Summer O’Brien is a sole trader who operates Summer’s Wilderness Packs, a wholesale business selling hiking backpacks to retail outdoor and camping shops all over Australia, and on the internet. Summer operates her business from a small, rented warehouse in Hobart. She employs a casual worker for four days a week. Summer’s bookkeeper has just retired and she asks you if you can help her to record the transactions for June. As you are studying accounting she also asks you to finish off the books for the year and prepare some financial statements for her. She is thinking of expanding and needs the statements to apply for a bank loan. The bookkeeper has been keeping the records manually but Summer is keen for you to use Excel to complete the various records each month. Ignore GST.

Other Information:

• Summer sells two products, the Summer’s Wilderness Day Pack (known as the “Day Pack”) and the Summer’s Wilderness Hiking Pack (known as the “Hiking Pack”).

• She uses a perpetual inventory system and the First-in, First-out method to assign costs to Cost of Goods Sold.

• Prepayments (prepaid expenses or unearned revenue) are treated as an Asset or Liability when paid.

• Assume transactions are on credit unless it is stated otherwise.

• All transactions are recorded on the day they occur.

• For convenience, round all figures to the nearest dollar (you can get Excel to do this for you by showing no cents).

Schedule of Accounts Receivable at 31 May 2020

Acc No	Account	Amount
101	Q Quoll	7227
102	P Possum	4221
103	W Wombat	1055
		12503

Schedule of Accounts Payable at 31 May 2020

Acc No	Account	Amount
201	L Lake	4678
202	T Tarn	6557
203	M Mountain	5360
		16595

Inventory Subsidiary Ledger at 31 May 2020

item no	product name	unit	unit cost	amount
	day pack	42	45	1890
	hiking pack	39	112	4368
				6258

The May Bank Reconciliation Statement is as follows:

Summer’s Wilderness Packs Bank Reconciliation Statement As at 31 May 2020

Balance as per Bank Statement 76645Cr

Add Outstanding Deposit 2940

79585

Less Unpresented cheques

No 891 3125
No 901 480
No 903 1450 5055
Balance as per Cash at Bank Account 74530 dr

Transactions for the month of June are as follows:

june1 Received $1 000 from W Wombat for full payment of his debt as at 31 May, Receipt No 103 (hint, we may have given him a discount).

1 Paid the annual insurance premium of $1 956, Cheque 904.

2 Cash Sales, 12 Hiking Packs @ $180, Receipt No 104.

4 Paid M Mountain the amount owing to them less 5% cash discount for early payment, Cheque 905.

6 Credit sales to P Possum of 20 Day Packs @ $78, Invoice No. 56.

6 Paid L Lake the amount owing at 31 May and received a 7.5% discount for early payment, Cheque 906.

7 Paid wages owing for the fortnight $420, Cheque 907.

8 Paid T Tarn the full amount owing as at 31 May, Cheque 908.

9 Received $7,100 from Q Quoll as full payment of her debt as at 31 May, Receipt No 105.

10 Received a quote from Trucks R Us for $90 000 for a new delivery truck.

14 Paid Electricity Account $310, Cheque 909.

15 Purchased 30 Day Packs @ $48 from T Tarn, Invoice 1290.

16 Purchased 25 Hiking Packs @ $113 from M Mountain, Invoice 101.

18 Credit sales to W Wombat of 33 Day Packs @ $80 each, Invoice No 57.

18 Cash sales, 15 Day Packs @ $78, Receipt No 106.

19 Credit sales to Q Quoll 25 Hiking Packs @ $180 each, Invoice No. 58.

21 Q Quoll returned 5 Hiking Packs as she decided she only wanted 20. Summer issued Credit Note 19 and gave Q Quoll a credit. As the packs were not damaged they were returned to the inventory.

22 Paid wages owing for the fortnight $420, Cheque 910.

22 Appointed Tim Brady as Sales Representative starting on 8th July 2020. His retainer wage was agreed at $1 666 per month with a commission of 5% on products sold.

23 Received $3,500 from P Possum, Receipt No 107.

24 Credit sales to W Wombat of 15 Hiking Packs @ $180, Invoice No. 59.

25 Purchased 40 Day Packs @ $49 each from L Lake, Invoice 277.

26 Cash Sales, 10 Day Packs @ $80 and 10 Hiking Packs @ $182, Receipt No 108.

27 Provided a wholesale sales quote to Hobart Hardware for 500 Day Packs @ $65.

28 Received $3 600 from Q Quoll, Receipt No 109.

29 Paid M Mountain $1 200, Cheque 911.

30 Traded in the delivery truck for $13 000 in part payment for a new delivery truck costing $74 000. The remaining $61 000 was paid in cash, Cheque 912 (see depreciation information below).

30 End of Month adjustments

• Insurance is paid once a year in advance on 1 June each year. No adjustment has been made during the year.

• Wages owing at 30 June $220.

• A stocktake in the office reveals that Packaging Materials on Hand are $640.

• Depreciation:

  • ➢ Warehouse Fixtures and Fittings depreciation is based on 15 years usage and the straight line method (residual value $6 000)

  • ➢ The old Delivery Truck sold on 30 June is depreciated at 20% using the diminishing balance method (residual $8 000).

  • ➢ The new Delivery Truck bought on 30 June is to be depreciated at 25% using the diminishing balance method (residual $10,000).

• The Telephone and Internet account for June for $250 has not been received or paid.

• Allowance for Doubtful Debts needs to be adjusted to equal 8% of Accounts Receivable Control at 30 June.

• A stocktake revealed the following closing balances: Day Pack 34

  Hiking Pack 7

You are required to:

1. Record accurately all transactions in the correct journals. You will need to complete the Inventory Subsidiary Ledger cards for the three items of inventory as you go so that you can calculate the Cost of Goods Sold for each lot of sales.

2. Post the journals to the general ledger at the end of the month (and post to the subsidiary ledger daily).