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COMPANY BACKGROUND Scallion Ltd began business on 1 July 2 0 2 2 , specialising in the purchase and supply of packaging materials. An accounting

COMPANY BACKGROUND
Scallion Ltd began business on 1 July 2022, specialising in the purchase and supply of packaging materials. An accounting system was designed and a chart of accounts was established. The business uses the periodic inventory system and is registered for GST at the rate of 10%.
The company also employs two office staff who work a five-day week from Monday to Friday. One office staff member is responsible for overseeing the daily running of the business, including inventory ordering; the other maintains the companys accounting records.
ACCOUNTING SYSTEM
The company has a financial year-end 30 June and prepares adjusting entries only at the end of the year. The firm uses the following journals to maintain its accounting records:
Sales Journal: to record all credit sales of inventory
Purchases Journal: to record all credit purchases of inventory
Cash Receipts Journal: to record all cash receipts
Cash Payments Journal: to record all cash payments
General Journal: to record all transactions other than the above
Scallion Ltd uses subsidiary ledgers for Accounts Receivable and Accounts Payable only.
The company maintains a general ledger to record the increases and decreases in each asset, liability, owners equity, revenue and expense account. Subsidiary ledgers are used to record the separate details of Accounts Receivable and Accounts Payable. The company maintains a periodic system to account for its inventory.
GOODS AND SERVICES TAX (GST)
The company is registered for GST at the rate of 10% and is required to pay GST on its purchases and to collect GST when making sales. The company uses a GST paid account for GST on purchases and a GST collected account for GST on sales (for manual records).
YOUR ASSIGNMENT
The firms in-house accountant has gone overseas for one month. You have been hired by Scallion Ltd to carry out the accounting duties in the accountants absence. This assignment provides you with the unadjusted trial balance at the end of May and requires you to record typical transactions for a retail business for the last month of the financial year. Once these transactions have been recorded and posted, you are required to complete the accounting cycle by journalising and posting adjusting and closing entries and preparing financial statements.
UNADJUSTED TRIAL BALANCE
The unadjusted trial balance as at 1 June 2023 is presented below:
ACCOUNT NAME 1 June Opening Balances
Cash $ 70,785
Accounts Receivable 25,740
Allowance for doubtful debts 2,645
Inventory 32,400
Office Supplies 1,800
Prepaid General Insurance 3,600
GST Paid 6,300
Equipment 13,500
Machinery 65,000
Truck 46,100
Land 350,000
Accounts Payable 69,300
GST Collected 15,795
Share Capital 340,000
Discount received 13,200
Repairs and maintenance 7,400
Purchases 486,200
Purchases returns & allowances 7,040
Salaries expense 83,600
Sales 789,800
Sales returns & allowances 8,800
Electricity expense 12,100
Telephone expense 2,505
Office expenses 13,500
Discount allowed 8,450
SUBSIDIARY LEDGERS
The individual balances of Accounts receivable and Accounts payable as at 1 June 2023 are shown below. Amounts include GST.
Accounts Receivable Subsidiary Ledger
CUSTOMER 1 June Opening Balances
Croft Ltd $ 2,970
M. Biller 14,850
O. Mowen 7,920
TOTAL 25,740
Accounts Payable Subsidiary Ledger
CREDITOR 1 June Opening Balances
Tumult Ltd $ 17,820
Lynwood Ltd 29,700
Dyson Ltd 21,780
TOTAL 69,300
ACCOUNTING PROCEDURES
Transactions are recorded by the accountant on a daily basis in the appropriate journal. Transactions are posted daily from the General Journal and the Cash Receipts and Cash Payments Journal to the Accounts receivable and Accounts payable subsidiary ledgers. Totals of the special journals are posted to the appropriate accounts at the end of the month.
Note: Amounts are to be recorded as the exact amounts in the journals and ledgers but are to be rounded to the nearest dollar when preparing financial statements.
TRANSACTIONS
The following transactions occurred during June 2023 and are INCLUSIVE of GST where appropriate.
2023
June 1 Scallion Ltd shareholders invested $60,000 cash in the business.
Purchased land and an existing retail store for $110,000 of which $77,000 is considered land cost. Paid $33,000 by cheque no.98 for the retail store and signed a mortgage payable for the balance. The retails store is depreciated over its useful life of 10 years.
2 Paid Lynwood Ltd $14,700 less a discount of $594 with cheque no.99.
Received cheque from M. Biller for $10,000 as part payment of his account
Purchased store furniture on credit terms from Corma Ltd for $7,480, terms n/60.
5 Purchased inventory on credit terms from Tumult Ltd $4,400; invoice date 6 June, terms 2/10, n/60.
6 Purchased a 3-year fire insurance policy for $792, cheque no.100.
7 Sent cheque no.101 to Tumult Ltd in full settlement of May

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