QUESTION 1 (25 + 10 + 15 = 50 marks)

Jules Vern had worked as a business consultant for several years with KPNY, one of the 'big four' accounting firms. Jules has recently gone into her own private practice trading as Vern Business Solutions.

1 Invested $100,000 of her own funds into a business bank account.

2 Purchased a small office premises in Box Hill for $250,000. Jules paid a 10% deposit and the balance was financed through a mortgage with Gotcha Banking Corporation.

A three-month subscription for online access to taxation updates was purchased for $2,400 cash.

3 Office furniture was purchased for $12,000 cash.

Paid $2,400 for professional indemnity insurance for 12 months.

4 Jules purchased computer equipment for $8,000 cash and a motor vehicle for $24,000 was acquired on 90 days credit terms.

5 Jules invoiced her first client $2,000.

6 Office supplies were purchased for $800 on 30 day credit terms.

10 Invoiced clients $4,800 for consulting services performed.

17 Received full payment from her first client.

18 Hired an office assistant on a casual basis.

21 Invoiced clients $7,200.

Jules withdrew $1,500 for personal use.

24 Received $2,300 from credit clients.

27 The Whitehorse Small Business Association have agreed to retain Jules' services in the future at a rate of $1,800 per day.

28 Invoiced corporate clients for work performed $8,400

30 Paid wages to office assistant totaling $1,800, $500 of which was deducted for PAYG tax and will be remitted to the Australian Tax Office in the future.

31 Made a part payment of $200 for the office stationery.

Paid motor vehicle expenses for the month totaling $240.

Received $2,500 from credit clients.

Jules withdrew $2,200 from the business, of which, $1,200 was for a one-off payment for professional membership joining fees to Business Consulting Australia, the relevant professional body, and $1,000 for a holiday to Hawaii.

Additional information:

As at 31 January, $400 of office supplies had been consumed.

As at 31 January, $950 interest has accrued on the mortgage.

Utilities owing at balance date are $420

Motor vehicle is depreciated at 20% per annum straight line.

Computer equipment is depreciated at 30% per annum reducing balance.

Office Furniture is depreciated at 10% per annum straight line.

Assume a full month for depreciation and no residual value.

Round to nearest dollar.

Ignore GST

Prepare the fully classified Income Statement and Balance Sheet for January 2020.