Part 1: Recording Transactions (18%) David Smith has a love of electronics and all things technical. On 1 July 2021, he starts his own business, MicroSystems, as a retailer of laptops, tablets and smartphones. He believes that his expert knowledge and ability to translate technical concepts into everyday terms for his customers will provide him with a competitive advantage against larger retailers, who focus more heavily on price than on providing individualised service. You used to work with David, before he decided to become an entrepreneur and you decided to go to university. In early Aug, you decide to meet up over coffee to discuss your new career paths. David talks about his new business and how he is worried about the large amount of cash he has spent during his first month of trading. You tell him about how you are studying an accounting topic now and launch into an explanation on the difference between the cash and accrual basis. David is impressed and asks you to help him by preparing accrual-based accounting information for his business. He supplies you with a list of transactions and events relating to his previous month of trading, July 2021, and some additional information about the business. Transactions/Events for July 2021 # Date Transaction/Event 1 1 David took out a loan of $60,000 from the bank to help finance his growing business (interest rate of 6% per annum, interest payable on the 1st of each month, principal repayable at the end of 5 years). 2 1 Paid $4,200 for a 12-month business insurance policy. 3 1 David contributed his personal motor vehicle, valued at $24,000, for exclusive use by the business (useful life 7 years, residual value $3,000). 4 1 Paid $30,000 of rent for a business premises for the next 6-month period. 5 1 Paid $12,000 for fixtures and fittings for the shop (useful life 8 years, residual value $0). 6 2 Paid $2,800 for advertising being carried out this week. 7 2 Credit purchase of 20 laptops @$890 each and 20 smartphones @$360 each. 8 3 Cash sales of 7 laptops @$1,850 each. 9 4 Credit sales of 12 smartphones @$530 each. 10 6 Attended a training seminar - paid $120 for a ticket at the door. 11 7 Cash purchase of 10 tablets @$140. 12 9 David hired Carly, a new staff member, whose wages will be $1,900 per fortnight. 13 10 Credit purchase of 20 smartphones @$380 each. 14 14 Received payments of $4,100 from customers. 15 15 Cash sales of 14 smartphones @$530 each. 16 18 David withdrew $4,000 cash from the business. Page 4 of 6 # Date Transaction/Event 17 21 Paid $230 to a maintenance service for repairs to a damaged shop fixture. 18 22 Credit sales of 10 laptops @$1,880 each and 6 tablets @$495 each. 19 23 Paid fortnightly wages of $1,900 to Carly. 20 24 Credit purchase of 20 laptops @$900 each and 10 tablets @$140. 21 25 David used $3,200 from the business bank account to pay his personal credit card. 22 26 David arranged a bank overdraft facility for his business bank account, with an available credit limit of $30,000. 23 27 Paid $25,000 to suppliers. 24 28 Booked an office cleaner for a same-day express cleaning service. Paid $140. 25 29 Credit sales of 10 smartphones @$530 each and 10 tablets @$495 each. 26 30 Took a laptop computer from inventory to use in the business' operations from 1st Aug (useful life 3 years, residual value $0). Additional Information 1. Carly has worked her standard hours for the past week, but she is not due to receive her pay until 7th Aug. (Adj # 1) 2. David's phone and internet usage for July is estimated at $850, but he has not yet received the bill. (Adj # 2) 3. His estimated electricity usage for July is $1,900. (Adj # 3) 4. He allows that 5% of his closing Accounts Receivable balance may not be collectible. (Adj # 4) David uses straight-line depreciation for all his assets. David uses a perpetual inventory system with a FIFO (first in, first out) inventory costing method. REQUIREMENTS for Part 1: a) Record the transactions listed for July 2021. b) Record any end-of-month adjustments required for July 2021, arising from both the additional information provided and the transactions you have recorded.