Mike has a variety of clients including lucrative contracts with large builders and rental property managers with whom he has built up strong relationships. He offers them terms of 30 days. Mike submits his Business Activity Statement (BAS) monthly on an accruals basis and pays GST and PAYG Tax monthly. The next payment is due on May 31 st . The business is operated from a commercial shed which was purchased by Mike for $696,000 three years ago. To finance this purchase Mike took out a loan over a fifteen-year period at a variable interest rate. 2 Currently the business uses a manual accounting system. However, you have been investigating the advantages of moving from a manual accounting system to a cloud-based accounting system and you have convinced Mike that the business should move to using the Xero accounting system in June.
a.Review the Chart of Accounts provided to become familiar with account names for the business
. b. Enter the transactions for the month of May into the General Journal.
c. Post the journal entries to the General ledger (note subsidiary ledgers are not required).
d. Prepare the Unadjusted Trial Balance.
e. Prepare the adjusting entries, post to the ledger, and prepare Adjusted Trial Balance.
f. Prepare Closing entries.
g. Prepare Profit and Loss Statement, Statement of Changes in Equity, and Balance Sheet.
a. Chart of Accounts Account Number Account Name 110 Cash at Bank 120 Accounts Receivable 130 Prepaid Vehicle Insurance 140 Office Supplies 150 TV Installation Supplies 160 Office Equipment 161 Accumulated Depreciation Office Equipment 170 TV Installation Equipment 171 Accumulated Depreciation TV Installation Equipment 180 Vehicles 181 Accumulated Depreciation Vehicles 190 Commercial Shed 191 Accumulated Depreciation Commercial Shed 200 GST 210 Accounts Payable 220 Unearned Revenue 230 Wages Payable 240 PAYG Payable 250 Bank Loan 300 M. Patel Capital 310 M. Patel Drawings 350 Profit & Loss Summary Opening Balance $ 181,548.00 $ 155,724.00 $ $ 5,220.00 $ 21,720.00 $ 43,440.00 $ 19,320.00 $ 390,000.00 $ 171,600.00 $ 504,000.00 $ 144,000.00 $ 696,000.00 $ 276,000.00 $ 43,536.00 $ 36,876.00 $ $ $ 3,120.00 $ 480,000.00 $ 823,200.00 $ $ 410 TV Installation Services Revenue $ 510 TV Installation Supplies Expense 515 Office Supplies Expense 520 Phone & Internet Expense 525 Wages Expense 530 Advertising Expense 535 Fuel Expense 540 Bank Charges 545 Interest Expense 550 Depreciation Expense 560 Vehicle Insurance Expense $ $ $ $ $ $ $ $ $ $ b. Transactions for the operations of Mike's TV Solutions for the month of May Note: All amounts are GST inclusive unless otherwise stated. Mike's TV Solutions allow terms n30. WIN 4 9 10 11 12 Transaction Date Details 1 May-01 Paid insurance for the vehicles for 12 months in advance $13,200. 2 May-02 Paid Accounts Payable $36,876. 3 May-04 Purchased TV Installation Supplies on credit $7,700. Received amount owing from Mel Smith Property Management for April May-06 installations $79,200. 5 May-08 Invoiced Rey Whyte for installations $114,180. 6 May-10 Purchased new TV Installation Equipment $211,200. Paid $19,200 cash and increased the Loan from the Bank to cover the balance. 7 May-12 Paid monthly mobile phone and internet account $550. 8 May-12 Paid for Advertising $330. Purchased a new all-in-one scanner, photocopier, printer, for the office May-13 $3,850 from Officewerx on credit. Wages expense of $23,520 incurred for the past fortnight which included May-14 PAYG tax of $3,120 - paid staff amount owing. May-14 Recorded cash for TV installation services delivered to date $58,080. May-15 Received amount owing from Rey Whyte Real Estate $37,800. 13 May-16 Mike withdrew cash from the business $150,000. May-19 Signed a contract with a new client Qld Housing Services for installation of televisions for Government Houses in Roma. Large involves 50 houses to have TV's installed during June. Received the sum of $26,400 in advance of work to be performed in June. May-21 Paid fuel bill $2,200. Wages expense of $23,520 incurred for the past fortnight which included 16 May-28 PAYG tax of $3,120 - paid staff amount owing. 17 May-28 Purchased TV Installation Supplies for cash $2,112. 18 May-28 Invoiced Bell Property for TV Installations $105,732. 19 May-28 Paid for TV Installation Supplies purchased on May 4th. May-29 Received payment from Rey Whyte for Invoice of 8th May. May-30 Recorded cash for TV Installation services provided to date $66,264. 22 May-30 Purchased TV Installation Supplies $5,126 from Mitre 15 for cash. 23 May-31 The bank Statement revealed bank charges of $113 had been deducted. 