Section General Journal Sales Journal Purchases Journal Cash Receipts Journal Cash Payments Journal Accounts Receivable Ledger Accounts Payable Ledger Inventory Ledger General Ledger Bank Reconciliation Schedules of Subsidiary Ledgers Trial Balance Financial Statements & Notes You are required to: 1. Record accurately all transactions for the month of June and the end of the accounting period in the correct journals. 2. You will need to complete the Inventory Subsidiary Ledger cards for the two items of inventory as you go so that you can calculate the Cost of Goods Sold for each lot of sales. 3. Complete adjusting journal entries at the end of the period, but not closing entries at this stage. (Topic 3 for depreciation methods.) 4. Complete a bank reconciliation process before totalling the cash journals. (Topic 8 there will be a "how to do a bank reconciliation" handout.) 5. Post the journals to the general ledger at the end of the month (and post to the subsidiary ledger daily). The ledger accounts have been created for you but you will firstly need to enter the opening balances in each account on 1st June. NOTE: the income and expense accounts will have an opening balance at this point as they are only closed off using closing entries at the end of the financial year. You should get these from the Trial Balance and Schedules. (Topic 5 - there was a "how to post" special journals handout.) 6. Complete Schedules of Accounts Receivable, Accounts Payable and Inventory and reconcile these with the relevant control accounts. (Topic 5 and 6) 7. Complete the adjusted Trial Balance (do this BEFORE completing and posting closing entries). 8. Complete closing entries necessary at the end of the accounting period and post them to the Ledger. Balance the Balance Sheet accounts. (Topic 4) 9. Complete an Income Statement and Balance Sheet. You should put aggregated amounts and a Note for the following items: Sales and Sales Returns Cost of Sales Depreciation Expense Accounts Receivable and Allowance for Doubtful Debts Fixed assets and their respective accumulated depreciation S Garcia, Capital (incorporate drawings and profit in the note) (See Topic 4 and Topic 7 for examples. Topic 7 is particularly relevant as this is a wholesale business selling inventory.) In the Financial Information document, you will find the schedules of balances from the subsidiary ledgers, the Bank Reconciliation Statement and the Trial Balance from the end of May 2021 and the June Bank Statement received from the bank. Sophia Garcia is a sole trader who operates Paddle Adventures, a wholesale business selling a range of kayaks to outdoor and camping shops in Tasmania, and on the internet. Sophia operates her business from a rented warehouse in Hobart. Sophia knows you are studying accounting and has asked you help her to record the transactions for June, to finish off the books for the year and prepare some financial statements for her. She is thinking of expanding and needs the statements to apply for a bank loan. Sophia is keen for you to use Excel to complete the various records each month. Ignore GST. Other Information: Sophia sells two types of kayaks, the Recreational Lite and the Ocean Deluxe kayak. She uses a perpetual inventory system and the First-in, First-out method to assign costs to Cost of Goods Sold. Prepaid expenses are treated as an Asset when paid Unearned revenue is treated as a Liability when received. Assume transactions are on credit unless it is stated otherwise. All transactions are recorded on the day they occur. For convenience, round all figures to the nearest dollar (you can get Excel to do this for you by showing no cents). O . These are the transactions for the month of June, which you are to record: Received full payment of the Sea Surf Ski account owed at 31 May, Receipt No 103. The June 1 balance was a single invoice dated 25 May 2021, payment terms were 3/10 and n/30. 1 Paid the annual insurance premium of $3,840 Cheque 303. The existing manufacturing equipment was sold for scrap, receiving $8,000. These funds were used as a deposit on a new machine $8,000. Cheque 304. The total cost of the new computerised manufacturing machine, $24,000. The balance 1 $16,000 was funded by a loan from the bank paid directly to the supplier, hint use the general ledger. (depreciation information below, noting no depreciation has been recorded for the year at 31 May). 