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.
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Chart of Accounts and Trial Balance as at 1 April, 2014
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Account No.
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Account Name
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Balance
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DR
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CR
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101
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Cash at Bank - ANZ
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27,580
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110
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Accounts Receivable
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36,518
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112
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Inventory
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46,770
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115
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Prepaid Insurance
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-
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118
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Office Supplies Inventory
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1,520
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130
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Office Equipment
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29,080
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131
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Accumulated Depreciation - Office Equipment
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14,040
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135
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Computer Equipment
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24,460
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136
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Accumulated Depreciation - Computer Equipment
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15,288
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200
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Tax Payable (GST)
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12,450
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201
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Accounts Payable
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28,970
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203
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Wages Payable
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-
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205
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PAYG Tax Payable
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5,180
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301
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Capital
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90,000
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Total
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165,928
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165,928
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302
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Drawings
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307
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Income Summary
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401
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Sales Revenue
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402
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Sales Returns & Allowances
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405
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Interest Revenue
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501
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Cost of Goods Sold
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503
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Bank Charges
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505
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Depreciation Expense - Computer Equipment
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506
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Depreciation Expense - Office Equipment
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510
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Entertainment Expense
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520
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Insurance Expense
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542
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Office Supplies Expense
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560
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Rent Expense
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580
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Telephone and Internet Expense
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585
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Wages Expense
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Accounts Receivable Subsidiary Ledger as at 1 April
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Dawson Training
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23,120
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Indigo Sports Centre
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7,448
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Weston High School
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5,950
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Total
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36,518
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Accounts Payable Subsidiary Ledger as at 1 April
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Premium Accountants
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3,850
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Ballistic Sports Equipment
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16,500
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Insight Computers
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4,520
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Odin Training & Recruitment
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1,100
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Sports Wholesalers
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3,000
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Total
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28,970
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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:
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Item Description
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Units on Hand
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Unit Cost
(excl GST)
$
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Total Value
(excl GST)
$
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Unit Selling Price
(excl GST)
$
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Tennis racquets
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64
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160
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10,240
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320
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Cross-Trainers
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23
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110
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2,530
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220
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Skis
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17
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2,000
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34,000
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4,000
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46,770
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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).