Assignment 1: Procure to Pay
Instructions for submission:
1. The assignment must be done in a word-file.
2. The name of the word file should be – “studentname_section_rollno”
3. This must be submitted one week from the date the assignment is uploaded
Business Case: Kerry Confectionery Ltd is Manufacturers of Coffee Bite, Caramilk, Coconut Punch, Lacto King, Orange Candy variety of Chocolates. The Chocolates Manufacturing Process is as follows
• Milk is Boiled to evaporate the Water content @100 Degree centigrade and it is called Boiled Milk
• Then to the boiled Milk, Sugar and Cocoa are added which has the water content. This is again boiled to evaporate all the water content to make it as Thick Liquid Milk called Condensed Milk
• Condensed Milk is allowed to be allowed to pass through a drier which takes all Water content and make it as dry chocolate.
• The dry chocolates are allowed to pass through a cutting machine which cuts the chocolates into different pieces of 5 grams, 10 grams, etc
• Then the pieces of chocolates are passed to a wrapper machine which wraps the chocolate and pass it on to a container
• Then the wrapped chocolates from the container are sent to a Packing machine which picks up chocolates and makes them as 500 grams, 1KG pack chocolate covers.
• Then the chocolates are placed in 10 kg, 20 Kg carton boxes and sent to Customers
Kerry Confectionery Ltd is Manufacturers of Caramilk, Lactoking and Coconut Punch Chocolates. Their Statement of Affairs as on 31-Oct-2017 is as follows
Balance sheet as on 31-Oct-2007
Liabilities Amount in RS. Assets Amount in RS.
Share Capital 50000 Fixed Assets
Long term Loans Building 25000
8% Debentures 50000 Plant and Machinery 75000
Loan from ICICI 25000 Investments
20000
Current Liabilities Current Assets
Sundry Creditors 50000 Inventory 25000
Sundry Debtors 20000
Bank 7500
Cash 2500
Total Liabilities 175000 Total Assets 175000
During the period 01-Nov-2007 to 30-Nov-2007 following Transactions took place
Transactions
1st Nov – The production department raises a requisition to buy
i) Milk 500 Ltrs @ 12INR per Ltr – 6000 INR
ii) Sugar 500 Kgs @ 10INR per Kg – 5000 INR
iii) Cocoa 500 Kgs @ 25 INR per Kg – 12500 INR
2nd Nov – The procurement department reviews the purchase requisition and raises a purchases order with Dairy International Ltd.(DIL) for the following
i) Milk 500 Ltrs @ 12INR per Ltr – 6000 INR
ii) Sugar 500 Kgs @ 10INR per Kg – 5000 INR
iii) Cocoa 500 Kgs @ 25 INR per Kg – 12500 INR
3rd Nov – DIL Supplies Milk 500 Ltrs @ 12INR per Ltr – 6000 INR
4th Nov – DIL Sends Invoice for INR 6000 with payment term 30 days, if paid within 5 days, then a discount of 5%
5th Nov – DIL supplies Sugar 500 Kgs @ 10INR per Kg – 5000 INR and Cocoa 500 Kgs @ 25 INR per Kg – 12500 INR
6th Nov – DIL sends Invoice for INR 5000 + INR 12500 with payment term 30 days, if paid within 5 days, then a discount of 5%
8th Nov The company pays DIL takes discount of 5% and deducts withholding tax of 10%
Assignment
1) Draw a process map of Procure to Pay applicable for the above scenario and explain each step with the applicable transaction and the Source Documents
2) Create the Accounting Entries for Each step, wherever it is applicable (Use the Chart of Accounts provided in Annexure A)
Annexure A
Chart of Accounts (COA)
The proper accounts payable procedure begins with a good chart of accounts, which enables you to post your expenses to the correct account. The process is complete when you issue a check or electronic payment to the vendor for the amount due on or before the stated due date.
If you’re used to managing your own personal bills, you should have no problem transitioning to the accounts payable process. However, there are a few things you need to do in order to prepare and process accounts payable properly.
Creating a chart of accounts that works with your business is one of the most important things you’ll need to do before you begin to process accounts payable. Your chart of accounts is where all of your accounting transactions reside, and accounts payable is no exception.
