Question $1$

Elsa Snow has been a lover of ice cream from she was very young. She grew up wanting to own her

very own ice creamery and did so in $2015.$ She opened her very own ice cream shop with several exotic

flavours of ice cream she invented herself by mixing and matching flavours. Among these creations

were $$nutterbutter delight$,$ a peanut butter flavoured ice cream and $$squeeze a peach$$ a frozen

confection with peach pieces incorporated. The following information relates to Elsa$$s Exotic Creamery

for the month of July $2015.$

July $1$ started business with, cash, $$40,000,$ building, $$450,000$ and a motor vehicle $$240,000,$

equipment, $$400,000$

July $2$ received loan repayable by $2021$ from the bank, $$460,000$ by cheque

July $3$ paid for store furniture by cheque $$120,000.$

July $3$ bought merchandise for resale from Cremo, by cheque $$130,000.$

July $4$ purchased a blast freezer, which froze the ice cream faster, on credit from Courts Ltd$.$ for

$$200,000.$

July $4$ sold merchandise to Tutti Fruitalicious, for cash $$110,000.$

July $5$ sold merchandise on credit to Devon Mouse Ltd $$95,000$ and Crazy Cream $$85,000.$

July $6$ merchandise valued at $$2,500,$ sold on credit to Crazy Cream on July $5,$ was returned to Elsa as

she had sent the incorrect flavour. A credit note was given to Crazy Cream.

July $7$ bought merchandise on credit from Serge Island Dairies $$60,000.$

July $8$ sold merchandise on credit to Pink Bunny Enterprise $$80,000.$

July $10$ bought stationery for cash $$15,000.$

July $11$ paid Jamaica Water Commission by cash, water rates $$30,000.$

July $13$ returned unsatisfactory merchandise to Serge Island Dairies for $$6,000$ receiving a credit note

for these goods. They sent goat$$s milk instead of cow$$s milk.

July $15$ bought merchandise on credit from Kristoff$$s Frozen Confections $$15,200.$

July $16$ sold merchandise to Princess Jasmine receiving a cheque for $$135,000$

July $17$ Devon Mouse Ltd$.$ settled his account with cash receiving a $3\%$ cash discount.

July $18$ lodged cash of $$85,000$ to the business bank account.

July $20$ paid Serge Island Dairies $$52,000$ in full settlement of the balance outstanding by cheque having

received a discount of $$2,000.$

July $22$ paid utilities for July by cheque $$60,000.$

July $25$ paid staff salaries by cheque $$125,000.$

July $26$ received a cheque of $$65,000$ for interest on deposits in the bank.

July $27$ purchased merchandise on credit from Olaf$$s Milk Factory for $$20,000.$

July $30$ Elsa used $13$ buckets of nutterbutter delight ice$-$cream valued at $$30,000$ for her sister, Anna$$s

$16$ th birthday party

REQUIRED:

a$)$ Journalize the transactions for the month. $($Narrations are not necessary$)$

b$)$ Post the above transactions in the General ledger.

c$)$ Extract a trial balance as at July $312015.$

d$)$ Journalize and post the adjusting entries using the following information:

$$ The monthly utility expense is $$55,000.$

$$ One employee complained that her salary was short by $$6,500.$ Investigations proved that

the employee was indeed short paid for the month.

$$ The insurance for the Creamery was due and payable by July $1$ st $.$ The annual premium is

$$60,000$ and the expense is incurred on a pro rata basis.

$$ It was found that of Pink Bunny Enterprise$$s balance, $$10,000$ has to be written off as

bad debts.

$$ Depreciation for the motor vehicle has not been taken into account for the month. The

business uses the straight line method at a rate of ten percent $(10\%)$ per annum.

Note: when doing the adjusted T accounts only the accounts that have been affected

need to be done

e$)$ Prepare an adjusted trial balance with the inclusion of the above balances

$($f$)$Prepare the Statement of Profit or Loss and the Statement of Financial Position for the period

under review. For use in the financial statements, closing stock amounts to $$35,000$ at the end of

the month.