Skate n Surf began operations on 1 June, buying and selling surfboards, skateboards, wetsuits and the protective gear for skateboarding. The structure of the business is that of a sole trader. The business employed a sales assistant during the month who is to be paid fortnightly. Tax is deducted from the employees wages (PAYG withholding tax) and remitted to the Australian Taxation Office (ATO) on a quarterly basis. The business has not registered with the ATO for the goods and services tax (GST) and has elected to use the accrual basis of accounting. Accounting records The business records all transactions in the general journal. These transactions are then posted to the appropriate account(s) in the general ledger and the accounts receivable or accounts payable subsidiary ledgers, where separate accounts are maintained for each customer or supplier. Chart of accounts The chart of accounts for Skate n Surf contains the accounts and account numbers below.

100		Cash at bank
110		Accounts receivable
120		Inventory
130		Prepaid insurance
171		Shop equipment (cost)
172		Accumulated depreciation - shop equipment
200		Accounts payable
210		PAYG withholding payable
220		Superannuation payable
230		Bank loan
300		Capital
310		Drawings
320		Profit or loss summary
400		Sales revenue
410		Sales returns and allowances
420		Discount received
500		Cost of sales
600		Advertising expense
610		Depreciation expense
620		Discount allowed
630		Electricity expense
640		Insurance expense
650		Interest expense
660		Postage and stationery expense
670		Superannuation expense
680		Telephone expense
690		Wages expense

Transactions

June	1		The owner opened a bank account for the business with a deposit of $36,000. This is capital provided by him.
	1		Purchased display stands, shelving etc. (shop equipment) from Shop Displays Pty Ltd for $36,000 and computer equipment for the shop from Computer Wizards for $6,000. These were paid for with a loan of $38,000 from the bank and cheque for $4,000 from the business bank account. The bank loan is repayable over 4 years.
	2		Paid $4,440 for a 1-year insurance policy covering fire, theft, and public liability.
	2		Paid $1,080 to Local Newspapers for advertising for the shop for the month.
	5		Purchased inventory (skateboards and protective gear) from Excitement Plus for $26,000 on terms on net 30.
	7		Purchased surfboards and wetsuits from Surf Imports for $25,000 on terms of 10/10, n/30.
	8		Credit sale to Serious Fun of skateboards and protective gear for $5,200 (cost of sales $2,000). This customer was given terms of 5/10, n/30.
	8		Cash sale of a skateboard and protective gear for $570 (cost of sales $230).
	11		Cash purchase of postage stamps and stationery from Australia Post for $120.
	12		Credit sale to Surfing World of various inventory items for $7,950 (cost of sales $4,700). Terms net 30.
	12		Returned some protective gear to Excitement Plus that was faulty and received an adjustment note (credit note) from them for $140.
	13		Received a cheque from Serious Fun for the amount owing by them after deducting the prompt payment discount.
	14		Paid Surf Imports the amount owing to them less the prompt payment discount.
	17		Credit sale to Academy Diving School of 16 wetsuits at a discounted price of $400 each on terms of net 15. Cost of sales $5,600.
	23		Paid Excitement Plus $3,700 of the amount owing to them.
	24		Issued an adjustment note (credit note) to Academy Diving School for 1 wetsuit at $400 each that was not the size they required. The cost of the wetsuit to us was $350 and it was put back into inventory.
	24		Purchased wetsuits from Surf Imports for $9,400 on terms of 10/10, n/30.
	25		Credit sale to Serious Fun of skateboards for $7,800 (cost of sales $4,200). Terms 5/10, n/30.
	27		Received and banked a cheque from Academy Diving School for the amount owing by them.
	30		A repayment of $1,000 was made on the bank loan.
	30		The owner cashed a cheque for $780 to pay wages to Scott Walker the sales assistant of $800 less PAYG Withholding of $20.

The end of month adjustments are below.

a.	Depreciation on shop equipment for the month is 10% p.a. prime cost (straight line).
b.	One-twelfth of the insurance expired.
c.	Superannuation payable for the month is 10% of the gross wages paid.
d.	Interest charged on the bank loan for the month was $150.

The transactions above have been journalised and posted. The statement or profit or loss for June is below.

Skate 'n' Surf Statement of profit or loss for the period 1 June to 30 June 20XX
Revenue
Sales revenue
Sales revenue				27,920
Less: Sales returns and allowances				400
Net sales revenue				27,520
Less: Cost of sales				16,380
Gross profit				11,140
Other revenue:
Discount received				2,500
				13,640
Expenses
Advertising expense		1,080
Depreciation expense		350
Discount allowed		260
Insurance expense		370
Interest expense		150
Postage and stationery expense		120
Superannuation exepnse		76
Wages expense		800
Total expenses				3,206
Net profit/(loss)				$10,434

(a) Journalise end-of-year closing entries

Date

Details

Post ref.

Debit

Credit