INTRODUCTION The objective of this Accounting practice set is to provide students with an insight into the process of recording transactions, completing adjusting and closing entries, and preparing financial statements for a retail business. Company Background Cape Cod Boats \& Yachts Pty Ltd has been in business in Ocean Grove, Victoria since July, 2017. The company was started by Clint Hodgson and operates a large showroom/warehouse which sells boating and yachting equipment \& accessories from all over Australia on a wholesale basis to other business outlets on both credit and cash terms. The company's Share Capital consists of 2,268,000 Ordinary Shares, originally issued at $2 each and which are owned by various members of the Hodgson Family. The company has employed a combination of sales and administration staff to run the business since July, 2017. The company has generally been profitable since it was originally formed and has reasonable liquidity and solvency. Management has run the company efficiently over the past six years since formation. Accounting System Information \& Procedures The company has a financial year end of 30 June and prepares adjusting entries at the end of the financial year. To ensure efficiency of its accounting procedures, the company uses the following Special Journals to maintain its accounting records: 1. Sales Journal (SJ): to record all sales of Inventory on credit 2. Purchases Journal (PJ): to record all Purchases of Inventory on credit 3. Cash Receipts Journal (CRJ): to record all Cash Receipts 4. Cash Payments Journal (CPJ): to record all Cash Payments 5. General Journal (GJ): to record all transactions other than the above. Business transactions are recorded for Cape Cod Boats \& Yachts Pty Ltd on a daily basis in one of these five journals in the accounts. Additionally, the company maintains a general ledger to record postings from the journals. Subsidiary Ledgers ar used to record the separate details of Accounts Receivable and Accounts Payable. Transactions are posted immediatel to the relevant ledger account if they are entered into the general journal, the "other" column of the Cash Receipt Journal or Cash Payments Journal, or if they affect any of the Accounts Receivable or Accounts Payable subsidiary ledger accounts. Apart from these transactions, totals of the special journals are taken at the end of the month and ther posted to the appropriate accounts. The company uses a periodic inventory system. In practice, the company would be required to collect and pay Goods and Services Tax (GST) on its sales and purchases. However, for the purposes of this exercise, GST has been excluded. Please Note: All amounts in this practice set can be rounded off to the nearest dollar. L f Note: Cape Cod Boats \& Yachts Pty Ltd offers all customers Credit Terms 2/10,n/30, unless otherwise stated dule of Accounts Payable As at 31 May 2023 TRANSACTIONS For June 2022 ADJUSTING ENTRIES a) The Showroom Fittings were installed on 1 July, 2022. They have a useful life of 9 years and no salvage value. The Straight-Line method is used to depreciate the Showroom Fittings. b) The Machinery was installed on 1 July, 2017. They have a useful life of 10 years and estimated salvage value of $12,600. The Straight-Line method is used to depreciate the Machinery. c) Twelve months of Showroom Warehouse Rent was prepaid on 1 March, 2023. Of the original prepaid amount, $986,160 worth of Rent has now expired. d) A count of Office Supplies indicates that $341,460 still remain on hand at year end. e) A one-year Insurance policy was purchased on 1 November 2022 for $45,360. f) Interest on the WestpacBank Mortgage Loan is charged at 7% per annum and is paid annually on 1 August (the interest expense should be rounded up to the nearest dollar). The Westpac Bank Mortgage Loan was originally taken out on the 1 August, 2022. g) The company has been informed that Drysdale Decks \& Masts has been declared bankrupt and Cape Cod Boats \& Yachts Pty Ltd has agreed to write off the amount owing as a Bad Debt. The company uses the direct write-off method to account for any Bad Debts in the books. h) A Telephone bill for $25,704 for June was received on 5 July, 2023. The amount has not yet been recorded. The company records them as a Utilities Expense. i) Office Staff are paid once per month, $293,832. The Office Staff were last paid on the 15 June, 2023. Exactly half of one month Office Staff wages are still owing. j) Sales Staff are paid fortnightly and work 7 days per week. The sales staff were last paid on the 29 June, 2023. One day of the wages bill amounting to $17,816 is still owed to the Sales Staff. k) The Accountant of the company has estimated that Tax Payable following the inclusion of certain tax adjustments, for the yea ended 30 June, 2023 will only be $345,604. This amount is to be paid on 31 October, 2023. INSTRUCTIONS 1) Enter the transactions for Weeks 15 into the appropriate Journal for the month of June 2023. Next, post all the Journal transactions to the ledger accounts as specified in the "Account System Information" section of the introduction. 2) Total all Special Journal columns and post to the appropriate ledger account at the end of the month. 3) Prepare the unadjusted Trial Balance as at 30 June 2023 on the Worksheet provided. 4) Prepare the adjusting entries shown on page 10 in the General Journal and post to the relevant ledger accounts. Now enter the adjustments in the relevant worksheet columns and prepare an adjusted Trial Balance. 5) A Stocktake on 30 June 2023 indicates that the balance of Closing Inventory is $5,665,968. Use this information to complete the remaining columns of the worksheet. 6) Use the worksheet to prepare the Income Statement and Balance Sheet. 7) Complete the Schedule of Accounts Receivable and Schedule of Accounts Payable. Ensure the balances agree with the totals in the control accounts. 8) Prepare closing entries and post to the relevant general ledger accounts. 9) Complete the post-closing Trial Balance as at June 2023