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 employee’s 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. The accounts receivable and accounts payable subsidiary ledgers are provided for information only, you are not required to post to these ledgers.

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 Stationery
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 $25,300. This is capital provided by him.
1 Purchased display stands, shelving etc. (shop equipment) from Shop Displays Pty Ltd for $33,900 and computer equipment for the shop from Computer Wizards for $3,800. These were paid for with a loan of $30,200 from the bank and cheque for $7,500 from the business bank account. The bank loan is repayable over 3 years.
1 Paid $4,530 for a 1-year insurance policy covering fire, theft, and public liability.
2 Purchased inventory (skateboards and protective gear) from Excitement Plus for $17,100 on terms on net 30.
5 Paid $1,500 to Local Newspapers for advertising for the shop for the month.
6 Cash sale of a skateboard and protective gear for $480 (cost of sales $200).
7 Purchased surfboards and wetsuits from Surf Imports for $16,500 on terms of 10/10, n/30.
8 Returned some protective gear to Excitement Plus that was faulty and received an adjustment note (credit note) from them for $180.
9 Credit sale to Serious Fun of skateboards and protective gear for $4,600 (cost of sales $1,780). This customer was given terms of 5/10, n/30.
11 Paid Surf Imports the amount owing to them less the prompt payment discount.
12 Credit sale to Surfing World of various inventory items for $6,790 (cost of sales $3,230). Terms net 30.
13 Cash purchase of stationery from Officeworks for $320.
14 Credit sale to Academy Diving School of 20 wetsuits at a discounted price of $300 each on terms of net 15. Cost of sales $2,260.
18 Received a cheque from Serious Fun for the amount owing by them after deducting the prompt payment discount.
19 Cash sale of inventory to the value of $820 (cost of sales $340).
20 Issued an adjustment note (credit note) to Academy Diving School for 1 wetsuit at $300 each that was not the size they required. The cost of the wetsuit to us was $180 and it was put back into inventory.
24 Paid Excitement Plus $4,900 of the amount owing to them.
25 Credit sale to Serious Fun of skateboards for $6,240 (cost of sales $2,600). Terms 5/10, n/30.
26 Purchased wetsuits from Surf Imports for $6,100 on terms of 10/10, n/30.
27 Received and banked a cheque from Academy Diving School for the amount owing by them.
30 The owner cashed a cheque for $1,700 to pay wages to Scott Walker the sales assistant of $820 less PAYG Withholding of $50, and $930 drawings for himself.

Journalise the June transactions.

Date

Description

Post ref.

Debit

Credit