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SkatesOn began operations on 1 June, buying and selling skateboards, roller blades, scooters and the protective gear that is essential when pursuing these types of

SkatesOn began operations on 1 June, buying and selling skateboards, roller blades, scooters and the protective gear that is essential when pursuing these types of sports. The structure of the business is that of a sole trader, with the owner being Jason King. Jason 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 SkatesOn 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 Wages payable
220 PAYG withholding 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 Depreciation expense
610 Discount allowed
620 Insurance expense
630 Interest expense
640 Rent expense
650 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 shop equipment (computer, cash register, shelving etc.) from Shop Outfitters Pty Ltd for $44,220. This was paid for with a loan of $40,640 from the bank and cheque for $3,580 from the business bank account. The bank loan is repayable over 4 years.
2 Purchased inventory (skateboards, roller blades, helmets and other protective gear) from Daintree Importers for $18,092 on terms on net 30.
2 Paid $3,012 for a 1-year insurance policy covering fire, theft, and public liability.
3 Paid rent of $2,070 for the shop for June.
6 Cash sale of a skateboard and protective equipment for $424 (cost of sales $174).
7 Returned some protective gear to Daintree Importers that was faulty and received an adjustment note (credit note) from them for $144.
8 Credit sale to Serious Fun of skateboards and roller blades for $5,620 (cost of sales $3,023). This customer was given terms of 5/10, n/30.
10 Purchased scooters from Scoot Imports for $10,530 on terms of 10/10, n/30.
14 Paid Daintree Importers $5,410 of the amount owing to them.
15 Credit sale to Action World of various inventory items for $6,097 (cost of sales $2,919). Terms net 30.
16 Received a cheque from Serious Fun for the amount owing by them after deducting the prompt payment discount.
17 Paid Scoot Imports the amount owing to them less the prompt payment discount.
20 Credit sale to Toys Plus of 29 scooters at a discounted price of $405 each on terms of net 15. Cost of sales $5,590.
21 Cash sale of inventory to the value of $707 (cost of sales $318).
22 Issued an adjustment note (credit note) to Action World for 5 helmets at $103 each that were not the style they prefer to sell. The cost of the helmets to us was $38 each and they were put back into inventory.
24 Paid wages to James Paget the sales assistant of $550 less PAYG Withholding of $44 for the five days he has been employed. In future he will be paid fortnightly.
27 The owner withdrew $920 cash from the business bank account for his own personal use.
28 Purchased scooters from Scoot Imports for $12,090 on terms of 10/10, n/30.
29 Received and banked a cheque from Toys Plus for the amount owing by them.
30 Credit sale to Serious Fun of scooters for $4,850 (cost of sales $2,170). Terms 5/10, n/30.
30 A repayment of $930 was made on the bank loan.

The end-of-month adjustments are below.

a. Depreciation on shop equipment for the month is 20% p.a. prime cost (straight line).
b. One-twelfth of the insurance expired.
c. Wages payable at 30 June were $373.
d. Interest charged on the bank loan for the month was $193.

The transactions above have been journalised and posted. The adjusted trial balance is below.

SkatesOn Adjusted trial balance as at 30 June 20XX

Account no.

Account

Debit

Credit

100

Cash at bank

$17,610

110

Accounts receivable

10,432

120

Inventory

26,564

130

Prepaid insurance

2,761

171

Shop equipment (cost)

44,220

172

Accumulated depreciation - shop equipment

$737

200

Accounts payable

24,628

210

Wages payable

373

220

PAYG withholding payable

44

230

Bank loan

39,903

300

Capital

25,300

310

Drawings

920

400

Sales revenue

29,443

410

Sales returns and allowances

515

420

Discount received

1,053

500

Cost of sales

14,004

600

Depreciation expense

737

610

Discount allowed

281

620

Insurance expense

251

630

Interest expense

193

640

Rent expense

2,070

650

Wages expense

923

$121,481

$121,481

Prepare the statement of financial position (balance sheet) as at 30 June. Show all accounts with balances as there are no notes to the financial statements.

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Current assets Total current assets Non-current assets Less: Total non-current assets Total assets SkatesOn Balance sheet as at 30 June 20XX Assets

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