While most accounting software applications include a default chart of accounts, be sure to add any additional accounts in order to track your accounts payable expenses properly. You can also set up your chart of accounts on spreadsheet software such as Microsoft Excel
Account Code Account Description
1000 ASSETS
1010 CASH Operating Account
1020 CASH Debitors
1030 CASH Petty Cash
1200 RECEIVABLES
1210 A/REC Trade
1220 A/REC Trade Notes Receivable
1230 A/REC Installment Receivables
1240 A/REC Retainage Withheld
1290 A/REC Allowance for Uncollectible Accounts
1300 INVENTORIES
1310 INV – Reserved
1320 INV – Work-in-Progress
1330 INV – Finished Goods
1340 INV – Reserved
1350 INV – Unbilled Cost & Fees
1390 INV – Reserve for Obsolescence
1400 PREPAID EXPENSES & OTHER CURRENT ASSETS
1410 PREPAID – Insurance
1420 PREPAID – Real Estate Taxes
1430 PREPAID – Repairs & Maintenance
1440 PREPAID – Rent
1450 PREPAID – Deposits
1500 PROPERTY PLANT & EQUIPMENT
1510 PPE – Buildings
1520 PPE – Machinery & Equipment
1530 PPE – Vehicles
1540 PPE – Computer Equipment
1550 PPE – Furniture & Fixtures
1560 PPE – Leasehold Improvements
1600 ACCUMULATED DEPRECIATION & AMORTIZATION
1610 ACCUM DEPR Buildings
1620 ACCUM DEPR Machinery & Equipment
1630 ACCUM DEPR Vehicles
1640 ACCUM DEPR Computer Equipment
1650 ACCUM DEPR Furniture & Fixtures
1660 ACCUM DEPR Leasehold Improvements
1700 NON – CURRENT RECEIVABLES
1710 NCA – Notes Receivable
1720 NCA – Installment Receivables
1730 NCA – Retainage Withheld
1800 INTERCOMPANY RECEIVABLES
1900 OTHER NON-CURRENT ASSETS
1910 Organization Costs
1920 Patents & Licenses
1930 Intangible Assets – Capitalized Software Costs
2000 LIABILITIES
2100 PAYABLES
2110 A/P Trade
2120 A/P Accrued Accounts Payable
2130 A/P Retainage Withheld
2150 Current Maturities of Long-Term Debt
2160 Bank Notes Payable
2170 Construction Loans Payable
2200 ACCRUED COMPENSATION & RELATED ITEMS
2210 Accrued – Payroll
2220 Accrued – Commissions
2230 Accrued – FICA
2240 Accrued – Unemployment Taxes
2250 Accrued – Workmen’s Comp
2260 Accrued – Medical Benefits
2270 Accrued – 401 K Company Match
2275 W/H – FICA
2280 W/H – Medical Benefits
2285 W/H – 401 K Employee Contribution
2300 OTHER ACCRUED EXPENSES
2310 Accrued – Rent
2320 Accrued – Interest
2330 Accrued – Property Taxes
2340 Accrued – Warranty Expense
2500 ACCRUED TAXES
2510 Accrued – Federal Income Taxes
2520 Accrued – State Income Taxes
2530 Accrued – Franchise Taxes
2540 Deferred – FIT Current
2550 Deferred – State Income Taxes
2600 DEFERRED TAXES
2610 D/T – FIT – NON CURRENT
2620 D/T – SIT – NON CURRENT
2700 LONG-TERM DEBT
2710 LTD – Notes Payable
2720 LTD – Mortgages Payable
2730 LTD – Installment Notes Payable
2800 INTERCOMPANY PAYABLES
2900 OTHER NON CURRENT LIABILITIES
3000 OWNERS EQUITIES
3100 Common Stock
3200 Preferred Stock
3300 Paid in Capital
3400 Partners Capital
3500 Member Contributions
3900 Retained Earnings
4000 REVENUE
4010 REVENUE – PRODUCT 1
4020 REVENUE – PRODUCT 2
4030 REVENUE – PRODUCT 3
4040 REVENUE – PRODUCT 4
4600 Interest Income
4700 Other Income
4800 Finance Charge Income
4900 Sales Returns and Allowances
4950 Sales Discounts
5000 COST OF GOODS SOLD
5010 COGS – PRODUCT 1
5020 COGS – PRODUCT 2
5030 COGS – PRODUCT 3
5040 COGS – PRODUCT 4
5700 Freight
5800 Inventory Adjustments
5900 Purchase Returns and Allowances
5950 Reserved
6000 – 7000 OPERATING EXPENSES
6010 Advertising Expense
6050 Amortization Expense
6100 Auto Expense
6150 Bad Debt Expense
6200 Bank Charges
6250 Cash Over and Short
6300 Commission Expense
6350 Depreciation Expense
6400 Employee Benefit Program
6550 Freight Expense
6600 Gifts Expense
6650 Insurance – General
6700 Interest Expense
6750 Professional Fees
6800 License Expense
6850 Maintenance Expense
6900 Meals and Entertainment
6950 Office Expense
7000 Payroll Taxes
7050 Printing
7150 Postage
7200 Rent
7250 Repairs Expense
7300 Salaries Expense
7350 Supplies Expense
7400 Taxes – FIT Expense
7500 Utilities Expense
7900 Gain/Loss on Sale of Assets
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Procure to Pay is the first assignment.
Submission Instructions:
1. The task must be completed in a word document.
2. The word file should be named “studentname section rollno.”
3. This must be provided within one week of the assignment’s submission date.
Kerry Confectionery Ltd is a chocolate manufacturer that produces Coffee Bite, Caramilk, Coconut Punch, Lacto King, and Orange Candy chocolates. The following is a description of the chocolate manufacturing process:
• Boiled milk is milk that has been boiled to evaporate the water content at 100 degrees Celsius.
• Then, to the cooked milk, sugar and cocoa with water content are added. This is then cooked again to evaporate all of the water content, resulting in Thick Liquid Milk known as Condensed Milk.
• Condensed Milk is permitted.
