Highway Heaven (ABN 65 111 177 778) is owned and operated by Michael Harley. He operates a motor cycle retail business buying motorcycles from importers and selling them in Melbourne. His shop is at 888 Sydney Road, Glenville, 3056. All sales of motor cycles are on credit, unless otherwise stated; customers are required to pay cash for riding lessons. Purchases of motor cycles are on credit and operating expenses are paid in cash. The business charges GST on all inventory sales and riding lessons, and pays GST on inventory purchases and most business expenses.

Highway Heaven 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%.

Michael has two employees, Dirk Davidson and Mae Scooter who are both paid $25 per hour. Wages owing to Dirk and Mai at 31 August is $200 each. Note: Highway Heaven does not use XERO payroll. Wages are recorded as an expense payment.

Inventory The following is a list of closing inventory and the suppliers at 31 August 2022: Quantity On hand Item Code Description Cost price Sale Price Supplier 20 BHH Big Head helmet $20 $60 Hit the Road 15 RR Road Runner $1,650 $5,280 Best Bikes 8 CC Coast Cruiser $2,200 $6,490 Best Bikes Each of the above items of inventory are quoted excluding GST. Inventory orders are delivered to Highway Heaven the same day the order is made to the supplier. Highway Heaven maintains perpetual inventory records for all inventory items using F.I.F.O. (First-In-First-Out recording method). Lessons Customers are charged $90 (excluding GST) per hour for riding lessons. All lessons are paid for in cash at the time of the lesson. Lessons revenue is recorded separately from the sale of inventory. Supplier information Supplier balances at 31 August 2022 are: Name Address ABN Account balance Hit the Road 181 Bend Boulevard, Bankstown, 3111 55 222 288 889 $1,200 Best Bikes 99 Hill Street Spokesville, 3222 27 222 266 667 $3560 Each of the above account balances represents deliveries of inventories received on 15 August 2022. All purchases are on terms net 30 days. Customer information Customer balances at 31 August 2022 are: Name Address ABN Last invoice date Account balance Free Wheelers 22 Downhill Drive, Skyway, 3444 84111122223 10 August $3,780 Kamikaze Couriers 10 Lost Lane, Somerton, 3999 16 111 199 990 26 August $5,900 Terms of payment for customers is net 30 days.

Bank loan Highway Heaven has a loan payable to Bikers Bank. Each month interest of $330 is paid and $1,000 principal is paid off the loan. Opening balances Trial balance at 31 August 2022. Account No. Account Debit Credit 600 Cash a bank (BSB 117288, account 854742) 14,370 610 Accounts receivable 9,680 630 Inventory 42,750 640 Stationery supplies 930 710 Motor vehicles 46,900 711 Accumulated depreciation-motor vehicles 10,900 720 Shop fittings & fixtures 7,500 721 Accumulated depreciation of shop fittings & fixtures 3,500 800 Accounts payable 4,760 820 Net GST Payable 1,390 822 Wages payable 400 824 Legal fees payable-Dumbar & Dumbar 880 834 Loan, Bikers Bank, Brunswick 50,000 880 Capital, Michael Harley 50,300 Total 122,130 122,13

