Question 1. Larkspur Furniture uses a perpetual inventory system and pays GST on an accrual basis. Larkspur engaged in the following transactions during July 2021. Transactions are inclusive of GST where relevant.

July 2 Purchased inventory for cash, $1 045

5 Purchased store supplies on credit for $495

8 Purchased inventory of $3 300 on account. Freight charges of $253, were added to the purchase invoice.

9 Sold goods for cash, $1 320. The cost of these goods was $700.

10 Received the electricity bill, $302.50.

11 Returned $220, of the inventory purchased on 8 July. It was damaged in transit.

12 Purchased inventory for cash for $3 663.

14 Sold inventory on credit terms $11 160, less a $600 quantity discount (cost, $5000). Note: GST applies after the discount.

24 Received returned inventory from the 14 July sale, $440. Larkspur Furniture had despatched the wrong goods by mistake. A credit note was issued. Larkspurs cost of the inventory received was $250. Ignore previous quantity discount.

27 Borrowed $5,000 from the bank. Signed a bill payable to the bank for this amount.

28 Purchased a computer on credit for $2,200.

Required:

1. Journalise the preceding transactions for Larkspur Furniture using multi-column special journals.

2. Post transaction amounts to ledger accounts and prepare a trial balance.

3. Complete the GST Section of the Business Activity Statement for July. As you are only reporting for one month, you will need to use the quarterly reporting option on the BAS statement.

4. Journalise payment of GST to the ATO on August 1, 2021.

5. A junior accountant is confused about why GST appears on the statement of financial position but not the statement of financial performance. Explain how and why this happens.

Chart of Accounts

101 Cash at bank 203 GST collected

102 Inventory 204 GST paid

103 Store supplies 401 Sales revenue

104 Accounts receivable 402 Sales returns and allowances

150 Office Equipment 501 Cost of goods sold

201 Accounts payable 601 Freight-in

202 Bill payable 602 Electricity expense