This case study requires you to use double entry manual recording to record transactions for September 2020. It covers many of the common transactions of everyday business, including GST.General information

Specific information

Pete’s Pedals (ABN 65 111 177 778) is owned and operated by Peter Lawson. He buys bicycles from importers and wholesalers and sells them in Melbourne and repairs bicycles. His shop is at 111 Sydney Road, Glenville, 3056.

All sales of bicycles are on credit, unless otherwise stated; customers are required to pay cash for bicycle repairs. Purchases of motor cycles are on credit and all operating expenses are paid in cash.

The business charges GST on all inventory sales and bicycle repairs, and pays GST on inventory purchases and most business expenses.

Goods and Services Tax

Pete’s Pedals charges GST of 10% on all sales pays GST on all business expenses, except wages. Non-current asset acquisitions are also taxed at GST of 10%.

Employees

Pete’s Pedal has two employees, David Wheelan and Mary Rider who are both paid $25 per hour. Wages owing to David and Mary at 31 August 2020 is $300 each. Note: Pete’s Pedals does not use the Xero payroll module.

Inventory

The following is a list of closing inventory and the suppliers at 31 August 2020:

Quantity On hand	Item Code	Description	Last cost price	Sale Price	Supplier
10	STD	Standard	$750	$1,100	Bike Barn
6	BMX	BMX	$500	$800	Best Bikes
5	PRM	Premium	$950	$1,400	Bike Barn

Each of the above items of inventory are quoted excluding GST.

Inventory orders are delivered to Pete’s Pedals the same day the order is made to the supplier.

Pete’s Pedals maintains inventory records for all inventory items using the perpetual inventory system.

Repairs

All repairs are paid for in cash at the time of the repair. Repair revenue is recorded separately from sales of inventory.

Supplier information

Supplier balances at 31 August 2020 are:

Name	Address	ABN	Account balance
Bike Barn	20 Bend Boulevard, Metro 3111	16 111 199 990	$2,100
Best Bikes	99 Hill Street Spokesville, 3222	74 222 233 334	$3,650

Each of the above account balances represents deliveries of inventories purchased on 15 August 2020. All purchases are on terms net 30 days.

Customer information

Customer balances at 31 August 2020 are:

Name	Address	ABN	Last invoice date	Account balance
World of Bikes	22 Downhill Drive, Skyway, 3444	55 222 288 889	26 August	2,550
Spokes	10 L Lane, Brookevale, 3999	27 222 266 667	11 August	$1,320
Belmore Bicycle Club	2 Laneway Place, Eastbourne, 3455	84 111 122 223	18 August	3,500

Terms of payment for customers is net 30 days. Freight of $50 (GST exclusive) is charged for all credit sales.

Transactions: September 2020

1) What are the double entries to record the below transaction.

25	Cash sale of 3 BMX bicycles for special price of 1,848 (GST inclusive). The customer was particularly good at negotiating a special price. The customer also purchased 3 helmets for cash at the normal price(R902).