Transactions: September 2022 Sept. 1 Wrote a cheque to All-Technics for a new cash register $3,740 (including GST). [Ref: Cheque 210] The cash register is expected to last for 3 years with a residual value of $160. Depreciation is allocated using the straight-line depreciation method. 1 Wrote a cheque to White Real Estate for shop rent for September, October and November for $8,184. (GST inclusive) [Ref: Cheque 211] 2 Paid a six-month advertising campaign in Bikers World, a monthly magazine sold in news agencies for motorbike enthusiasts. [Ref: Cheque 212] Highway Heaven will have an advertisement in each edition of the magazine. A cheque was written for $2,772 (GST inclusive) for the six months. 3 Cash sale: 1 Coast Cruiser and 4 Big Head helmets (Invoice R301) 4 Two customers each paid for a 3 hour lesson each (Invoice L1) 6 Paid legal fees owing to Dumbar & Dumbar [Ref:Cheque 213] 8 Paid Hit the Road the balance outstanding at 31 August [Ref: Cheque 214] 10 Michael withdrew $2,500 cash for personal use [Ref: Cheque 215] 10 Cash sales: 5 Big Head helmets, 2 Road Runners and 1 Coast Cruiser (Invoice (R302) 10 Total amount owing at 31 August was paid to Best Bikes [Ref: Cheque 216] 11 Credit sale: 3 Road Runner motorbikes to Kamikaze Couriers.(Invoice CR71); Freiht charges $90. 11 Highway Heaven purchased 10 Big Head helmets on credit. All goods were received the same day. (Ref: P.O. 344) 12 Kamikaze Couriers paid the balance owing at 31 August. 12 Credit purchase of the following items (Ref: P.O. 345) 5 Road Runners 5 Coast Cruisers All goods were received the same day. 12 Paid $561 (GST inclusive) to Evans Garage for motor vehicle expenses. [Ref: Cheque 217] 14 Free Wheelers paid the amount owing at 31 August. 14 Pay day. Dirk was paid for 56 hours, and Mae was paid for 50 hours, which included the wages owing at 31 August. [Ref: Cheques 218 and 219]. GST is not applicable. 15 Credit sale of inventory to a new customer, Rangers Bike Club, of 2 Coast Cruisers. Freight/delivery charges were $80 (GST exclusive) (Invoice CR72) New customer details: 110 Melbourne Road, Williamsville, 3222, ABN 65 111 722 545 16 3 customers paid cash for a 3 hour lesson each. (Invoice L2) 18 Received amount owing from Kamikaze Couriers for 11 September sale. 18 Paid Australian Taxation Office net GST payable at 31 August. [Ref: Cheque 220] 19 Michael introduces a new product for sale. He has purchased T-shirts with the business logo on the back. The supplier is Tommy Tea, 18 Short Street, Tigerland, 3055.(ABN 84 111 222 233 ). Highway Heaven purchased 100 T-shirts on credit for a list price of $22.00.(GST inclusive).(P.O. 346) Selling price of the T-shirts is $38.50 (GST inclusive). 21 Credit sale: 8 Big Head helmets and 30 T-shirts to Free Wheelers. (Invoice CR73) 21 Paid for stationery supplies of $2,739 (GST inclusive) to Officeworks. [Ref: Cheque 221] 22 Michael withdrew $3,000 cash for personal use. [Ref: Cheque 222] 23 A customer paid cash for a 4 hour lesson (Invoice L3). 23 Credit purchase of inventory (Ref: P.O. 347 & P.O. 348): 16 Big Head helmets 2 Road Runners 3 Coast Cruisers The goods were received on the same day. 25 Credit sale of 4 Road Runners to Kamikaze Couriers. (Invoice CR73); freight charges of $90. 25 Cash sale of 1 Coast Cruiser for special price of $4543 (GST inclusive). The customer was particularly good at negotiating a special price for the Coast Cruiser. The customer also purchased 10 T-shirts for cash at the normal price (Invoice R303). 26 Paid Best Bikes for inventory purchased on 12 September [Ref: Cheque 223] 26 Returned 10 Big Head helmets to Hit the Road as they were damaged. These items were purchased on 23 September. A credit note was issued by the supplier. 26 Received payment from Rangers Bike Club for bikes purchased on 12 September. 27 Paid 12 months motor vehicle insurance of $1,016.40 (GST inclusive) to Allied Insurance. [Ref: Cheque 224] Note: record this as motor vehicle expenses. 27 Kamikaze Couriers returned 1 Road Runner as it was not required. Michael agreed to give Kamikaze Couriers a full credit as the motorbike was returned in perfect condition. 28 Pay day for employees. Dirk was paid for 64 hours and Mae was paid for 58 hours. [Ref: Cheques 225 and 226] 29 Received $7,800 from Kamikaze Couriers. 30 Paid monthly loan repayment to Bikers Bank of $1,330 (this includes $330 interest). In addition, Michael decided the business will pay an additional $2,000 off the loan principal. GST is not applicable to this transaction. [Ref: Cheque 227].

