Reference no: EM132629397

Question - Bill's Lawnmower Shop (BLS) in Cape Town has a year-end of 30 June 2020. During the month of June, the following transactions, amongst others, took place:

1. On 1 June, BLS borrowed R100 000 from the bank at 12% interest per annum

2. On 1 June, the business purchased lawnmowers on credit for R70 000 from a local wholesaler.

3. On 5 June, the business sold lawnmowers to Glorious Garden Services for cash R6 500 (inventory cost R1 500).

4. On 8 June, the business purchased R1 500 stationery on credit from Mason's stationery shop.

5. On 28 June, Glorious Garden Services returned goods to the sales value of R1 625 (inventory cost R375) for cash

6. On 30 June, the business had unused stationery of R1 000 on hand.

7. On 30 June, the business had paid interest of R1 000. (See point 1 above)

IGNORE VAT

The lawnmower shop uses the perpetual system to record inventory and the FIFO method to value inventory

Required -

1. Prepare the general journal entries (include any adjustment entries where necessary) that would have been processed in the books of the business to record all the above transactions. Narrations are required.

2. Prepare the closing journal entries that would have been processed in the books of the business assuming that a trading and profit and loss account was prepared for the month ended 30 June 2020.

3. Prepare the inventory asset account as it would appear in the general ledger of the business for the month ended 30 June 2020. Balance the account if necessary.