Business background

Janice Green is the sole owner of a retail business, KidsLife which just commenced operations

in July $2020$ that buys and sells toys. The business is registered for Goods and Services Tax

$($GST$)$ with the ATO and business dealings are under the Australian Business Number $($ABN$)71$

$245860176.$

As a graduate accountant you will be preparing the March accounts for Janice Green and you

need to determine if and how each transaction is to be recorded in the accounts using MYOB.

KidsLife uses the accrual method of accounting and Janice has a perpetual inventory system in

place that records a continuous movement of inventory. In terms of accounts receivable, some

customers are given a discount for prompt payment and terms vary from $7$ to $30$ days. Regarding

suppliers, KidsLife receives a discount if payment is made early on outstanding invoices.

Janice wants to reduce expenses as much as possible and to lower wage costs, she works in

the store Mondays to Saturdays and just last month hired an experienced salesperson, Susan

Molly $($retail sales$/$admin$)$ who works Mondays to Fridays and is paid for the fortnight just worked

$($up to and including$)$ the Friday. Susan works $7$ hours a day in March as she is for the time being

the only other person working $($other than Janice$).$ Tax is deducted from her wage $($PAYG$)$ and

is remitted to the ATO quarterly. Janice is aware that a Payroll module in MYOB should be used

to process pays, however she does not have the time and funds to facilitate this at the moment.

Susan$$s wages are paid fortnightly via a cheque and is entitled to superannuation at $9\mathrm{.}5\%$ of her

gross wages for the month of March. An end of month journal entry will need to reflect this

accrual.

In terms of end of month processing, Janice Prepaid Rent at the start of the financial year. The

balance in the account reflects the portion that has still not been expensed. Prepayments are

recorded as assets and the portion used for the month $($expense$)$ is recorded in the general

journal as an adjusting entry, which you will need to record in the accounts. There was a wages

accrual processed at the end of February $2021,$ which was estimated to be $$1500.$ Reversal

entries for wages accrued are done at the start of March. You will need to determine how to

record a reversing entry for wages accrued.

Straight Line Depreciation of furniture and equipment is calculated based on a $7$ year life of the

equipment. You will need to calculate the annual depreciation $\%$ rate. The fixed asset has a

$$35,000$ salvage value at the end of its life. An adjusting entry is required for the month to reflect

depreciation on furniture and equipment.

Amortisation of leasehold improvements is based on the term of the lease which is $15$ years. An

adjusting entry is required for March to reflect amortisation of the leasehold.

AYB$106$ Assignment Semester $12024$ Page $5$

PART A: PROCESSING TRANSACTIONS $(20\%)$

Setup the following customer:

Trinity Jones

$5109$ Rainbow Crescent

NOOSA HEADS QLD $4567$

Ph: $(075)54559997$

ABN: nil

Discount: $2/10,$ n$/30$

Credit Limit: $$10,000$

Setup the following supplier:

BB and Co

$2$ Rodrigues Drive

NEWMARKET QLD $4030$

Ph: $(07)33575489$

ABN: $76895119000$

Discount: $5/10,$ n$/30$

Credit Limit: $$15,000$

New inventory item details:

Item Number: PC$01$ Cost ex GST: $$206$

Item Name: Inflatable Play Centre Base Selling Price ex GST: $$385$

March $2021$ transactions:

Mar

$1$ Record the reversing entry for wages that were accrued.

$1$

Susan ordered $50$ x PC$01$ Inflatable Play Centres from BB and Co at a cost of

$$206$ each $($exc GST$)($Purchase order$/$Invoice #$492)$ Hint: Setup the new

inventory item $($refer to Page $4$ for item details$)$

Freight charges were exempt as the purchase was over $$5,000.$ Ensure tax

inclusive box is not ticked.

Received the Supplier Invoice # $1022$ the same day $($Ignore the pre$-$dated

message when recording the purchase$)$

$2$ Superannuation payable of $$142\mathrm{.}5$ was paid to Superfast by Cheque # $891$

$2$

Cash sale $($paid by EFTPOS$)$: Hint: You will need to create a customer called

$$Cash$$ with C$.$O$.$D terms

$1$ x AU$01$ Audi Ride on car, $1$ x PC$01$ Inflatable Play Centre.

Ensure tax inclusive box is ticked when recording the cash sale.

$3$

Cash sale $($paid by Cash$)$:

$1$ x SG$01$ Soccer Goal set, $1$ x PT$01$ Pool inflatable float and $2$ x KY$01$ Kids

Kayaks with Paddle. The money was put in the safe overnight for the next

banking.

Ensure tax inclusive box is ticked when recording the cash sale. Hint: Use the

same processing method as the tutorial work.

AYB$106$ Assignment Semester $12024$ Page $6$

$4$ Received an EFT payment from Samuel and Jo for Invoice #$1902$ taking into

account any discount if applicable.

$4$

Cash sale $-2$ x AU$01$ Audi Ride on cars, $2$ x FR$01$ Ford Ranger $12$V Ride on cars,

$1$ x CB$01$ Cubby House. The customer paid Cash.

Ensure tax inclusive box is ticked when recording the cash sale. Hint: Use the

same processing method as the tutorial work.

$5$ Prepared a bank deposit and banked the mone