Part 1 - Case study

Ben Cook owns and operates a business called Ben Cook Traders, which sells products to retail outlets throughout the country.

The business has been trading for 10 years. On the 3rd July 2014 a fire destroyed the building in which all the accounting documentation was held. All business documentation was burned however, Ben had recently prepared his end of financial year business trial and had kept a copy on his computer at home.

Ben needs to get some documentation completed again and has asked you to do it for him. He has provided you with the trial balance sheet from home and has requested you to complete the following tasks:

1.Record the account balances in the general ledger accounts

2.Record the adjustment for 30^th June 2014 in the general journal

3.Post the journals to the ledger, including an asset register card for the motor vehicle that was sold through the year. Ben has provided you with acquisition details he obtained from the vehicle supplier

4.Prepare a trial balance once adjustments have been posted

5.Record the journal entries to close accounts at 30 June 2014

6.Post the closing entries to the general ledger

7.Prepare a trial balance after accounts have been closed

8.Prepare the financial reports for the year ending 30 June 2014

Ben has requested that the accounts and reports be prepared in a professional manner and presented within one week.

Ben Cook Traders

Trial Balance

As at 30 June 2014

Account name

Debit

Credit

Advertising

55000

Bad debts

12000

Bank

30000

Buildings

800000

Buying expenses

14800

Cartage outwards

120000

Commission revenue

59900

Discount expense

2500

Discount received

1800

Donations

5000

Electricity

40000

GST payable

15000

Input tax credits

10000

Interest expense

176000

Lease expense

6000

Legal costs

75000

Loan BL Finance due 2020

600000

Mortgage

400000

Motor vehicle expense

50000

Office salaries

40000

Manager salaries

100000

Wages

80000

Office stationary

4000

Petty cash advance

500

Provision for annual leave

25300

Provision for long service leave

15000

Purchases

360000

Purchases returns and allowances

27000

Rates and taxes

15250

Rent revenue

300000

Sales

900000

Stock (1/7/14)

120000

Creditors control

50000

Debtors control

80000

Provision for doubtful debts

2800

Equipment

900000

Accumulated depreciation - equipment

315000

Drawings

63750

Motor vehicle

320000

Accumulated depreciation - motor vehicle

168000

Capital

540000

3449800

3449800

Adjustments:

Interest owing on loan $4000

Wages owing to employees $10000

Additional bad debts to be written off (inclusive of GST) $5500

Provision for doubtful debts to be equal to 4% of debtors

Commission revenue yet to be received $5100

The provision for long service leave is to be increased by 3% of all salaries and wages

Provision for annual leave is to be doubled

Advertising paid in advance $5000

Equipment is being depreciated @15% p/a using the reduced balance method depreciation

Motor vehicles are being depreciated @20% p/a using the straight line method of depreciation

On April 1 2014 one of the vehicles (BMW) Registration number STR333 was traded for $25000 on a new Volvo costing $66000 GST Inc, the balance payable over 3 years financed by a loan from ACG Finance. The BMW was purchased on 1 January 2010 from Smart car sales with an expected life of 5 years with no residual payment

oCost price INC GST $120000

oDelivery costs INC GST$5000

oRegistration and insurance$2500

Note: the disposal of the vehicle has not been recorded in the accounts

Stock on hand @ 30 June 2014 is $100000