Additional Exercise 4.13

06/11/2019 Additional Exercise 4.13
https://edugen.wileyplus.com/edugen/shared/assignment/test/qprint.uni 1/4
Print by: Marcus NGO
Bentley Sem 2 2019 / Online Workbook
*Additional Exercise 4.13
(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
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680 Telephone expense
690 Wages expense
Transactions
June 1 The owner opened a bank account for the business with a deposit of $30,200. This is
capital provided by him.
1 Purchased display stands, shelving etc. (shop equipment) from Shop Displays Pty Ltd for
$28,600 and computer equipment for the shop from Computer Wizards for $3,900. These
were paid for with a loan of $28,600 from the bank and cheque for $3,900 from the
business bank account. The bank loan is repayable over 3 years.
2 Purchased inventory (skateboards and protective gear) from Excitement Plus for $25,500
on terms on net 30.
5 Cash purchase of stationery from Officeworks for $310.
7 Purchased surfboards and wetsuits from Surf Imports for $19,400 on terms of 10/10,
n/30.
9 Paid Surf Imports the amount owing to them less the prompt payment discount.
11 Paid $5,580 for a 1-year insurance policy covering fire, theft, and public liability.
12 Paid $1,520 to Local Newspapers for advertising for the shop for the month.
13 Credit sale to Serious Fun of skateboards and protective gear for $5,000 (cost of sales
$2,800). This customer was given terms of 5/10, n/30.
14 Credit sale to Surfing World of various inventory items for $7,100 (cost of sales $3,600).
Terms net 30.
17 Credit sale to Academy Diving School of 15 wetsuits at a discounted price of $275 each on
terms of net 15. Cost of sales $3,300.
18 Returned some protective gear to Excitement Plus that was faulty and received an
adjustment note (credit note) from them for $210.
18 Received a cheque from Serious Fun for the amount owing by them after deducting the
prompt payment discount.
19 Issued an adjustment note (credit note) to Academy Diving School for 4 wetsuits at $275
each that was not the size they required. The cost of the wetsuits to us was $450 and
they were put back into inventory.
20 Cash sale of inventory to the value of $1,100 (cost of sales $450).
23 Paid Excitement Plus $2,300 of the amount owing to them.
25 Credit sale to Serious Fun of skateboards for $7,200 (cost of sales $3,760). Terms 5/10,
n/30.
26 Received and banked a cheque for $5,200 from Surfing World in part payment of the
amount owing by them.
27 Purchased wetsuits from Surf Imports for $7,500 on terms of 10/10, n/30.
30 Paid Telstra $150 for telephone expenses.
30 The owner cashed a cheque for $850 to pay wages to Scott Walker the sales assistant of
$880 less PAYG Withholding of $30.
The end of month adjustments are below.
a. Depreciation on shop equipment for the month is 25% p.a. prime cost (straight line).
b. One-twelfth of the insurance expired.
c. Superannuation payable for the month is 10% of the gross wages paid.
d. Interest charged on the bank loan for the month was $119.
The transactions above have been journalised and posted. The adjusted trial balance is below.
Skate ‘n’ Surf
Adjusted trial balance
as at 30 June 20XX

Account no. Account Debit
100 Cash at bank 9,180

Credit

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110 Accounts receivable

12,125
38,730
5,115
32,500
1,100
13,460
1,520
677
250
465
119
310
84
150
880
677
30,490
30
84
28,719
30,200
24,525
1,940
$116,665 $116,665

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 400 Sales revenue 410 Sales returns and allowances 420 Discount received 500 Cost of sales 600 Advertising expense 610 Depreciation expense 620 Discount allowed 640 Insurance expense 650 Interest expense 660 Postage and stationery expense 670 Superannuation expense 680 Telephone expense 690 Wages expense *(a)
Prepare the statement of profit or loss for June.
(Enter accounts in ascending account order.)
Skate ‘n’ Surf
Statement of profit or loss
for the period 1 June to 30 June 20XX

Revenue
Sales revenue
Less:
Net sales revenue
Less:
Gross profit
Other revenue:

Expenses
06/11/2019 Additional Exercise 4.13
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Total expenses
Net profit / (loss)

$
*(b)
The parts of this question must be completed in order. This part will be available when you
complete the part above.
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