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
Cashat bank
110
Accounts receivable
120
Inventory
130
Prepaid insurance
171
Shopequipment (cost)
172
Accumulated depreciation – shop equipment
200
Accounts payable
210
Wagespayable
220
PAYGwithholding payable
230
Bankloan
300
Capital
310
Drawings
320
Profitor loss summary
400
Salesrevenue
410
Salesreturns and allowances
420
Discount received
500
Costof sales
600
Depreciation expense
610
Discount allowed
620
Insurance expense
630
Interest expense
640
Rentexpense
650
Wagesexpense
Transactions
June
1
Theowner opened a bank account for the business with a deposit of$26,600. This is capital provided by him.
1
Purchased shop equipment (computer, cash register, shelving etc.)from Shop Outfitters Pty Ltd for $42,420. This was paid for with aloan of $39,500 from the bank and cheque for $2,920 from thebusiness bank account. The bank loan is repayable over 4years.
2
Purchased inventory (skateboards, roller blades, helmets and otherprotective gear) from Daintree Importers for $16,489 on terms onnet 30.
2
Paid$3,312 for a 1-year insurance policy covering fire, theft, andpublic liability.
3
Paidrent of $2,180 for the shop for June.
6
Cashsale of a skateboard and protective equipment for $481 (cost ofsales $174).
7
Returned some protective gear to Daintree Importers that was faultyand received an adjustment note (credit note) from them for$159.
8
Creditsale to Serious Fun of skateboards 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 Imports for $10,130 on terms of10/10, n/30.
14
PaidDaintree Importers $4,890 of the amount owing to them.
15
Creditsale to Action World of various inventory items for $7,128 (cost ofsales $2,696). Terms net 30.
16
Received a cheque from Serious Fun for the amount owing by themafter deducting the prompt payment discount.
17
PaidScoot Imports the amount owing to them less the prompt paymentdiscount.
20
Creditsale to Toys Plus of 29 scooters at a discounted price of $384 eachon terms of net 15. Cost of sales $6,500.
21
Cashsale of inventory to the value of $728 (cost of sales $292).
22
Issuedan adjustment note (credit note) to Action World for 5 helmets at$103 each that were not the style they prefer to sell. The cost ofthe helmets to us was $37 each and they were put back intoinventory.
24
Paidwages to James Paget the sales assistant of $470 less PAYGWithholding of $38 for the five days he has been employed. Infuture he will be paid fortnightly.
27
Theowner withdrew $980 cash from the business bank account for his ownpersonal use.
28
Purchased scooters from Scoot Imports for $12,360 on terms of10/10, n/30.
29
Received and banked a cheque from Toys Plus for the amount owing bythem.
30
Creditsale to Serious Fun of scooters for $5,140 (cost of sales $1,880).Terms 5/10, n/30.
30
Arepayment of $950 was made on the bank 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 equipmentfor the month is 20% p.a. prime cost (straight line).
b.
One-twelfth of the insuranceexpired.
c.
Wages payable at 30 June were$403.
d.
Interest charged on the bankloan 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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