Prepare general journal entries for the balance day

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Reference no: EM131238357

Fundamentals of Accounting Assignment

Question 1: Control Account and Subsidiary ledgers

The post-closing trial balance of Pollack Ltd as at I November 2012 contained the following normal balances:

Account no.

Account title

Account balance

1100

Cash at Bank

$120 000

1120

Accounts Receivable

14 540

1130

Bills Receivable

1 500

1140

Inventory

160 000

1150

Prepaid Insurance

 

1160

GST Outlays

4 000

1210

Delivery Vehicle

80 000

1215

Accumulated Depreciation - Delivery Vehicle

8 000

1220

Office Equipment

48 000

1225

Accumulated Depreciation - Office Equipment

8 000

2110

Accounts Payable

11 560

2120

Bills Payable

 

2150

GST Collections

7 000

3110

Share Capital

384 000

3120

Retained Earnings

9 480

4110

Sales

 

4115

Sales Returns and Allowances

 

4120

Discount Received

 

5110

Purchases

 

5115

Purchases Returns and Allowances

 

5120

Discount Allowed

 

5130

Rent Expense

 

5140

Electricity Expense

 

5150

Salaries Expense

 

Subsidiary ledger balances at 31 October 2012 were:

Accounts Receivable

Customer

Date of sale

Terms

Amount

D. Draper

28 October

2/10, n/30

$4 200

C. Hand

30 October

2/10, n/30

4 620

T. Tremble

18 October

2/10, n/30

5 720

Accounts Payable

Creditor

Date of purchase

Terms

Amount

Laws Ltd

19 October

1/30, n/60

$3 280

M. Merlow

10 October

n/30

5 300

Lenny Ltd

23 October

1/15, n/30

2 980

Nov.     

1 - Bought inventory from M. Merlow on credit, $4800 plus GST; terms n/30. Purchased 1 year's insurance cover for $1800 plus GST, cheque no. 400.

3 - Inventory sold to C. Hand last month was returned. Issued an adjustment note for the amount of $110 (including GST). Received a cheque from D. Draper to cover the sale made on 28 October.

4 - Paid Lenny Ltd cheque no. 401 for purchase of 23 October. Purchased inventory from Laws Ltd on credit, $4800 plus GST; terms 1/10, n/60.

5 - Issued cheque no. 402 for $3300 to M. Merlow on account, and issued a 60-day 10% bill payable for the balance due on the purchase of 10 October.

8 - Paid November rent of premises $1080 plus GST, cheque no. 403. Paid Laws Ltd for the purchase of 19 October, cheque no. 404.

10 - Sold inventory on account to A. Arnott, $9000 plus GST; terms 2/10, n/30. Received cash for the issue of additional share capital, $60 000 (GST-free).

11 - Received cheque for $2860 from T. Tremble in part payment of the sale made on 18 October, together with a bill receivable for the balance due.

12 - Sold merchandise to D. Draper on account, $9600 plus GST; terms 2/10, n/30.

13 - Purchased goods on credit from Lenny Ltd, $7920; terms 1/15, n/30 (including GST).

14 - Paid fortnightly salaries by cheque no. 405, $2400. Cash sales from 1 November to 14 November, $18 400 plus GST.

18 - Sold goods to T. Tremble on account, $9300 plus GST; terms 2/10, n/30. Received an adjustment note from Lenny Ltd for $154 for defective goods returned (includes GST).

19 - Forwarded cheque no. 406 to ATO to cover GST owing from previous month, $3000.

20 - A. Arnott forwarded a cheque for $2640 on account; no discount was allowed. Purchased goods for cash. Issued cheque no. 407 for $10 800 plus GST.

21 - Received a cheque from D. Draper for $1320 and a promissory note (bill receivable) for the balance of his account; no discount was allowed.

26 - T. Tremble forwarded a cheque for the goods sold on 18 November.

27 - Paid Lenny Ltd for the purchase made on 13 November, cheque no. 408.

28 - Paid fortnightly salaries with cheque no. 409, $2400 (GST-free).

30 - Electricity account paid by cheque no. 410, $420 plus GST. Cash sales from 15 November to 30 November, $18 000 plus GST. Purchased inventory on credit from Lenny Ltd, $7260; terms 1/15, n/30 (includes GST).

