposited Funds account. See the
table below and the instructions that follow.
Date Transaction
4/04/2014 Sold fresh fruit and vegies for cash, $135.00.
Use 1-1180 Undeposited Funds.
ID# = CR000002.
Payment Method = Cash.
Memo = Cash sales.
Allocation Account = 4-1000 Sales; Tax = FRE.
Applied Payment Details are not required.

You should have noticed the use of the FRE code to indicate that a supply of goods has occurred
GST-free.

1 Use the Receive Money window to enter the details for the receipt shown as occurring on April 4, but
do not press Record. See Figure 3.124.

Figure 3.124 Receipt #2 completed

At this stage, before you actually record the receipt, you may wish to view the transaction in
terms of debits and credits using the recap function.
 Chapter 3: Banking 3.101

Viewing a transaction before recording (recapping)

1 From the Edit menu, select Recap Transaction.
The Recap Transaction window appears (Figure 3.125) showing the debit and credit entries for
the receipt you are about to record.

Figure 3.125 Recap Transaction window showing the receipt to be deposited in the Undeposited Funds account
It is the Undeposited Funds account, not the Cheque Account that is the initial recipient of the
debit entry.

2 Click on OK to return to the Receive Money window, and then click on Record to complete
this transaction.
The Receive Money window is now ready to record the next receipt of cash in the Undeposited
Funds account. The Undeposited Funds account will be the default account used for deposits
until you select another account. Before you record each receipt/deposit, you must think carefully
about which banking account is to be used.
3 Record the remaining receipts on April 4 (shown below) as deposits in the Undeposited Funds account,
and then return to the Command Centre window.
Date Transaction
4/04/2014 Sold fresh fruit and vegies for cash, $175.00.
Use 1-1180 Undeposited Funds.
ID# = CR000003.
Payment Method = Cash.
Memo = Cash sales.
Allocation Account = 4-1000 Sales; Tax = FRE.
Applied Payment Details are not required.
4/04/2014 Sold fresh fruit and vegies for cash, $290.00.
Use 1-1180 Undeposited Funds.
ID# = CR000004.
Payment Method = Cash.
Memo = Cash sales.
Allocation Account = 4-1000 Sales; Tax = FRE.
Applied Payment Details are not required.
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Preparing a bank deposit

With all of the receipts from April 4 now recorded in the Undeposited Funds account, it is time
to deposit the total of these receipts, $600.00 ($135.00 + $175.00 + $290.00) in the Cheque
Account. The bank deposit will be made using the Prepare Bank Deposit function.
Date Transaction
4/04/2014 Deposited cash received in Cheque Account, $600.00.
Use Prepare Bank Deposit.
ID# = CR000005.
Memo = Bank Deposit.

1 Click on Prepare Bank Deposit, and then enter the details to match those shown in Figure 3.126.

Figure 3.126 Completed bank deposit

The money deposited in the Undeposited Funds account during the day will be taken out, and
then placed in the Cheque Account.
2 Click on Record to complete the bank deposit, and then click on Cancel.

Saving and recording recurring receipts

Essentially, creating and recording a recurring receipt is much the same as a recurring payment.
Fred’s Fresh Foods has an agreement with Mario’s Market to supply fresh fruit and vegies on a
weekly basis for varying amounts of cash. Fred’s Fresh Foods have decided to treat this regular
cash sale with a special client as a recurring receipt.
This recurring receipt will use the Undeposited Funds account. See below.
Date Transaction
6/04/2014 Sold fresh fruit and vegies for cash to Mario’s Market, $400.00.
Use 1-1180 Undeposited Funds.
ID# = CR000006.
Payment Method = Cash.
Memo = Cash sales – Mario’s.
Allocation Account = 4-1000 Sales; Tax = FRE.
Applied Payment Details are not required.
Save as Recurring with details as follows:
Name = Sales - Mario’s Market
Frequency = Weekly
Starting on = 13/04/2014
 Chapter 3: Banking 3.103

1 Enter the details of the cash sale to Mario’s Market in the Receive Money window, and then click on
the Save as Recurring button.
Figure 3.127 (below) shows the completed details in the Edit Recurring Schedule window.

Figure 3.127 Edit Recurring Schedule window showing the recurring receipt
2 Change the details in the Edit Recurring Schedule window to match those shown in Figure 3.127
above, and then click on Save.
3 Click on Record in the Receive Money window to complete this transaction.

Recording further transactions

1 Now record the remaining transactions (see table below) for April 2014. Take particular care with the
choice of banking accounts for receipts (and bank deposits), as well as with the recurring receipts.
All payments in the following table are from the Cheque Account.
Applied Payment Details are not required for any of the following transactions.

