Question

Skate ‘n’ Surf began operations on 1 June, buying and selling surfboards, skateboards, wetsuits and the protective gear for skateboarding. The structure of the business is that of a sole trader.

The business employed a sales assistant during the month who is to be paid fortnightly. Tax is deducted from the employee’s wages (PAYG withholding tax) and remitted to the Australian Taxation Office (ATO) on a quarterly basis.

The business has not registered with the ATO for the goods and services tax (GST) and has elected to use the accrual basis of accounting.

Accounting records
The business records all transactions in the general journal. These transactions are then posted to the appropriate account(s) in the general ledger. The accounts receivable and accounts payable subsidiary ledgers are provided for information only, you are not required to post to these ledgers.

Chart of accounts
The chart of accounts for Skate ‘n’ Surf contains the accounts and account numbers below.

100		Cash at bank
110		Accounts receivable
120		Inventory
130		Prepaid insurance
171		Shop equipment (cost)
172		Accumulated depreciation - shop equipment
200		Accounts payable
210		PAYG withholding payable
220		Superannuation payable
230		Bank loan
300		Capital
310		Drawings
320		Profit or loss summary
400		Sales revenue
410		Sales returns and allowances
420		Discount received
500		Cost of sales
600		Advertising expense
610		Depreciation expense
620		Discount allowed
630		Electricity expense
640		Insurance expense
650		Interest expense
660		Stationery
670		Superannuation expense
680		Telephone expense
690		Wages expense

Transactions
June	1		The owner opened a bank account for the business with a deposit of $25,900. This is capital provided by him.
	1		Purchased display stands, shelving etc. (shop equipment) from Shop Displays Pty Ltd for $33,500 and computer equipment for the shop from Computer Wizards for $3,700. These were paid for with a loan of $29,200 from the bank and cheque for $8,000 from the business bank account. The bank loan is repayable over 3 years.
	1		Paid $4,570 for a 1-year insurance policy covering fire, theft, and public liability.
	2		Purchased inventory (skateboards and protective gear) from Excitement Plus for $17,500 on terms on net 30.
	5		Paid $1,400 to Local Newspapers for advertising for the shop for the month.
	6		Cash sale of a skateboard and protective gear for $400 (cost of sales $185).
	7		Purchased surfboards and wetsuits from Surf Imports for $16,800 on terms of 10/10, n/30.
	8		Returned some protective gear to Excitement Plus that was faulty and received an adjustment note (credit note) from them for $200.
	9		Credit sale to Serious Fun of skateboards and protective gear for $4,400 (cost of sales $1,730). This customer was given terms of 5/10, n/30.
	11		Paid Surf Imports the amount owing to them less the prompt payment discount.
	12		Credit sale to Surfing World of various inventory items for $6,740 (cost of sales $3,200). Terms net 30.
	13		Cash purchase of stationery from Officeworks for $310.
	14		Credit sale to Academy Diving School of 15 wetsuits at a discounted price of $290 each on terms of net 15. Cost of sales $2,210.
	18		Received a cheque from Serious Fun for the amount owing by them after deducting the prompt payment discount.
	19		Cash sale of inventory to the value of $880 (cost of sales $340).
	20		Issued an adjustment note (credit note) to Academy Diving School for 1 wetsuit at $290 each that was not the size they required. The cost of the wetsuit to us was $200 and it was put back into inventory.
	24		Paid Excitement Plus $4,500 of the amount owing to them.
	25		Credit sale to Serious Fun of skateboards for $6,290 (cost of sales $2,100). Terms 5/10, n/30.
	26		Purchased wetsuits from Surf Imports for $5,900 on terms of 10/10, n/30.
	27		Received and banked a cheque from Academy Diving School for the amount owing by them.
	30		The owner cashed a cheque for $1,700 to pay wages to Scott Walker the sales assistant of $830 less PAYG Withholding of $50, and $920 drawings for himself.

Journalise the June transactions. in this table format

Date

Description

Post ref.

Debit

Credit

Answer 1

Journal Entries:

Date	Description	Ref	Debit	Credit
June 1	Cash at Bank		25,900
	Capital			25,900
June 1	Shop Equipment (33,500+3,700)		37,200
	Cash at Bank			8,000
	Bank Loan			29,200
June 1	Prepaid Insurance		4,570
	Cash at Bank			4,570
June 2	Inventory		17,500
	Accounts Payable			17,500
June 5	Advertising Expense		1,400
	Cash at Bank			1,400
June 6	Cash		400
	Sales Revenue			400
	Cost of Sales		185
	Inventory			185
June 7	Inventory		16,800
	Accounts Payable			16,800
June 8	Accounts Payable		200
	Inventory			200
June 9	Accounts Receivable		4,400
	Sales Revenue			4,400
	Cost of Sales		1,730
	Inventory			1,730
June 11	Accounts Payable		16,800
	Discount Received (16,800*10%)			1,680
	Cash at Bank (16,800-1,680)			15,120
June 12	Accounts Receivable		6,740
	Sales Revenue			6,740
	Cost of Sales		3,200
	Inventory			3,200
June 13	Stationery		310
	Cash at Bank			310
June 14	Accounts Receivable (15*290)		4,350
	Sales Revenue			4,350
	Cost of Sales		2,210
	Inventory			2,210
June 18	Cash at Bank (4,400-220)		4,180
	Discount Allowed (4,400*5%)		220
	Accounts Receivable			4,400
June 19	Cash at Bank		880
	Sales Revenue			880
	Cost of Sales		340
	Inventory			340
June 20	Sales Returns & Allowances		290
	Accounts Receivable			290
	Inventory		200
	Cost of Sales			200
June 24	Accounts Payable		4,500
	Cash at Bank			4,500
June 25	Accounts Receivable		6,290
	Sales Revenue			6,290
	Cost of Sales		2,100
	Inventory			2,100
June 26	Inventory		5,900
	Accounts Payable			5,900
June 27	Cash at Bank (4,350-290)		4,060
	Accounts Receivable			4,060
June 30	Wages Expense		830
	Drawings		920
	PayG Withholding Payable			50
	Cash at Bank			1,700