Required -

A. Record the November transactions (round amounts to the nearest dollar) in appropriate special journals and the general journal.

B. Open running balance accounts in the subsidiary ledgers and their control accounts in the general ledger, and enter the opening details of these accounts.

C. Post relevant data from the journals to the appropriate running balance subsidiary ledger accounts.

D. Prepare schedules of accounts receivable and accounts payable as at 30 November 2012, and reconcile to the appropriate subsidiary ledger control accounts in the general ledger.

E. Prepare the GST Collections and GST Outlays accounts as they would appear at 30 November 2012.

Question 2: Journal Entries, Discounts, Closing Entries and Income Statement- Both Perpetual and Periodic Inventory Systems

Starbright Lighting buys lamps for $40 each and sells them for $70 each. On 1April 2013, 24 lamps were in inventory. Starbright Lighting completed the transactions below during April.

April -

3 - Purchased 40 lamps on account. Terms: 2/10, n/30, EXW supplier's warehouse.

4 - Paid freight cost of $60 on 3 April purchase.

5 - Sold 22 lamps on account. Terms: 3/10, n/30, DDP acquirer's warehouse. Paid freight cost of $30.

9 - Returned 10 of the lamps purchased on 3 April and paid the amount due on the lamps retained in stock.

10 - A customer returned 3 of the lamps sold on 5 April. The lamps were not defective and were returned to stock.

13 - Purchased 20 lamps on credit. Terms: 2/10, n/30, EXW supplier's warehouse.

14 - Received payment from customer for the amount due on 5 April sale.

19 - Sold 39 lamps for cash at $60 each.

20 - Four of the lamps sold on 19 April were returned by the customer for a cash refund. The lamps were not defective.

22 - Paid the supplier the amount owed for the 13 April purchase.

A physical inventory count taken on 30 April 2013 showed 20 lamps in stock.

Required -

A. In two columns and ignoring GST, prepare general journal entries to record the transactions assuming:

1. a perpetual inventory system is used

2. a periodic inventory system is used. Narrations are not required.

B. Repeat requirement A but assume the business is registered for the GST.

C. Assuming Starbright closes its accounts at  month-end,  prepare relevant  entries  to close  the accounts under both inventory systems.

Question 3: Adjusting the accounts and preparing financial statements

The following trial balance was prepared from the ledger accounts of Taiwan Consultants a firm of management consultants.

Taiwan Consultants Unadjusted  Trial Balance as at 30 June 2011

 

Debit $

Credit  $

Bank

41,520

 

Stock office supplies on hand

11,890

 

Office equipment

152,000

 

Accumulated depreciation, office equipment

 

24,400

Premises

800,000

 

Accumulated depreciation, premises

 

64,000

Accounts payable

 

33,000

GST collections

 

5,500

GST outlays

3,500

 

Accounts receivable

46,000

 

Fees revenue

 

880,600

Rent revenue

 

16,000

Advertising expense

25,000

 

Administrative expenses

30,000

 

Salaries

390,000

 

Internet service provider

2,000

 

Interest expense

19,000

 

Telephone expense

8,000

 

Loan  (due 1 Sept 2015)

 

200,000

Capital - L. Lee

 

345,410

Drawings - L. Lee

40,000                             

 

 

       $1,568,910         

$1,568,910

Adjustments:

  • Salaries are $1500 per day. They are paid weekly in arrears. The next pay day is July 3 which is a Wednesday.
  • Depreciation on premises is 2% pa, on a straight-line basis.
  • Depreciation of office equipment is 10% of the equipment's cost.
  • On 1 January, 2011. Taiwan Consultants rented part of its premises to T. Light for 12 months and received a cheque for $16,000 representing the whole year's rental.
  • Office supplies of $6,390 had been used during the year. Office supplies of $5,500 were on hand at the end of the period.
  • Advertising of $2,000 was prepaid for an advertising campaign starting in July 2011.
  • $6,000 is owing for consulting work completed but not yet billed to the client.

Required -

a) Prepare general journal entries for the balance day adjustments.

b) Prepare an Income Statement for the year ended 30 June 2011.

c) Prepare a classified Balance sheet as at 30 June 2011.

Reference no: EM131238357

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