Date Transaction
6/04/2014 Deposited cash received in Cheque Account, $400.00.
Use Prepare Bank Deposit.
ID# = CR000007.
Memo = Bank Deposit.
7/04/2014 Paid for petrol, $33.00 (inc. GST).
Cheque No. = 4; Payee = Ample Service Station.
Memo = Paid petrol.
Allocation Account = 6-2100 Petrol & Oil; Tax = GST.
9/04/2014 Paid for vehicle repairs, $204.60 (inc. GST).
Cheque No. = 5; Payee = Ample Service Station.
Memo = Paid vehicle repairs.
Allocation Account = 6-2200 Vehicle Repairs & Servicing; Tax = GST.
10/04/2014 Bought fresh fruit and vegies for cash, $590.00.
Cheque No. = 6; Payee = Bulk Fruit.
Memo = Paid fruit & vegies.
Allocation Account = 1-1300 Merchandise Inventory; Tax = FRE.
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Date Transaction
12/04/2014 Sold fresh fruit and vegies for cash, $155.00.
Use 1-1180 Undeposited Funds.
Payment Method = Cash.
ID# = CR000008.
Memo = Cash sales.
Allocation Account = 4-1000 Sales; Tax = FRE.
12/04/2014 Sold fresh fruit and vegies for cash, $260.00.
Use 1-1180 Undeposited Funds.
Payment Method = Cash.
ID# = CR000009.
Memo = Cash sales.
Allocation Account = 4-1000 Sales; Tax = FRE.
12/04/2014 Deposited cash received in Cheque Account, $415.00.
Use Prepare Bank Deposit.
ID# = CR000010.
Memo = Bank Deposit.
13/04/2014 Sold fresh fruit and vegies for cash to Mario’s Market, $580.00.
Use 1-1180 Undeposited Funds.
Payment Method = Cash.
ID# = CR000011.
Memo = Cash sales – Mario’s.
Allocation Account = 4-1000 Sales; Tax = FRE.
Use Recurring.
13/04/2014 Deposited cash received in Cheque Account, $580.00.
Use Prepare Bank Deposit.
ID# = CR000012.
Memo = Bank Deposit.
16/04/2014 Bought fresh fruit and vegies for cash, $436.00.
Cheque No. = 7; Payee = Bulk Fruit.
Memo = Paid fruit & vegies.
Allocation Account = 1-1300 Merchandise Inventory; Tax = FRE.
18/04/2014 Sold fresh fruit and vegies for cash, $560.00.
Use 1-1180 Undeposited Funds.
Payment Method = Cash.
ID# = CR000013.
Memo = Cash sales.
Allocation Account = 4-1000 Sales; Tax = FRE.
18/04/2014 Deposited cash received in Cheque Account, $560.00.
Use Prepare Bank Deposit.
ID# = CR000014.
Memo = Bank Deposit.
19/04/2014 Bought fresh fruit and vegies for cash, $239.00.
Cheque No. = 8; Payee = Bulk Fruit.
Memo = Paid fruit & vegies.
Allocation Account = 1-1300 Merchandise Inventory; Tax = FRE.
20/04/2014 Sold fresh fruit and vegies for cash to Mario’s Market, $528.00.
Use 1-1180 Undeposited Funds.
Payment Method = Cash.
ID# = CR000015.
Memo = Cash sales – Mario’s.
Allocation Account = 4-1000 Sales; Tax = FRE.
Use Recurring.
20/04/2014 Deposited cash received in Cheque Account, $528.00.
Use Prepare Bank Deposit.
ID# = CR000016.
Memo = Bank Deposit.
 Chapter 3: Banking 3.105

