Additional Exercise

06/11/2019 Additional Exercise 3.20
https://edugen.wileyplus.com/edugen/shared/assignment/test/qprint.uni 1/3
Print by: Marcus NGO
Bentley Sem 2 2019 / Online Workbook
*Additional Exercise 3.20
(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
Transactions
June 1 The owner opened a bank account for the business with a deposit of $36,000. This is capital provided by him.
1 Purchased display stands, shelving etc. (shop equipment) from Shop Displays Pty Ltd for $36,000 and computer
equipment for the shop from Computer Wizards for $9,000.
These were paid for with a loan of $42,000 from the bank and cheque for $3,000 from the business bank
account. The bank loan is repayable over 4 years.
2 Paid $4,200 for a 1-year insurance policy covering fire, theft, and public liability.
2 Paid $1,200 to Local Newspapers for advertising for the shop for the month.
7 Purchased inventory (skateboards and protective gear) from Excitement Plus for $26,000 on terms on net 30.
8 Credit sale to Serious Fun of skateboards and protective gear for $5,500 (cost of sales $2,400). This customer
was given terms of 5/10, n/30.
06/11/2019 Additional Exercise 3.20
https://edugen.wileyplus.com/edugen/shared/assignment/test/qprint.uni 2/3
8 Cash sale of a skateboard and protective gear for $500 (cost of sales $240).
11 Cash purchase of postage stamps and stationery from Australia Post for $180.
12 Credit sale to Surfing World of various inventory items for $7,950 (cost of sales $4,300). Terms net 30.
12 Returned some protective gear to Excitement Plus that was faulty and received an adjustment note (credit note)
from them for $190.
13 Received a cheque from Serious Fun for the amount owing by them after deducting the prompt payment
discount.
14 Paid Surf Imports the amount owing to them less the prompt payment discount.
17 Credit sale to Academy Diving School of 16 wetsuits at a discounted price of $320 each on terms of net 15. Cost
of sales $3,700.
23 Paid Excitement Plus $4,500 of the amount owing to them.
24 Issued an adjustment note (credit note) to Academy Diving School for 1 wetsuit at $320 each that was not the
size they required. The cost of the wetsuit to us was $190 and it was put back into inventory.
24 Purchased wetsuits from Surf Imports for $9,400 on terms of 10/10, n/30.
25 Credit sale to Serious Fun of skateboards for $8,100 (cost of sales $3,600). Terms 5/10, n/30.
27 Received and banked a cheque from Academy Diving School for the amount owing by them.
30 A repayment of $1,200 was made on the bank loan.
30 The owner cashed a cheque for $780 to pay wages to Scott Walker the sales assistant of $810 less PAYG
Withholding of $30.
The June transactions above have been journalised and posted.
Skate ‘n’ Surf
Trial balance
as at 30 June 20XX
Account no. Account

Debit
8,965
16,050
46,160
4,200
45,000
320
14,050
1,200
275
180
810
Credit
30,710
30
40,800
36,000
27,170
2,500
$137,210 $137,210

100 Cash at bank 110 Accounts receivable 120 Inventory 130 Prepaid insurance 171 Shop equipment (cost) 200 Accounts payable 210 PAYG withholding payable 230 Bank loan 300 Capital 400 Sales revenue 410 Sales returns and allowances 420 Discount received 500 Cost of sales 600 Advertising expense 620 Discount allowed 660 Postage and stationery expense 690 Wages expense Journalise the following end-of-month adjustments.
(Note: Enter debit entries first, followed by credit entries in the general journal. Credit account titles are
automatically indented when the amount is entered. Do not indent manually. Leave blank any answer fields
that do not require an answer. Round answer to the nearest whole dollar.)
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 10.0% of the gross wages paid.
d. Interest charged on the bank loan for the month was $158.

Date Description Post ref. Debit Credit
20XX
June

(Depreciation for the month)
06/11/2019 Additional Exercise 3.20
https://edugen.wileyplus.com/edugen/shared/assignment/test/qprint.uni 3/3
Question Attempts: 0 of 1 used
(Amount of prepaid insurance
expired for June)
(Superannuation payable for
June)
(Interest charged to bank
loan for June)
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