2 Cash Sales, 34 Ocean Deluxe Kayaks @ $395, Receipt No 104. 4 Paid Ocean & Marine the amount owing to them less 4% cash discount for early payment, Cheque 305. 6 Credit sales to Bandt Paddle of 80 Recreational Lite Kayaks @ $195, Invoice No. 26. Paid Hydro Spares the amount owing at 31 May and received a 5% discount for early 6 payment, Cheque 306. 8 Paid Seaview half of the amount owing as at 31 May (no discount), Cheque 308. Received $10,950 from Tyler Outdoor as part payment of the debt as at 31 May, Receipt 9 No 105. 12 Paid wages owing for the fortnight $4600, Cheque 307. 14 Paid May Electricity Account $480, Cheque 309. 15 Purchased 50 Recreational Lite Kayaks @ $140 from Seaview, Invoice 1290. 16 Purchased 30 Ocean Deluxe Kayaks @ $230 from Ocean & Marine, Invoice 101. 18 Credit sales to Sea Surf Ski of 33 Recreational Lite Kayaks @ $195 each, Invoice No 27. 18 Cash sales, 35 Recreational Lite Kayaks @ $195, Receipt No 106. 19 Credit sales to Tyler Outdoor 85 Ocean Deluxe Kayaks @ $395 each, Invoice No. 28. 21 Tyler Outdoor returned 15 Ocean Deluxe Kayaks. Sophia gave Tyler Outdoor a credit and issued Credit Note 19. The kayaks were not damaged and returned to inventory. 23 Received $25,000 from Bandt Paddle, Receipt No 107. 24 Credit sales to Sea Surf Ski of 15 Ocean Deluxe Kayaks @ $385, Invoice No. 29. 25 Purchased 80 Recreational Lite Kayaks @ $145 each from Hydro Spares, Invoice 277. 25 Purchased 50 Ocean Deluxe Kayaks @ $235 from Ocean & Marine, Invoice 102. . . 26 Paid wages owing for the fortnight $4600, Cheque 310. 26 Cash Sales, 10 Recreational Lite Kayaks @ $225 and 10 Ocean Deluxe Kayaks @ $420, Receipt No 108. 28 Received $10 000 from Tyler Outdoor, Receipt No 109. 29 Paid Ocean Marine for June 16/6 Invoice #101 less 4% discount for early payment, Cheque 311. End of accounting period adjustments 30 Insurance is paid once a year in advance on 1 June each year. No adjustment has been made during the year. Wages owing for work done but not paid at 30 June $2 300. Freight Expense for the month of June is $2 000, the invoice has not been received or paid. A stocktake in the office reveals that Packaging Materials on Hand are $820. Depreciation: Delivery Truck depreciation is based on 12 years usage and the straight-line method (residual value $12 000) The scrapped Manufacturing Equipment is depreciated with an estimated useful life of 15 years using the straight-line method (residual $nil). The new computerised Manufacturing Equipment bought on 1 June is to be depreciated at 25% pa using the straight-line method (residual $4 000). Telephone and Internet account for June for $390 has not been received or paid. Allowance for Doubtful Debts needs to be adjusted to equal 5% of Accounts Receivable Control at 30 June. Interest on the loan (new manufacturing equipment) has not been charged, the interest rate is 6% pa. A stocktake revealed the following closing balances: Recreational Lite Kayak 72 Ocean Deluxe Kayak 39 Acc No Credit Debit 24,410 62,6101 1,365 33,350 2,380 45,000 39,000 72.000 17,000 44,485 71,250 52,000 495,545 S Garcia T/As Paddle Adventures Trial Balance as at 31 May 2021 Account Name Cash at Bank 1-1100 Accounts Receivable Control 1-1104 Allowance for Doubtful Debts 1-1105 Inventory Control 1-1115 Packaging Materials on Hand 1-2121 Prepaid Insurance 1-2125 Manufacturing Equipment 1-3175 Accum Depn- Manufacturing Equipment 1-3176 Delivery Truck 1-3180 Accum Depn- Delivery Truck 1-3181 Accounts Payable Control 2-1200 Accrued Expense Payable 2-1215 Loan 2-2000 S Garcia, Capital 3-1300 S Garcia, Drawings 3-1310 Profit and Loss Summary 3-9000 Sales 4-1000 Sales Returns and Other Allowances 4-1005 Interest Revenue 4-8410 Discount Received 4-8420 Cost of Goods Sold 5-1000 Freight Expense 5-4000 Inventory Adjustment 5-4500 Advertising expense 6-1520 Salaries and Wages Expense 6-2540 Telephone and Internet Expense 6-2545 Electricity Expense 6-2547 Insurance Expense 6-2550 Packaging Materials Expense 6-2556 Depn Expense - Manufacturing Equipment 6-2563 Depn Expense - Delivery Truck 6-2564 Bank Fee Expense 6-2580 Rent Expense 6-3570 Interest Expense 6-3575 Vehicle Running Expenses 6-3580 Bad Debts Expense 6-3590 Discount Allowed 6-3595 Gain/Loss on Disposal of Manufacturing Equipment 6-3600 4751 110 401 198,218 12,604 1,200 123,850 2.445 10,840 1,956 450 18,000 6,550 818 669,156 669,156 Schedule of Accounts Receivable at 31 May 2021 Acc No Account 101 Tyler Outdoor 102 Bandt Paddle 103 Sea Surf Ski Amount 22,800 31.210 8.600 62,610 Schedule of Accounts Payable at 31 May 2021 Acc No Account 201 Hydro Spares 202 Seaview 203 Ocean & Marine Amount 16,880 12,980 14,625 44,485 Inventory Subsidiary Ledger at 31 May 2021 Item No Product Name Recreational Lite Kayak K02 Ocean Deluxe Kayak Units 102 Unit Cost Amount 135 13,770 220 19,580 33,350 89 The May Bank Reconciliation Statement is as follows: Paddle Adventures Bank Reconciliation Statement As at 31 May 2021 Balance as per Bank Statement Add Outstanding Deposit CR 25,845 2.800 28,645 Less Unpresented cheques No 299 No 302 Balance as per Cash at Bank Account 1.230 3,005 4.235 24,410 DR Bank statement from her bank for the month of June. S Garcia T/A Paddle Adventures Tasmania Local Bank A/c No 2350 BANK STATEMENT Date Particulars Debits Credits Balance S $ 8,342 2.800 13,430 8,000 14,040 3,840 8,000 10.950 2021 Jun-01 Balance forward I Cash and cheques 2 Cash and cheques 2 Cash and cheques 3 Cash and cheques 3 Cheque 305 4 Cheque 303 5 Cheque 304 9 Cash and cheques 11 Account Fee 11 Returned Cheque (Tyler Outdoor) 12 Cheque 302 12 Cheque 307 12 Cheque 308 14 Cash and cheques 14 Cheque 306 18 Cash and cheques 19 Interest Earned 19 Cheque 309 20 Cheque 299 23 Cash and cheques 26 Cash and cheques 29 Cheque 310 30 Transaction Fees 55 10,950 3,005 4,600 6,490 $ 25.845 Cr 34,187 Cr 36,987 Cr 50.417 Cr 58,417 Cr 44,377 Cr 40,537 Cr 32,537 Cr 43,487 Cr 43,432 Cr 32,482 Cr 29,477 Cr 24,877 Cr 18,387 Cr 29,337 Cr 13,301 Cr 20,126 Cr 20,168 Cr 19,688 Cr 18,458 Cr 43.458 Cr 49.908 Cr 45,308 Cr 45,271 Cr 10,950 16,036 6,825 42 480 1,230 25,000 6,450 4.600 37 Section General Journal Sales Journal Purchases Journal Cash Receipts Journal Cash Payments Journal Accounts Receivable Ledger Accounts Payable Ledger Inventory Ledger General Ledger Bank Reconciliation Schedules of Subsidiary Ledgers Trial Balance Financial Statements & Notes You are required to: 1. Record accurately all transactions for the month of June and the end of the accounting period in the correct journals. 2. You will need to complete the Inventory Subsidiary Ledger cards for the two items of inventory as you go so that you can calculate the Cost of Goods Sold for each lot of sales. 3. Complete adjusting journal entries at the end of the period, but not closing entries at this stage. (Topic 3 for depreciation methods.) 4. Complete a bank reconciliation process before totalling the cash journals. (Topic 8 there will be a "how to do a bank reconciliation" handout.) 5. Post the journals to the general ledger at the end of the month (and post to the subsidiary ledger daily). The ledger accounts have been created for you but you will firstly need to enter the opening balances in each account on 1st June. NOTE: the income and expense accounts will have an opening balance at this point as they are only closed off using closing entries at the end of the financial year. You should get these from the Trial Balance and Schedules. (Topic 5 - there was a "how to post" special journals handout.) 6. Complete Schedules of Accounts Receivable, Accounts Payable and Inventory and reconcile these with the relevant control accounts. (Topic 5 and 6) 7. Complete the adjusted Trial Balance (do this BEFORE completing and posting closing entries). 