24 May-31 Paid monthly repayment on Bank Loan of $3,500. The interest component included in the repayment amount is $1,415. 25 May-31 Returned TV Installation Supplies $275 to Mitre 15 and received a refund. 26 May-31 Paid GST and PAYG amounts owing from previous month. 14 15 20 21 Adjusting entries 1 May-31 TV Installation Supplies on hand total $28,400. 2 May-31 Expired insurance amounted to $1,000. Wages owing for the last few days of May total $11,760 which includes PAYG 3 May-31 of $1,560. 4 May-31 Depreciation charges for the month were recorded as follows: Commercial Shed $7,080 Vehicles $4,320 TV Installation Equipment $3,240 Office Equipment $1,560 5 May 31 Office Supplies on hand $2,400 a. Chart of Accounts Account Number Account Name 110 Cash at Bank 120 Accounts Receivable 130 Prepaid Vehicle Insurance 140 Office Supplies 150 TV Installation Supplies 160 Office Equipment 161 Accumulated Depreciation Office Equipment 170 TV Installation Equipment 171 Accumulated Depreciation TV Installation Equipment 180 Vehicles 181 Accumulated Depreciation Vehicles 190 Commercial Shed 191 Accumulated Depreciation Commercial Shed 200 GST 210 Accounts Payable 220 Unearned Revenue 230 Wages Payable 240 PAYG Payable 250 Bank Loan 300 M. Patel Capital 310 M. Patel Drawings 350 Profit & Loss Summary Opening Balance $ 181,548.00 $ 155,724.00 $ $ 5,220.00 $ 21,720.00 $ 43,440.00 $ 19,320.00 $ 390,000.00 $ 171,600.00 $ 504,000.00 $ 144,000.00 $ 696,000.00 $ 276,000.00 $ 43,536.00 $ 36,876.00 $ $ $ 3,120.00 $ 480,000.00 $ 823,200.00 $ $ 410 TV Installation Services Revenue $ 510 TV Installation Supplies Expense 515 Office Supplies Expense 520 Phone & Internet Expense 525 Wages Expense 530 Advertising Expense 535 Fuel Expense 540 Bank Charges 545 Interest Expense 550 Depreciation Expense 560 Vehicle Insurance Expense $ $ $ $ $ $ $ $ $ $ b. Transactions for the operations of Mike's TV Solutions for the month of May Note: All amounts are GST inclusive unless otherwise stated. Mike's TV Solutions allow terms n30. WIN 4 9 10 11 12 Transaction Date Details 1 May-01 Paid insurance for the vehicles for 12 months in advance $13,200. 2 May-02 Paid Accounts Payable $36,876. 3 May-04 Purchased TV Installation Supplies on credit $7,700. Received amount owing from Mel Smith Property Management for April May-06 installations $79,200. 5 May-08 Invoiced Rey Whyte for installations $114,180. 6 May-10 Purchased new TV Installation Equipment $211,200. Paid $19,200 cash and increased the Loan from the Bank to cover the balance. 7 May-12 Paid monthly mobile phone and internet account $550. 8 May-12 Paid for Advertising $330. Purchased a new all-in-one scanner, photocopier, printer, for the office May-13 $3,850 from Officewerx on credit. Wages expense of $23,520 incurred for the past fortnight which included May-14 PAYG tax of $3,120 - paid staff amount owing. May-14 Recorded cash for TV installation services delivered to date $58,080. May-15 Received amount owing from Rey Whyte Real Estate $37,800. 13 May-16 Mike withdrew cash from the business $150,000. May-19 Signed a contract with a new client Qld Housing Services for installation of televisions for Government Houses in Roma. Large involves 50 houses to have TV's installed during June. Received the sum of $26,400 in advance of work to be performed in June. May-21 Paid fuel bill $2,200. Wages expense of $23,520 incurred for the past fortnight which included 16 May-28 PAYG tax of $3,120 - paid staff amount owing. 17 May-28 Purchased TV Installation Supplies for cash $2,112. 18 May-28 Invoiced Bell Property for TV Installations $105,732. 19 May-28 Paid for TV Installation Supplies purchased on May 4th. May-29 Received payment from Rey Whyte for Invoice of 8th May. May-30 Recorded cash for TV Installation services provided to date $66,264. 22 May-30 Purchased TV Installation Supplies $5,126 from Mitre 15 for cash. 23 May-31 The bank Statement revealed bank charges of $113 had been deducted. 24 May-31 Paid monthly repayment on Bank Loan of $3,500. The interest component included in the repayment amount is $1,415. 25 May-31 Returned TV Installation Supplies $275 to Mitre 15 and received a refund. 26 May-31 Paid GST and PAYG amounts owing from previous month. 14 15 20 21 Adjusting entries 1 May-31 TV Installation Supplies on hand total $28,400. 2 May-31 Expired insurance amounted to $1,000. Wages owing for the last few days of May total $11,760 which includes PAYG 3 May-31 of $1,560. 4 May-31 Depreciation charges for the month were recorded as follows: Commercial Shed $7,080 Vehicles $4,320 TV Installation Equipment $3,240 Office Equipment $1,560 5 May 31 Office Supplies on hand $2,400
