06/11/2019 Additional Exercise 3.21
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Bentley Sem 2 2019 / Online Workbook
*Additional Exercise 3.21
(Note: Although this question is based on the Skates ‘n’ Surf business the accounts, amounts and
transactions involved may differ between questions. Please read each question separately.)
Skate ‘n’ Surf began operations on 1 June, buying and selling surfboards, skateboards, wetsuits and the
protective gear for skateboarding. The structure of the business is that of a sole trader.
The business employed a sales assistant during the month who is to be paid fortnightly. Tax is deducted from
the employee’s wages (PAYG withholding tax) and remitted to the Australian Taxation Office (ATO) on a
quarterly basis.
The business has not registered with the ATO for the goods and services tax (GST) and has elected to use the
accrual basis of accounting.
Accounting records
The business records all transactions in the general journal. These transactions are then posted to the
appropriate account(s) in the general ledger and the accounts receivable or accounts payable subsidiary
ledgers, where separate accounts are maintained for each customer or supplier.
Chart of accounts
The chart of accounts for Skate ‘n’ Surf contains the accounts and account numbers below.
100 Cash at bank
110 Accounts receivable
120 Inventory
130 Prepaid insurance
171 Shop equipment (cost)
172 Accumulated depreciation – shop equipment
200 Accounts payable
210 PAYG withholding payable
220 Superannuation 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 Advertising expense
610 Depreciation expense
620 Discount allowed
630 Electricity expense
640 Insurance expense
650 Interest expense
660 Postage and stationery expense
670 Superannuation expense
680 Telephone expense
690 Wages expense
Transactions
06/11/2019 Additional Exercise 3.21
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June 1 The owner opened a bank account for the business with a deposit of $25,800. This is capital provided
by him.
1 Purchased display stands, shelving etc. (shop equipment) from Shop Displays Pty Ltd for $32,400
and computer equipment for the shop from Computer Wizards for $3,600. These were paid for with a
loan of $31,680 from the bank and cheque for $4,320 from the business bank account. The bank
loan is repayable over 3 years.
1 Paid $5,880 for a 1-year insurance policy covering fire, theft, and public liability.
2 Purchased inventory (skateboards and protective gear) from Excitement Plus for $17,000 on terms
on net 30.
5 Paid $1,500 to Local Newspapers for advertising for the shop for the month.
6 Cash sale of a skateboard and protective gear for $480 (cost of sales $165).
7 Purchased surfboards and wetsuits from Surf Imports for $16,270 on terms of 10/10, n/30.
8 Returned some protective gear to Excitement Plus that was faulty and received an adjustment note
(credit note) from them for $140.
9 Credit sale to Serious Fun of skateboards and protective gear for $4,400 (cost of sales $1,720). This
customer was given terms of 5/10, n/30.
11 Paid Surf Imports the amount owing to them less the prompt payment discount.
12 Credit sale to Surfing World of various inventory items for $6,750 (cost of sales $3,240). Terms net
30.
13 Cash purchase of stationery from Officeworks for $320.
14 Credit sale to Academy Diving School of 15 wetsuits at a discounted price of $260 each on terms of
net 15. Cost of sales $2,290.
18 Received a cheque from Serious Fun for the amount owing by them after deducting the prompt
payment discount.
19 Cash sale of inventory to the value of $900 (cost of sales $340).
20 Issued an adjustment note (credit note) to Academy Diving School for 1 wetsuit at $260 each that
was not the size they required. The cost of the wetsuit to us was $140 and it was put back into
inventory.
24 Paid Excitement Plus $5,200 of the amount owing to them.
25 Credit sale to Serious Fun of skateboards for $6,250 (cost of sales $2,900). Terms 5/10, n/30.
26 Purchased wetsuits from Surf Imports for $5,700 on terms of 10/10, n/30.
27 Received and banked a cheque from Academy Diving School for the amount owing by them.
30 The owner cashed a cheque for $1,810 to pay wages to Scott Walker the sales assistant of $810 less
PAYG Withholding of $80, and $1,080 drawings for himself.
The June transactions above have been journalised and posted. Following are the end of month adjustments
(round to the nearest dollar), which are also journalised.
a. Depreciation on shop equipment for the month is 20% p.a. prime cost (straight line).
b. One-twelfth of the insurance expired.
c. Superannuation payable for the month is 9% of the gross wages paid.
d. Interest charged on the bank loan for the month was $132.
| Date Description | Post ref. Debit Credit |
| 20XX | |
| June 30 Depreciation expense | 600 |
Accumulated depreciation – shop equipment 600
(Depreciation for the month)
30 Insurance expense 490
Prepaid insurance 490
(Amount of prepaid insurance expired for June)
30 Superannuation expense 73
Superannuation payable 73
(Superannuation payable for June)
30 Interest expense 132
Bank loan 132
(Interest charged to bank loan for June)
06/11/2019 Additional Exercise 3.21
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Post the above adjusting entries to the general ledger below.
