Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Record the following entries in a worksheet format. You and your friend start a business which sells face masks to small medical practices across Western
Record the following entries in a worksheet format.
You and your friend start a business which sells face masks to small medical practices across Western Australia. You lease a small warehouse, employ Mellisa as manager who will deal with the sales/customers while you deal with the accounting function of the business.
1 January You invest $50,000 cash into the business. You obtained the money from your parents that they consider an interest free loan. You go to ZNA Bank and open a business bank account. Mellisa signs an employment agreement where she is contracted to receive $13,000 per year paid fortnightly. Her salary will be paid in arrears. On this same day you sign a 6 month lease agreement to rent a warehouse beginning today. The rent for the 6 month period is $6,000 and is paid in full.
5 January You purchase 10,000 face masks from a supplier in China and pay cash. The cost per mask is $2. Shipping costs of $1,000 are also paid for. The masks arrive the same day as there was excess stock in a nearby warehouse.
7 January Mellisa receives a large sales order for 6,000 face masks to be delivered to Dunsborough Doctors. As you are just starting out, you and Mellisa agree that you are happy to receive a smaller profit margin in order to secure long term customers. The selling price per face mask is $3. You extend 1 month credit to the customer and you are both very happy with this first sale. Mellisa ships the order to Dunsborough Doctors and pays a shipping cost of $500 to the delivery driver.
8 January Your first week is a successful one. You decide to pay back $5,000 that you borrowed from you parents.
15 January You decide delivery costs are too expensive so you buy a ute that you will use to make deliveries. The cost of the ute is $20,000. You are worried about working capital requirements in your business so you pay for half of the ute with cash and decide to take a loan for the balance from ABC Bank. The loan term is for two years at an annual interest rate of 12% due to be paid at the end of each month. The ute is expected to have a useful life of 5 years.
16 January You pay Mellisa's fortnightly wages. You receive a cheque from Dunsborough Doctors for 50% of the balance that they owe.
20 January You find a reasonably priced local supplier of masks and purchase 5,000 masks on 7 days credit from Paul's PPE. The price per mask is $3 and since you picked these up in your new ute you don't need to pay any delivery costs. On the way back to your warehouse you buy $500 of office supplies such as pens, paper and ink cartridges.
21 January You withdraw $250 from the business to pay for a personal parking fine.
27 January You pay what you owe Paul's PPE in full.
You and your friend start a business which sells face masks to small medical practices across Western Australia. You lease a small warehouse, employ Mellisa as manager who will deal with the sales/customers while you deal with the accounting function of the business.
1 January You invest $50,000 cash into the business. You obtained the money from your parents that they consider an interest free loan. You go to ZNA Bank and open a business bank account. Mellisa signs an employment agreement where she is contracted to receive $13,000 per year paid fortnightly. Her salary will be paid in arrears. On this same day you sign a 6 month lease agreement to rent a warehouse beginning today. The rent for the 6 month period is $6,000 and is paid in full.
5 January You purchase 10,000 face masks from a supplier in China and pay cash. The cost per mask is $2. Shipping costs of $1,000 are also paid for. The masks arrive the same day as there was excess stock in a nearby warehouse.
7 January Mellisa receives a large sales order for 6,000 face masks to be delivered to Dunsborough Doctors. As you are just starting out, you and Mellisa agree that you are happy to receive a smaller profit margin in order to secure long term customers. The selling price per face mask is $3. You extend 1 month credit to the customer and you are both very happy with this first sale. Mellisa ships the order to Dunsborough Doctors and pays a shipping cost of $500 to the delivery driver.
8 January Your first week is a successful one. You decide to pay back $5,000 that you borrowed from you parents.
15 January You decide delivery costs are too expensive so you buy a ute that you will use to make deliveries. The cost of the ute is $20,000. You are worried about working capital requirements in your business so you pay for half of the ute with cash and decide to take a loan for the balance from ABC Bank. The loan term is for two years at an annual interest rate of 12% due to be paid at the end of each month. The ute is expected to have a useful life of 5 years.
16 January You pay Mellisa's fortnightly wages. You receive a cheque from Dunsborough Doctors for 50% of the balance that they owe.
20 January You find a reasonably priced local supplier of masks and purchase 5,000 masks on 7 days credit from Paul's PPE. The price per mask is $3 and since you picked these up in your new ute you don't need to pay any delivery costs. On the way back to your warehouse you buy $500 of office supplies such as pens, paper and ink cartridges.
21 January You withdraw $250 from the business to pay for a personal parking fine.
27 January You pay what you owe Paul's PPE in full.
Step by Step Solution
★★★★★
3.41 Rating (173 Votes )
There are 3 Steps involved in it
Step: 1
Date Account Debit Credit 1 January Cash Investment 50000 1 January Loan from Parents 50000 1 Januar...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started