8. Complete closing entries necessary at the end of the accounting period and post them to the Ledger. Balance the Balance Sheet accounts. (Topic 4) 9. Complete an Income Statement and Balance Sheet. You should put aggregated amounts and a Note for the following items: Sales and Sales Returns Cost of Sales Depreciation Expense Accounts Receivable and Allowance for Doubtful Debts Fixed assets and their respective accumulated depreciation S Garcia, Capital (incorporate drawings and profit in the note) (See Topic 4 and Topic 7 for examples. Topic 7 is particularly relevant as this is a wholesale business selling inventory.) In the Financial Information document, you will find the schedules of balances from the subsidiary ledgers, the Bank Reconciliation Statement and the Trial Balance from the end of May 2021 and the June Bank Statement received from the bank. Sophia Garcia is a sole trader who operates Paddle Adventures, a wholesale business selling a range of kayaks to outdoor and camping shops in Tasmania, and on the internet. Sophia operates her business from a rented warehouse in Hobart. Sophia knows you are studying accounting and has asked you help her to record the transactions for June, to finish off the books for the year and prepare some financial statements for her. She is thinking of expanding and needs the statements to apply for a bank loan. Sophia is keen for you to use Excel to complete the various records each month. Ignore GST. Other Information: Sophia sells two types of kayaks, the Recreational Lite and the Ocean Deluxe kayak. She uses a perpetual inventory system and the First-in, First-out method to assign costs to Cost of Goods Sold. Prepaid expenses are treated as an Asset when paid Unearned revenue is treated as a Liability when received. Assume transactions are on credit unless it is stated otherwise. All transactions are recorded on the day they occur. For convenience, round all figures to the nearest dollar (you can get Excel to do this for you by showing no cents). O . These are the transactions for the month of June, which you are to record: Received full payment of the Sea Surf Ski account owed at 31 May, Receipt No 103. The June 1 balance was a single invoice dated 25 May 2021, payment terms were 3/10 and n/30. 1 Paid the annual insurance premium of $3,840 Cheque 303. The existing manufacturing equipment was sold for scrap, receiving $8,000. These funds were used as a deposit on a new machine $8,000. Cheque 304. The total cost of the new computerised manufacturing machine, $24,000. The balance 1 $16,000 was funded by a loan from the bank paid directly to the supplier, hint use the general ledger. (depreciation information below, noting no depreciation has been recorded for the year at 31 May). 2 Cash Sales, 34 Ocean Deluxe Kayaks @ $395, Receipt No 104. 4 Paid Ocean & Marine the amount owing to them less 4% cash discount for early payment, Cheque 305. 6 Credit sales to Bandt Paddle of 80 Recreational Lite Kayaks @ $195, Invoice No. 26. Paid Hydro Spares the amount owing at 31 May and received a 5% discount for early 6 payment, Cheque 306. 8 Paid Seaview half of the amount owing as at 31 May (no discount), Cheque 308. Received $10,950 from Tyler Outdoor as part payment of the debt as at 31 May, Receipt 9 No 105. 12 Paid wages owing for the fortnight $4600, Cheque 307. 14 Paid May Electricity Account $480, Cheque 309. 15 Purchased 50 Recreational Lite Kayaks @ $140 from Seaview, Invoice 1290. 16 Purchased 30 Ocean Deluxe Kayaks @ $230 from Ocean & Marine, Invoice 101. 18 Credit sales to Sea Surf Ski of 33 Recreational Lite Kayaks @ $195 each, Invoice No 27. 18 Cash sales, 35 Recreational Lite Kayaks @ $195, Receipt No 106. 19 Credit sales to Tyler Outdoor 85 Ocean Deluxe Kayaks @ $395 each, Invoice No. 28. 21 Tyler Outdoor returned 15 Ocean Deluxe Kayaks. Sophia gave Tyler Outdoor a credit and issued Credit Note 19. The kayaks were not damaged and returned to inventory. 23 Received $25,000 from Bandt Paddle, Receipt No 107. 24 Credit sales to Sea Surf Ski of 15 Ocean Deluxe Kayaks @ $385, Invoice No. 29. 25 Purchased 80 Recreational Lite Kayaks @ $145 each from Hydro Spares, Invoice 277. 25 Purchased 50 Ocean Deluxe Kayaks @ $235 from Ocean & Marine, Invoice 102. . . 26 Paid wages owing for the fortnight $4600, Cheque 310. 26 Cash Sales, 10 Recreational Lite Kayaks @ $225 and 10 Ocean Deluxe Kayaks @ $420, Receipt No 108. 28 Received $10 000 from Tyler Outdoor, Receipt No 109. 