(Note: Leave blank any answer fields that do not require an answer.)
Cash at bank No. 100
Date Details Debit Date Details Credit
June 1 Capital 25,800 June 1 Shop equipment (cost) 4,320
| 6 Sales revenue 480 18 Accounts receivable 4,180 19 Sales revenue 900 27 Accounts receivable 3,640 | 5 Advertising expense 1,500 11 Accounts payable 14,643 13 Postage and stationery expense 320 24 Accounts payable 5,200 30 Wages expense 730 30 Drawings 1,080 |
1 Prepaid insurance 5,880
Accounts receivable No. 110
Date Details Debit Date Details Credit
June 9 Sales revenue 4,400 June 18 Cash at bank 4,180
12 Sales revenue 6,750 18 Discount allowed 220
| 14 Sales revenue 3,900 25 Sales revenue 6,250 | 20 Sales returns and allowances 260 27 Cash at bank 3,640 |
Inventory No. 120
Date Details Debit Date Details Credit
June 2 Accounts payable 17,000 June 6 Cost of sales 165
7 Accounts payable 16,270
| 8 Accounts payable 140 9 Cost of sales 1,720 12 Cost of sales 3,240 14 Cost of sales 2,290 19 Cost of sales 340 25 Cost of sales 2,900 | 20 Cost of sales 140 26 Accounts payable 5,700 |
Prepaid insurance No. 130
| Date Details Debit June 1 Cash at bank 5,880 | Date Details Credit June |
Shop equipment (cost) No. 171
Date Details Debit
| Date Details Credit |
June 1 Bank loan 31,680
1 Cash at bank 4,320
Accumulated depreciation – shop equipment No. 172
| Date Details Debit | Date Details Credit June |
Accounts payable No. 200
Date Details Debit Date Details Credit
June 8 Inventory 140 June 2 Inventory 17,000
11 Cash at bank 14,643 7 Inventory 16,270
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11 Discount received 1,627 26 Inventory 5,700
| 24 Cash at bank PAYG withholding payable | 5,200 No. 210 |
| Date Details Debit |
Date Details Credit
June 30 Wages expense 80
Superannuation payable No. 220
| Date Details Debit | Date Details Credit June |
Bank loan No. 230
| Date Details Debit |
Date Details Credit
June 1 Shop equipment (cost) 31,680
Capital No. 300
| Date Details Debit |
Date Details Credit
June 1 Cash at bank 25,800
Drawings No. 310
Date Details Debit
| Date Details Credit |
June 30 Cash at bank 1,080
Sales revenue No. 400
| Date Details Debit | 9 Accounts receivable 4,400 12 Accounts receivable 6,750 14 Accounts receivable 3,900 19 Cash at bank 900 25 Accounts receivable 6,250 |
Date Details Credit
June 6 Cash at bank 480
Sales returns and allowances No. 410
Date Details Debit
| Date Details Credit |
June 20 Accounts receivable 260
Discount received No. 420
| Date Details Debit |
Date Details Credit
June 11 Accounts payable 1,627
Cost of sales No. 500
Date Details Debit Date Details Credit
June 6 Inventory 165 June 20 Inventory 140
| 9 Inventory 1,720 12 Inventory 3,240 14 Inventory 2,290 20 Inventory 340 25 Inventory 2,900 |
Advertising expense No. 600
| Date Details Debit | Date Details Credit |
06/11/2019 Additional Exercise 3.21
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Question Attempts: 0 of 1 used
June 5 Cash at bank 1,500
Depreciation expense No.
610
| Date Details Debit June | Date Details Credit |
Discount allowed No. 620
Date Details Debit
| Date Details Credit |
June 18 Accounts receivable 220
Insurance expense No.
640
| Date Details Debit June | Date Details Credit |
Interest expense No.
650
| Date Details Debit June | Date Details Credit |
Postage and stationery expense No. 660
Date Details Debit
| Date Details Credit |
June 13 Cash at bank 320
Superannuation expense No.
670
| Date Details Debit June | Date Details Credit |
Wages expense No. 690
Date Details Debit
| Date Details Credit |
June 30 Cash at bank 730
30 PAYG withholding payable 80
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