Problem
The Singh Tax Services business was established on August 1 of the current year to help clients with their tax planning. The business entered into the following transactions:
Date Transactions
2 Mar. Mr. Singh set up the business by investing $20,000 in the business' cheque account.
3 The business paid $6600 (including GST) in advance for one year's rent of office space.
4 Office equipment was purchased at a cost of $13200 (including GST). A down payment of 2200 was made and an $11, 000 note payable was signed for th e balance owed. The note is due in one year.
7 Office supplies were purchased for $1760 cash (including GST)
16 Fees of $3740 (including GST) were collected from clients for tax services provided during the first half of August.
29 A salary of $3000, which included $300 PAYG tax, was paid to the office secretary.
30 Mr Singh withdrew $1800 for personal use.
31 The March electricity bill of $264 (including GST) was received; it will be paid in early April.
31 Clients were billed $5060 (including GST) for tax services performed during the second half of August
31 Swan recorded the following adjustments:
i. Rent expense for the month
ii. Depreciation of $90 on office equipment
iii. Interest expense of $110 on the note payable
iv. Office supplies used (the office supplies on hand at the end of the month cost $1300).
NOTE: GST is 10%
Task
1. Using the following column headings or account titles, prepare a worksheet to record the above transactions: Date, Cash, Prepaid Rent, Office Equipment, Office Supplies, Accounts Receivable, GST Paid, Notes Payable, Electricity Payable, GST Collected, PAYG Payable, Capital, Tax Service Revenue, Salary Expense, Electricity Expense, Rent Expense, Depreciation, Interest Expense, Office Supplies Expense.
2. Prepare a trial balance
3. Prepare a classified income statement for the business for August
4. Prepare a balance sheet for the business on August 31
5. Briefly comment on how well the business did in August