29 Paid Ocean Marine for June 16/6 Invoice #101 less 4% discount for early payment, Cheque 311. End of accounting period adjustments 30 Insurance is paid once a year in advance on 1 June each year. No adjustment has been made during the year. Wages owing for work done but not paid at 30 June $2 300. Freight Expense for the month of June is $2 000, the invoice has not been received or paid. A stocktake in the office reveals that Packaging Materials on Hand are $820. Depreciation: Delivery Truck depreciation is based on 12 years usage and the straight-line method (residual value $12 000) The scrapped Manufacturing Equipment is depreciated with an estimated useful life of 15 years using the straight-line method (residual $nil). The new computerised Manufacturing Equipment bought on 1 June is to be depreciated at 25% pa using the straight-line method (residual $4 000). Telephone and Internet account for June for $390 has not been received or paid. Allowance for Doubtful Debts needs to be adjusted to equal 5% of Accounts Receivable Control at 30 June. Interest on the loan (new manufacturing equipment) has not been charged, the interest rate is 6% pa. A stocktake revealed the following closing balances: Recreational Lite Kayak 72 Ocean Deluxe Kayak 39 Acc No Credit Debit 24,410 62,6101 1,365 33,350 2,380 45,000 39,000 72.000 17,000 44,485 71,250 52,000 495,545 S Garcia T/As Paddle Adventures Trial Balance as at 31 May 2021 Account Name Cash at Bank 1-1100 Accounts Receivable Control 1-1104 Allowance for Doubtful Debts 1-1105 Inventory Control 1-1115 Packaging Materials on Hand 1-2121 Prepaid Insurance 1-2125 Manufacturing Equipment 1-3175 Accum Depn- Manufacturing Equipment 1-3176 Delivery Truck 1-3180 Accum Depn- Delivery Truck 1-3181 Accounts Payable Control 2-1200 Accrued Expense Payable 2-1215 Loan 2-2000 S Garcia, Capital 3-1300 S Garcia, Drawings 3-1310 Profit and Loss Summary 3-9000 Sales 4-1000 Sales Returns and Other Allowances 4-1005 Interest Revenue 4-8410 Discount Received 4-8420 Cost of Goods Sold 5-1000 Freight Expense 5-4000 Inventory Adjustment 5-4500 Advertising expense 6-1520 Salaries and Wages Expense 6-2540 Telephone and Internet Expense 6-2545 Electricity Expense 6-2547 Insurance Expense 6-2550 Packaging Materials Expense 6-2556 Depn Expense - Manufacturing Equipment 6-2563 Depn Expense - Delivery Truck 6-2564 Bank Fee Expense 6-2580 Rent Expense 6-3570 Interest Expense 6-3575 Vehicle Running Expenses 6-3580 Bad Debts Expense 6-3590 Discount Allowed 6-3595 Gain/Loss on Disposal of Manufacturing Equipment 6-3600 4751 110 401 198,218 12,604 1,200 123,850 2.445 10,840 1,956 450 18,000 6,550 818 669,156 669,156 Schedule of Accounts Receivable at 31 May 2021 Acc No Account 101 Tyler Outdoor 102 Bandt Paddle 103 Sea Surf Ski Amount 22,800 31.210 8.600 62,610 Schedule of Accounts Payable at 31 May 2021 Acc No Account 201 Hydro Spares 202 Seaview 203 Ocean & Marine Amount 16,880 12,980 14,625 44,485 Inventory Subsidiary Ledger at 31 May 2021 Item No Product Name Recreational Lite Kayak K02 Ocean Deluxe Kayak Units 102 Unit Cost Amount 135 13,770 220 19,580 33,350 89 The May Bank Reconciliation Statement is as follows: Paddle Adventures Bank Reconciliation Statement As at 31 May 2021 Balance as per Bank Statement Add Outstanding Deposit CR 25,845 2.800 28,645 Less Unpresented cheques No 299 No 302 Balance as per Cash at Bank Account 1.230 3,005 4.235 24,410 DR Bank statement from her bank for the month of June. S Garcia T/A Paddle Adventures Tasmania Local Bank A/c No 2350 BANK STATEMENT Date Particulars Debits Credits Balance S $ 8,342 2.800 13,430 8,000 14,040 3,840 8,000 10.950 2021 Jun-01 Balance forward I Cash and cheques 2 Cash and cheques 2 Cash and cheques 3 Cash and cheques 3 Cheque 305 4 Cheque 303 5 Cheque 304 9 Cash and cheques 11 Account Fee 11 Returned Cheque (Tyler Outdoor) 12 Cheque 302 12 Cheque 307 12 Cheque 308 14 Cash and cheques 14 Cheque 306 18 Cash and cheques 19 Interest Earned 19 Cheque 309 20 Cheque 299 23 Cash and cheques 26 Cash and cheques 29 Cheque 310 30 Transaction Fees 55 10,950 3,005 4,600 6,490 $ 25.845 Cr 34,187 Cr 36,987 Cr 50.417 Cr 58,417 Cr 44,377 Cr 40,537 Cr 32,537 Cr 43,487 Cr 43,432 Cr 32,482 Cr 29,477 Cr 24,877 Cr 18,387 Cr 29,337 Cr 13,301 Cr 20,126 Cr 20,168 Cr 19,688 Cr 18,458 Cr 43.458 Cr 49.908 Cr 45,308 Cr 45,271 Cr 10,950 16,036 6,825 42 480 1,230 25,000 6,450 4.600 37