Question 6 Steel Traders uses a perpetual inventory system on accrual basis to account for stainless steel smart cookers that it sells with one-year warranty and maintenance services. It is registered for GST. The business' unadjusted trial balance as at 31 August 2021 was as follows: Accounts Debit (5) Credit (S) Accounts Payable 10,275 Accounts Receivable 16,000 Capital 100,000 Cash at Bank 35,000 Cost of Sales 376,000 GST Payable 1,125 GST Receivable 1,870 Insurance Expenses 3,600 Interest Expenses 2,000 Inventory 31,000 Maintenance Fees 12,000 Prepayments 22,500 Provision for Warranty 10,000 Rent Expenses 22,800 Salaries Expenses 60,240 Sales 440,000 Sales Returns and Allowances 3,000 Unearned Revenue 4,600 Utilities Expenses 5,690 Warranty Expenses 4,300 Total 581,000 581,000 At 31 August 2021, additional information showed: i. Receipt of an invoice of $5,225 inclusive GST with terms of 2/30, n/60 from a service provider for warranty claims completed in August. ii. Six smart cookers bought at the total amount of $7,260 inclusive GST on credit were returned to the distributor. iii. A customer claimed cash refund of $5,500 inclusive GST for the return of two malfunctioning smart cookers. The items with a unit cost of $1,000 net GST were returned into inventory. iv. A payment for shop rental of six months for 1 July 2021 to 31 December 2021 was recorded in the "Rent Expenses" account. Required: a. Prepare the general journal entries to record all the above transactions, using only the account names given in the unadjusted trial balance. [13 marks] b. Prepare the Prepayments and Rent Expenses T-ledger accounts after recording the adjustments in part a. for August 2021, showing the closing balance of each account. [5 marks] Question 6 Steel Traders uses a perpetual inventory system on accrual basis to account for stainless steel smart cookers that it sells with one-year warranty and maintenance services. It is registered for GST. The business' unadjusted trial balance as at 31 August 2021 was as follows: Accounts Debit (5) Credit (S) Accounts Payable 10,275 Accounts Receivable 16,000 Capital 100,000 Cash at Bank 35,000 Cost of Sales 376,000 GST Payable 1,125 GST Receivable 1,870 Insurance Expenses 3,600 Interest Expenses 2,000 Inventory 31,000 Maintenance Fees 12,000 Prepayments 22,500 Provision for Warranty 10,000 Rent Expenses 22,800 Salaries Expenses 60,240 Sales 440,000 Sales Returns and Allowances 3,000 Unearned Revenue 4,600 Utilities Expenses 5,690 Warranty Expenses 4,300 Total 581,000 581,000 At 31 August 2021, additional information showed: i. Receipt of an invoice of $5,225 inclusive GST with terms of 2/30, n/60 from a service provider for warranty claims completed in August. ii. Six smart cookers bought at the total amount of $7,260 inclusive GST on credit were returned to the distributor. iii. A customer claimed cash refund of $5,500 inclusive GST for the return of two malfunctioning smart cookers. The items with a unit cost of $1,000 net GST were returned into inventory. iv. A payment for shop rental of six months for 1 July 2021 to 31 December 2021 was recorded in the "Rent Expenses" account. Required: a. Prepare the general journal entries to record all the above transactions, using only the account names given in the unadjusted trial balance. [13 marks] b. Prepare the Prepayments and Rent Expenses T-ledger accounts after recording the adjustments in part a. for August 2021, showing the closing balance of each account. [5 marks]
