Additional Exercise 3.22

06/11/2019 Additional Exercise 3.22
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Bentley Sem 2 2019 / Online Workbook
*Additional Exercise 3.22
(Note: Although this question is based on the Skate ‘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
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Transactions
June 1 The owner opened a bank account for the business with a deposit of $22,000. This is capital
provided by him.
1 Purchased display stands, shelving etc. (shop equipment) from Shop Displays Pty Ltd for $26,700
and computer equipment for the shop from Computer Wizards for $4,400. These were paid for
with a loan of $26,000 from the bank and cheque for $5,100 from the business bank account. The
bank loan is repayable over 4 years.
1 Paid $3,600 for a 1-year insurance policy covering fire, theft, and public liability.
2 Purchased inventory (skateboards and protective gear) from Excitement Plus for $21,700 on terms
on net 30.
5 Cash purchase of postage stamps and stationery from Australia Post for $450.
7 Purchased surfboards and wetsuits from Surf Imports for $18,230 on terms of 10/10, n/30.
8 Paid $1,480 to Local Newspapers for advertising for the shop for the month.
8 Paid Surf Imports the amount owing to them less the prompt payment discount.
11 Credit sale to Surfing World of various inventory items for $7,110 (cost of sales $3,680). Terms net
30.
12 Credit sale to Academy Diving School of 13 wetsuits at a discounted price of $240 each on terms
of net 15. Cost of sales $2,200.
13 Credit sale to Serious Fun of skateboards and protective gear for $4,700 (cost of sales $2,200).
This customer was given terms of 5/10, n/30.
14 Cash sale of a skateboard and protective gear for $460 (cost of sales $180).
18 Received a cheque from Serious Fun for the amount owing by them after deducting the prompt
payment discount.
23 Cash sale of inventory to the value of $940 (cost of sales $420).
24 Issued an adjustment note (credit note) to Academy Diving School for 2 wetsuits at $240 each
that was not the size they required. The cost of the wetsuits to us was $340 and they were put
back into inventory.
25 Paid Excitement Plus $4,600 of the amount owing to them.
26 Credit sale to Serious Fun of skateboards for $6,500 (cost of sales $2,800). Terms 5/10, n/30.
27 Purchased wetsuits from Surf Imports for $6,900 on terms of 10/10, n/30.
27 Received and banked a cheque from Academy Diving School for the amount owing by them.
30 Paid Energy Australia $190 for electricity expenses.
30 The owner cashed a cheque for $1,770 to pay wages to Scott Walker the sales assistant of $850
less PAYG Withholding of $30, and $950 drawings for himself.
The end of month adjustments are below.
a. Depreciation on shop equipment for the month is 15% 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 $108.
The transactions above have been journalised and posted.
Cash at bank No. 100
Date Details Debit Date Details Credit
June 1 Capital 22,000 June 1 Shop equipment (cost) 5,100
14 Sales revenue 460

1 Prepaid insurance 3,600
5 Postage and stationery expense 450
8 Advertising expense 1,480
8 Accounts payable 16,407
25 Accounts payable 4,600
30 Electricity expense 190
30 Wages expense 820
30 Drawings 950
18 Accounts receivable 4,465
23 Sales revenue 940
27 Accounts receivable 2,640

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Accounts receivable No. 110
Date Details Debit Date Details Credit
June 11 Sales revenue 7,110 June 18 Cash at bank 4,465
12 Sales revenue 3,120 18 Discount allowed 235

13 Sales revenue 4,700
26 Sales revenue 6,500
24 Sales returns and allowances 480
27 Cash at bank 2,640

Inventory No. 120
Date Details Debit Date Details Credit
June 2 Accounts payable 21,700 June 11 Cost of sales 3,680
7 Accounts payable 18,230

12 Cost of sales 2,200
13 Cost of sales 2,200
14 Cost of sales 180
23 Cost of sales 420
26 Cost of sales 2,800
24 Cost of sales 340
27 Accounts payable 6,900

Prepaid insurance No. 130
Date Details Debit Date Details Credit
June 1 Cash at bank 3,600 June 30 Insurance expense 300
Shop equipment (cost) No. 171
Date Details Debit

Date Details Credit

June 1 Bank loan 26,000
1 Cash at bank 5,100
Accumulated depreciation – shop equipment No. 172

Date Details Debit

Date Details Credit
June 30 Depreciation expense 389
Accounts payable No. 200
Date Details Debit Date Details Credit
June 8 Cash at bank 16,407 June 2 Inventory 21,700
8 Discount received 1,823 7 Inventory 18,230

25 Cash at bank 4,600 27 Inventory 6,900

PAYG withholding payable No. 210

Date Details Debit

Date Details Credit
June 30 Wages expense 30
Superannuation payable No. 220

Date Details Debit

Date Details Credit
June 30 Superannuation expense 73
Bank loan No. 230

Date Details Debit

Date Details Credit
June 1 Shop equipment (cost) 26,000
30 Interest expense 108
Capital No. 300

Date Details Debit

Date Details Credit
June 1 Cash at bank 22,000
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Drawings No. 310
Date Details Debit

Date Details Credit

June 30 Cash at bank 950
Sales revenue No. 400

Date Details Debit 12 Accounts receivable 3,120
13 Accounts receivable 4,700
14 Cash at bank 460
23 Cash at bank 940
26 Accounts receivable 6,500

Date Details Credit
June 11 Accounts receivable 7,110
Sales returns and allowances No. 410
Date Details Debit

Date Details Credit

June 24 Accounts receivable 480
Discount received No. 420

Date Details Debit

Date Details Credit
June 8 Accounts payable 1,823
Cost of sales No. 500
Date Details Debit Date Details Credit
June 11 Inventory 3,680 June 24 Inventory 340

12 Inventory 2,200
13 Inventory 2,200
14 Inventory 180
23 Inventory 420
26 Inventory 2,800

Advertising expense No. 600
Date Details Debit

Date Details Credit

June 8 Cash at bank 1,480
Depreciation expense No. 610
Date Details Debit

Date Details Credit

June 30 Accumulated depreciation – shop equipment 389
Discount allowed No. 620
Date Details Debit

Date Details Credit

June 18 Accounts receivable 235
Electricity expense No. 630
Date Details Debit

Date Details Credit

June 30 Cash at bank 190
Insurance expense No. 640
Date Details Debit

Date Details Credit

June 30 Prepaid insurance 300
Interest expense No. 650
Date Details Debit

Date Details Credit

June 30 Bank loan 108
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Postage and stationery expense No. 660
Date Details Debit

Date Details Credit

June 5 Cash at bank 450
Superannuation expense No. 670
Date Details Debit

Date Details Credit

June 30 Superannuation payable 73
Wages expense No. 690
Date Details Debit

Date Details Credit

June 30 Cash at bank 820
30 PAYG withholding payable 30
Prepare an adjusted trial balance.
(Note: Enter accounts in ascending account number order. Leave blank any answer fields that do
not require an answer.)
Skate ‘n’ Surf
Adjusted trial balance
as at 30 June 20XX

Account no Account Debit
$
Credit
$

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$ $

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