Date Transaction
21/04/2014 Sold fresh fruit and vegies for cash, $115.00.
Use 1-1180 Undeposited Funds.
Payment Method = Cash.
ID# = CR000017.
Memo = Cash sales.
Allocation Account = 4-1000 Sales; Tax = FRE.
21/04/2014 Sold fresh fruit and vegies for cash, $76.50.
Use 1-1180 Undeposited Funds.
Payment Method = Cash.
ID# = CR000018.
Memo = Cash sales.
Allocation Account = 4-1000 Sales; Tax = FRE.
21/04/2014 Deposited cash received in Cheque Account, $191.50.
Use Prepare Bank Deposit.
ID# = CR000019.
Memo = Bank Deposit.
23/04/2014 Paid for petrol, $45.65 (inc. GST).
Cheque No. = 9; Payee = Ample Service Station.
Memo = Paid petrol.
Allocation Account = 6-2100 Petrol & Oil; Tax = GST.
26/04/2014 Bought fresh fruit and vegies for cash, $187.00.
Cheque No. = 10; Payee = Bulk Fruit.
Memo = Paid fruit & vegies.
Allocation Account = 1-1300 Merchandise Inventory; Tax = FRE.
27/04/2014 Sold fresh fruit and vegies for cash to Mario’s Market, $393.00.
Use 1-1180 Undeposited Funds.
Payment Method = Cash.
ID# = CR000020.
Memo = Cash sales – Mario’s.
Allocation Account = 4-1000 Sales; Tax = FRE.
Use Recurring.
27/04/2014 Deposited cash received in Cheque Account, $393.00.
Use Prepare Bank Deposit.
ID# = CR000021.
Memo = Bank Deposit.
29/04/2014 Paid cleaning of shop, $31.35 (inc. GST).
Cheque No. = 11; Payee = Cheepa Jobs.
Memo = Paid cleaning.
Allocation Account = 6-4100 Cleaning; Tax = GST.
29/04/2014 Paid telephone, $85.36 (inc. GST)
Cheque No. = 12; Payee = Uptos.
Memo = Paid telephone.
Allocation Account = 6-4600 Telephone; Tax = GST.
30/04/2014 Paid rent of shop for April, $1,100.00 (inc. GST).
Cheque No. = 13; Payee = Cousin Joe.
Memo = Shop rent – April.
Allocation Account = 6-4400 Rent; Tax = GST.
Save as Recurring with details as follows:
Name = Shop Rent
Frequency = Monthly
Starting on = 30/05/2014.

When all transactions have been completed for the month of April 2014, you will take a moment
to check the balance of the Undeposited Funds account.
If the Undeposited Funds has worked as intended, it should have a balance of $0.00, as all
monies deposited in this account should have been transferred to the Cheque Account. You will
use the Find Transactions function to check this.
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Using Find Transactions to view transactions

1 From the Banking Command Centre, click on the Find Transactions button in the Command Panel.
The Find Transactions window should appear with the Account page tab already selected.
2 Type 11180 in the empty account number box, make sure the date range is from 1/04/2014 to
30/04/2014, and then resize the Find Transactions window so that all transactions are visible.
The transaction details of the Undeposited Funds account should appear as in Figure 3.128.

Figure 3.128 Undeposited Funds account transaction details

The debit entries represent individual receipts of cash and the credit entries represent transfers
to the Cheque Account for bank deposits. Most importantly, your Beginning Balance and
Ending Balance should both equal $0.00.
3 Restore the Find Transactions window to its normal size, and then click on Close to return to the
Command Centre window.

Correcting a recording error

A subsequent check of the records of Fred’s Fresh Foods revealed that cheque #9 (issued on
23/04/2014) was incorrectly recorded as $45.65. It should have been $65.45.
This error must be rectified now, so that a bank reconciliation can be successfully carried out.
1 Click on the Transaction Journal button from your Banking Command Centre.
The Transaction Journal window should open with the Disbursements tab selected.
2 Make sure that the date range shown is 1/04/2014 to 30/04/2014, and then scroll down through the list
of payments (disbursements) until you locate the cheque for the amount of $45.65 (23/04/2014).
3 Click on the zoom arrow beside that transaction to view that transaction in the Spend Money window.
4 Click in the Amount box (underneath the Date), type 65.45, then press Tab.
The Tax amount should be automatically adjusted to $5.95, as the total amount paid (and
allocated) is now $65.45.
 Chapter 3: Banking 3.107

5 Click on OK to return to the Transaction Journal window (Figure 3.129 below).

Figure 3.129 Transaction Journal window showing the corrected payment

6 Click on Close to return to the Command Centre window.
You may now proceed with the reconciliation of the Cheque Account.

Reconciling the Cheque Account

The bank statement received on April 30, 2014 had a closing balance of $7,927.25. This balance
did not include any interest received or service charges.
The following items did not appear in the bank statement received on April 30, 2014:
Withdrawal Cheque No. 11 $31.35
Withdrawal Cheque No. 12 $85.36
Withdrawal Cheque No. 13 $1,100.00
1 Carry out the reconciliation process and save the reconciliation report as Fresh_01.pdf.
2 When the reconciliation of the Cheque Account is complete, return to the Command Centre window.

Preparing reports
The only additional report required by Fred’s Fresh Foods is the Bank Register for April 2014.
1 Prepare the Bank Register for account 1-1110 only for the period covering 1/04/2014 to 30/04/2014.
2 Save this report as Fresh_02.pdf, and then check your report against the solution on your DVD.

Combining all reports into a single pdf

Your reports for this exercise should comprise Fresh_01.pdf and Fresh_02.pdf.
1 Combine Fresh_01.pdf and Fresh_02.pdf into a single file named Fresh_all.pdf.
You should now exit your data file and MYOB AccountRight Plus.

Exiting MYOB AccountRight Plus

1 Close your data file and exit MYOB AccountRight Plus.
Revision Exercise 3 is now completed.