Expensive Designs Pty Ltd started as a business on 1 June 2020. Listed below are the transactions that took place in the month of June 2020:

June

1 Issued shares to investors for $10,000 cash.

2 Purchased a secondhand car for company use from Cars R Us Pty Ltd for $13,500, paying $3,600 in cash and the remainder on credit.

3 Purchased insurance of $500 for the month from Insurers R Us that will be paid at a later date.

7 Invoiced customers $3,000 for services performed.

10 Paid $750 cash for the current month’s rent.

14 Paid $250 cash to Insurers R Us for the insurance purchased on 3 June.

15 Received an invoice for $700 for advertising for the current month and the invoice will be paid next month.

28 Received and banked cash of $2,000 from customers for services invoiced on 7 June.

30 Received and banked cash of $800 for cash sales.

The chart of accounts for Expensive Designs Pty Ltd contains the accounts and account numbers below and no new accounts need to be added:

100 Cash at bank

105 Accounts receivable

110 Supplies

160 Motor vehicles (cost)

200 Accounts payable

300 Share capital

305 Dividends

400 Sales revenue

510 Rent expense

520 Advertising expense

530 Insurance expense

Required

1)   Journalise the June transactions (narrations are not required and no depreciation adjustment is necessary).                                                                                                 

2)   Post all the journals from (1) above to the general ledger and prepare a trial balance as at 30 June 2020.                                                                     

3)   Prepare:

a.     a statement of profit or loss for the month.

b.    a calculation of retained earnings for the month.

A classified statement of financial position at 30 June 2020

Question 1 Solution

(1) Journalise the June transactions (narrations are not required).                          

General Journal                                                      

Date Account Post Ref. Debit Credit

(2) Post all the journals from (1) above to the general ledger. Prepare a trial balance as at 30 June 2020.                                                                                  

·     An example is given below of the first general ledger account, Cash at bank. Please copy this format for the other general accounts that you need and then post your journals into the general ledger accounts.

·     Balance any accounts that have more than one entry/posting. Any accounts with just one entry do not need to be balanced for this assignment.

·     You don’t need to include general ledger accounts that have no postings or entries.

·     You must also prepare a trial balance once you have posted all your entries.

Cash at bank No. 100

Date Details Debit Date Details Debit

3)   Prepare:

a.     a statement of profit or loss for the month.

b.    a calculation of retained earnings for the month.

c.     a classified statement of financial position at 30 June 2020