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 $26,600. This is capital provided byhim.
1
Purchased shop equipment (computer,cash register, shelving etc.) from Shop Outfitters Pty Ltd for$42,420. This was paid for with a loan of $39,500 from the bank andcheque for $2,920 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 $16,489 on terms on net 30.
2
Paid $3,312 for a 1-year insurancepolicy covering fire, theft, and public liability.
3
Paid rent of $2,180 for the shop forJune.
6
Cash sale of a skateboard andprotective equipment for $481 (cost of sales $174).
7
Returned some protective gear toDaintree Importers that was faulty and received an adjustment note(credit note) from them for $159.
8
Credit sale to Serious Fun ofskateboards and roller blades for $6,560 (cost of sales $2,815).This customer was given terms of 5/10, n/30.
10
Purchased scooters from Scoot Importsfor $10,130 on terms of 10/10, n/30.
14
Paid Daintree Importers $4,890 of theamount owing to them.
15
Credit sale to Action World of variousinventory items for $7,128 (cost of sales $2,696). 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 29 scootersat a discounted price of $384 each on terms of net 15. Cost ofsales $6,500.
21
Cash sale of inventory to the value of$728 (cost of sales $292).
22
Issued an adjustment note (credit note)to Action World for 5 helmets at $103 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 $470 less PAYG Withholding of $38 for the five days hehas been employed. In future he will be paid fortnightly.
27
The owner withdrew $980 cash from thebusiness bank account for his own personal use.
28
Purchased scooters from Scoot Importsfor $12,360 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 $5,140 (cost of sales $1,880). Terms 5/10, n/30.
30
A repayment of $950 was made on thebank loan.
The June transactions above have been journalised and posted.Journalise the following end-of-month adjustments.
(Enter debit entries first, followed by credit entriesin general journal. Credit account titles are automaticallyindented when the amount is entered. Do not indentmanually.)
a.
Depreciation on shop equipment for the month is 20% p.a. primecost (straight line).
b.
One-twelfth of the insurance expired.
c.
Wages payable at 30 June were $403.
d.
Interest charged on the bank loan for the month was $175.
Post Date Description ref. 20XX June (Depreciation for the month) (Amount of prepaid insurance expired for June) (Wages accrued at 30 June) (Interest charged to bank loan for June) Debit Credit Show transcribed image text Post Date Description ref. 20XX June (Depreciation for the month) (Amount of prepaid insurance expired for June) (Wages accrued at 30 June) (Interest charged to bank loan for June) Debit Credit
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