Adjustments at 30 September 2022 Some adjustments are found in the above transactions. Additional adjustments are: Motor vehicle and shop furniture & fixtures are to be depreciated at 15% per year. Wages owing at 30 April: Dirk 9 hours, Mae 8 hours The April bank statement included bank fees of $35. Inventory count on 30 April revealed inventory on hand as: Big Head helmets 16 Road Runner bikes 14 Coast Cruiser bikes 11 T-shirts 52

Accounts List Code Name Type Tax Code 200 Sales Revenue GST on Income 260 Freight collected Revenue GST on Income 270 Lessons income Revenue GST Free Income 310 Cost of Goods Sold Direct Costs GST on Expenses 320 Inventory loss/gain Expense BAS Excluded 400 Advertising Expense GST on Expenses 404 Bank Fees Expense GST Free Expenses 416 Depreciation motor vehicle Expense BAS Excluded 418 Depreciation Shop fittings and fixtures Expense BAS Excluded 420 Depreciation Cash register Expense BAS Excluded 425 Freight & Courier Expense GST on Expenses 437 Interest Expense Expense GST Free Expenses 441 Legal expenses Expense GST on Expenses 449 Motor Vehicle Expenses Expense GST on Expenses 461 Printing & Stationery Expense GST on Expenses 469 Rent Expense GST on Expenses 477 Wages and Salaries Expense BAS Excluded 497 Bank Revaluations* Bank Revaluations BAS Excluded 498 Unrealised Currency Gains* Unrealised Currency Gains BAS Excluded 499 Realised Currency Gains* Realised Currency Gains BAS Excluded 505 Income Tax Expense Expense BAS Excluded 600 Cash at bank Bank BAS Excluded 610 Accounts Receivable Accounts Receivable BAS Excluded 620 Prepayments Current Asset BAS Excluded 630 Inventory Inventory BAS Excluded 640 Stationery Current Asset GST on Expenses 710 Motor vehicle Fixed Asset GST on Expenses 711 Less Accumulated Depreciation on Motor vehicle Fixed Asset BAS Excluded 720 Shop fittings and fixtures Fixed Asset GST on Expenses 721 Less Accumulated Depreciation on Shop fittings and fixtures Fixed Asset BAS Excluded 730 Cash register Fixed Asset GST on Expenses 731 Less Accumulated Depreciation on Cash register Fixed Asset BAS Excluded 800 Accounts Payable Accounts Payable BAS Excluded 801 Unpaid Expense Claims* Unpaid Expense Claims BAS Excluded 820 GST GST BAS Excluded 822 Wages payable Current Liability BAS Excluded 824 Legal fees payable Current Liability BAS Excluded 830 Income Tax Payable Current Liability BAS Excluded 834 Loan - Bikers Bank Non-current Liability BAS Excluded 840 Historical Adjustment* Historical BAS Excluded 850 Suspense* Current Liability BAS Excluded 860 Rounding* Rounding BAS Excluded 877 Tracking Transfers* Tracking BAS Excluded 880 Drawings - Michael Harley Current Liability BAS Excluded 881 Capital - Michael Harley Current Liability BAS Excluded 960 Retained Earnings* Retained Earnings BAS Excluded Note: Amend, add or delete accounts as required. Accounts with a * cannot be deleted. Required: Part A: manual recording 1. Record the opening balances as at 1 September 2022 in the general journal and appropriate general ledger accounts and the opening balances of accounts receivable, accounts payable and inventory in the appropriate subsidiary ledger accounts. 2. Record the transactions in the appropriate general or special journal for September 2022. 3. Record and post all transactions from the general and specialist journals to the general ledger in accordance with accounting procedures. 4. Prepare schedules of accounts receivable, accounts payable and inventory as at 30 September 2022 and reconcile these with the control accounts in the general ledger. 5. Record end of month adjustments in the general journal and post these to the general ledger. 6. Prepare a Trial Balance after end of month adjustments as at 30 September 2022. 7. Prepare closing entries for September 2022. 8. Prepare a Statement of Financial Performance (Income Statement) for September 2022 and a Statement of Financial Position (Balance Sheet) as at 30 September 2022. 9. Prepare a Trial Balance after closing entries for September 2022. Pro-forma journals, ledgers, worksheets and reports are available in the assessment folder and must be used to submit part A(this is an excel file).