Reference no: EM13372937

Lauren Flintoff is the owner of a retail sports equipment business located in Milton that she established 3 years ago.  She operates the business as a sole trader.

Lauren submits her Business Activity Statements (GST Return) quarterly on an accruals basis. 

Chart of Accounts and Trial Balance as at 1 April, 2014
Account No.	Account Name		Balance
			DR		CR
101	Cash at Bank - ANZ		27,580
110	Accounts Receivable		36,518
112	Inventory		46,770
115	Prepaid Insurance		-
118	Office Supplies Inventory		1,520
130	Office Equipment		29,080
131	Accumulated Depreciation - Office Equipment				14,040
135	Computer Equipment		24,460
136	Accumulated Depreciation - Computer Equipment				15,288
200	Tax Payable (GST)				12,450
201	Accounts Payable				28,970
203	Wages Payable				-
205	PAYG Tax Payable				5,180
301	Capital				90,000
	Total		165,928		165,928
302	Drawings
307	Income Summary
401	Sales Revenue
402	Sales Returns & Allowances
405	Interest Revenue
501	Cost of Goods Sold
503	Bank Charges
505	Depreciation Expense - Computer Equipment
506	Depreciation Expense - Office Equipment
510	Entertainment Expense
520	Insurance Expense
542	Office Supplies Expense
560	Rent Expense
580	Telephone and Internet Expense
585	Wages Expense
Accounts Receivable Subsidiary Ledger as at 1 April
Dawson Training		23,120
Indigo Sports Centre		7,448
Weston High School		5,950
Total		36,518
Accounts Payable Subsidiary Ledger as at 1 April
Premium Accountants		3,850
Ballistic Sports Equipment		16,500
Insight Computers		4,520
Odin Training & Recruitment		1,100
Sports Wholesalers		3,000
Total		28,970

 Inventory Balances as at 1 April

 

Active Sports sells three types of inventory and uses a perpetual inventory system.

The stock take at 31 March showed:

 

Item Description	Units on Hand	Unit Cost (excl GST) $	Total Value (excl GST) $	Unit Selling Price (excl GST) $
Tennis racquets	64	160	10,240	320
Cross-Trainers	23	110	2,530	220
Skis	17	2,000	34,000	4,000
			46,770

The business uses the following specialised journals to record its business transactions:

• A Sales Journal is used to record the sale of inventory on credit during the month.
• A Cash Receipts Journal is used to record all cash received.
• A Cash Payments Journal is used to record all cash paid.
• A Purchases Journal is used to record all purchases of inventory on credit.
• A General Journal is used to record all other transactions. All invoices received for expenses incurred and owing are recorded in the general journal at the time of receiving the invoice. (Narrations are not required for general journal transactions.)

The business uses a general ledger, an accounts receivable subsidiary ledger and an accounts payable subsidiary ledger. The 4 column running balance form of ledger account is used.

NOTE: There is an extra column in the ledger accounts to make a note of source document numbers etc. We do not have such information so you may leave this column blank.

Financial statements are prepared at the end of each month. The accounts are also closed off at the end of each month.

All necessary pro-formas are available on the Blackboard site and are to be used to complete the manual accounting practice set. Quick Books software is to be used to prepare computerised records in Part B to ensure they agree.

The business transactions that occurred in April 2014 are as follows:

1.    April 1   Paid rent for April $4,400 with cheque number 46 ($4,000 plus GST $400).

2.    April 1   Purchased an Apple MacBook Pro on credit from Insight Computers for $1,342 ($1,220 plus GST $122) 

3.    April 2   Purchased office supplies with cheque number 47 for $770 ($700 plus GST $70)

4.    April 2   Sold 5 pairs of skis on credit to Snowy Resort, invoice number AB32 $22,000 ($20,000 plus GST $2,000).

5.    April 3 Purchased 40 tennis racquets on credit from Dunlop $ 7,040 ($6,400 plus GST $640).

6.    April 4   Paid for prepaid insurance of $1,320 for 12 months effective 1 April ($1,200 plus GST $120) with cheque number 48.

7.    April 4    Sold 23 pairs of cross-trainers, 6 tennis racquets and 1 pair of skis as a cash sale for $12,078 ($10,980 plus $1,098 GST), receipt number C324.

8.    April 4    Lauren withdrew $8, 000 cash for her personal use with cheque number 49 (no GST is applicable.) 

9.    April 4   Paid the monthly net wages of the staff of $10,400 with cheque number 50 (no GST is applicable.)

10.  April 10   Sold 4 pairs skis and 20 tennis racquets on credit to Mainstream Adventures, Invoice Number AB33 $24,640 ($22,400 plus GST $2,240). 

11.  April 11 Purchased 50 pairs of cross trainers and 5 pairs of skis on credit from Sports Wholesalers $ 17,050 ($15,500 plus GST $1,550).

12.   April 14  Paid Premium Accountants the balance owing of $3,850 with cheque number 51.

13.  April 21   Paid Ballistic Sports Equipment $15,400 with cheque number 52 as part payment of prior month purchases of inventory.

14.  April 21   Issued a credit note to Mainstream Adventures for return of 2 tennis racquets,  Credit Number 14 $704 ($640 plus GST $64).  

15.   April 22   Received $15,200 from Dawson Training as payment on account. 

16.  April 26   Paid the monthly telephone and internet expense with cheque number 53 for $275 (GST $25).

17.    April 26   Invoiced Dawson Training for 40 tennis racquets, Invoice Number AB34 for $14,080 ($12,800 plus GST $1,280). 

18.   April 28   Received $6,000 on account from Indigo Sports Centre.

19.  April 28 Returned 5 pairs of cross trainers to Sports Wholesalers and received a credit of $ 605 ($550 plus GST $55).

20.  April 30   Lauren lodged her quarterly Business Activity Statement (BAS return) and paid cheque number 54 to the ATO for a total of $17,630.  This represented the March quarter net GST payable of $12,450 and also the previous month PAYG tax payable of $5,180 (record each transaction on a separate line).

21.  April 30   Received $22,000 from Snowy Resort as payment on account.  

22.  April 30 Bank statement:   Received interest into the bank account $125. (no GST applicable)

23.  April 30 Bank Statement: Bank charges of $25 (no GST applicable)

24.  April 30  Record a general journal entry for $2,590 for the total PAYG tax withheld on the monthly wages.  (Debit wages expense and credit PAYG Tax Payable).