SkatesOn began operations on 1 June, buying and sellingskateboards, roller blades, scooters and the protective gear thatis essential when pursuing these types of sports. The structure ofthe business is that of a sole trader, with the owner being JasonKing.
Jason employed a sales assistant during the month who is to be paidfortnightly. Tax is deducted from the employee’s wages (PAYGwithholding tax) and remitted to the Australian Taxation Office(ATO) on a quarterly basis.
The business has not registered with theATO for the goods and services tax (GST) and has elected to use theaccrual basis of accounting.
Accounting recordsThe business records all transactions in the general journal. Thesetransactions are then posted to the appropriate account(s) in thegeneral ledger and the accounts receivable or accounts payablesubsidiary ledgers, where separate accounts are maintained for eachcustomer or supplier.
Chart of accountsThe chart of accounts for SkatesOn contains the accounts andaccount numbers below.
100
Cash at bank
110
Accounts receivable
120
Inventory
130
Prepaid insurance
171
Shop equipment (cost)
172
Accumulated depreciation – shopequipment
200
Accounts payable
210
Wages payable
220
PAYG withholding payable
230
Bank loan
300
Capital
310
Drawings
320
Profit or loss summary
400
Sales revenue
410
Sales returns and allowances
420
Discount received
500
Cost of sales
600
Depreciation expense
610
Discount allowed
620
Insurance expense
630
Interest expense
640
Rent expense
650
Wages expense
Transactions
June
1
The owner opened a bank account for thebusiness with a deposit of $24,200. This is capital provided byhim.
1
Purchased shop equipment (computer,cash register, shelving etc.) from Shop Outfitters Pty Ltd for$47,400. This was paid for with a loan of $43,790 from the bank andcheque for $3,610 from the business bank account. The bank loan isrepayable over 4 years.
2
Purchased inventory (skateboards,roller blades, helmets and other protective gear) from DaintreeImporters for $18,404 on terms on net 30.
2
Paid $3,288 for a 1-year insurancepolicy covering fire, theft, and public liability.
3
Paid rent of $1,980 for the shop forJune.
6
Cash sale of a skateboard andprotective equipment for $464 (cost of sales $191).
7
Returned some protective gear toDaintree Importers that was faulty and received an adjustment note(credit note) from them for $163.
8
Credit sale to Serious Fun ofskateboards and roller blades for $6,560 (cost of sales $3,011).This customer was given terms of 5/10, n/30.
10
Purchased scooters from Scoot Importsfor $9,660 on terms of 10/10, n/30.
14
Paid Daintree Importers $5,200 of theamount owing to them.
15
Credit sale to Action World of variousinventory items for $6,435 (cost of sales $2,785). Terms net30.
16
Received a cheque from Serious Fun forthe amount owing by them after deducting the prompt paymentdiscount.
17
Paid Scoot Imports the amount owing tothem less the prompt payment discount.
20
Credit sale to Toys Plus of 33 scootersat a discounted price of $423 each on terms of net 15. Cost ofsales $5,580.
21
Cash sale of inventory to the value of$721 (cost of sales $321).
22
Issued an adjustment note (credit note)to Action World for 5 helmets at $91 each that were not the stylethey prefer to sell. The cost of the helmets to us was $37 each andthey were put back into inventory.
24
Paid wages to James Paget the salesassistant of $530 less PAYG Withholding of $42 for the five days hehas been employed. In future he will be paid fortnightly.
27
The owner withdrew $1,020 cash from thebusiness bank account for his own personal use.
28
Purchased scooters from Scoot Importsfor $11,310 on terms of 10/10, n/30.
29
Received and banked a cheque from ToysPlus for the amount owing by them.
30
Credit sale to Serious Fun of scootersfor $4,850 (cost of sales $2,070). Terms 5/10, n/30.
30
A repayment of $930 was made on thebank loan.
The June transactions above have been journalised andposted.
Cash at bank
No. 100
Date
Details
Debit
Date
Details
Credit
June
1
Capital
24,200
June
1
Shop equipment (cost)
3,610
6
Sales revenue
464
2
Prepaid insurance
3,288
16
Accounts receivable
6,232
3
Rent expense
1,980
21
Sales revenue
721
14
Accounts payable
5,200
29
Accounts receivable
13,959
17
Accounts payable
8,694
24
Wages expense
488
27
Drawings
1,020
30
Bank loan
930
Accounts receivable
No. 110
Date
Details
Debit
Date
Details
Credit
June
8
Sales revenue
6,560
June
16
Cash at bank
6,232
15
Sales revenue
6,435
16
Discount allowed
328
20
Sales revenue
13,959
22
Sales returns and allowances
455
30
Sales revenue
4,850
29
Cash at bank
13,959
Inventory
No. 120
Date
Details
Debit
Date
Details
Credit
June
2
Accounts payable
18,404
June
6
Cost of sales
191
10
Accounts payable
9,660
7
Accounts payable
163
22
Cost of sales
185
8
Cost of sales
3,011
28
Accounts payable
11,310
15
Cost of sales
2,785
20
Cost of sales
5,580
21
Cost of sales
321
30
Cost of sales
2,070
Prepaid insurance
No. 130
Date
Details
Debit
Date
Details
Credit
June
2
Cash at bank
3,288
June
Shop equipment (cost)
No. 171
Date
Details
Debit
Date
Details
Credit
June
1
Bank loan
43,790
June
1
Cash at bank
3,610
Accounts payable
No. 200
Date
Details
Debit
Date
Details
Credit
June
7
Inventory
163
June
2
Inventory
18,404
14
Cash at bank
5,200
10
Inventory
9,660
17
Cash at bank
8,694
28
Inventory
11,310
17
Discount received
966
PAYG withholding payable
No. 220
Date
Details
Debit
Date
Details
Credit
June
June
24
Wages expense
42
Bank loan
No. 230
Date
Details
Debit
Date
Details
Credit
June
30
Cash at bank
930
June
1
Shop equipment (cost)
43,790
Capital
No. 300
Date
Details
Debit
Date
Details
Credit
June
June
1
Cash at bank
24,200
Drawings
No. 310
Date
Details
Debit
Date
Details
Credit
June
27
Cash at bank
1,020
June
Sales revenue
No. 400
Date
Details
Debit
Date
Details
Credit
June
June
6
Cash at bank
464
8
Accounts receivable
6,560
15
Accounts receivable
6,435
20
Accounts receivable
13,959
21
Cash at bank
721
30
Accounts receivable
4,850
Sales returns and allowances
No. 410
Date
Details
Debit
Date
Details
Credit
June
22
Accounts receivable
455
June
Discount received
No. 420
Date
Details
Debit
Date
Details
Credit
June
June
17
Accounts payable
966
Cost of sales
No. 500
Date
Details
Debit
Date
Details
Credit
June
6
Inventory
191
June
22
Inventory
185
8
Inventory
3,011
15
Inventory
2,785
20
Inventory
5,580
21
Inventory
321
30
Inventory
2,070
Discount allowed
No. 610
Date
Details
Debit
Date
Details
Credit
June
16
Accounts receivable
328
June
Rent expense
No. 640
Date
Details
Debit
Date
Details
Credit
June
3
Cash at bank
1,980
June
Wages expense
No. 650
Date
Details
Debit
Date
Details
Credit
June
24
Cash at bank
488
June
24
PAYG withholding payable
42
Prepare a trial balance as at 30 June and schedules of accountsreceivable and accounts payable.
(Note: Enter accounts in ascending account numberorder. Leave blank any answer fields that do not require ananswer.)
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