Question

Ms Jennie Smiles is the major shareholder and chief executive officer of Celebrations Pty Ltd, a small business which provides organisation services and supplies for parties, wedding receptions and other happy occasions.

Due to the relatively small size of the business Jennie is unable to justify a computerised accounting system thus all accounting is completed manually by ABC Accounting.

Celebrations Pty Ltd uses a perpetual inventory system, noting the cost of all inventory sold is 65% of the sales (GST exclusive) price.

It is now the end of February 2018 and Jennie requests ABC Accounting to complete all necessary accounting to enable the preparation of a trial balance as at 28 February 2018. As the ABC Accounting accountant assigned to Celebrations Pty Ltd you are requested to complete the following tasks using Excel:

(a) Prepare general journal entries to record the February transactions as identified below. Notations/descriptions are required.

(b) Open general ledger accounts (T-Bar OR Running Balance format) for each account shown on the 31 January 2018 trial balance and
- enter the opening balance (for 1 February 2018) for each account using the balance as shown in the 31 January 2018 Trial Balance.
- Post the entries from the general journal to the general ledger accounts and enter the posting references in the general journal.

(c) Balance off each general ledger account at 28 February and prepare a trial balance as at 28 February 2018.

Ms Smiles has provided a list of the transactions which occurred during the month of February, as well as the business’s trial balance as at 31 January, 2018.

PLEASE NOTE

i) When a discount is received or allowed, you are required to adjust the associated GST Paid or Collected.

ii) Should any GST or discount calculations not result in whole $ values, you can round the result to the nearest whole $.

The transactions for February 2018 were as follows:
   

Date (2018)	Transactions
1 February	Sold inventory on credit to Wendy’s Parties $3,300 (GST inclusive). Terms 3/7, n/30. Invoice No 1101.
2 February	Received $2,570 commission owing from parties organised in January. Issued Receipt No. 350.
3 February	Paid Party Supplies $2,760 (Cheque No. 201), after receiving a discount of $88, the amount owing for the purchase of inventory on credit in January.
4 February	Cash purchase of office supplies from Discount Office Supplies $1,320 (GST inclusive). Cheque No. 202.
5 February	Issued a $330 (GST inclusive) credit to Wendy’s Parties for unsuitable inventory returned.
6 February	Received $1,320 (Cheque No. 1020), after allowing a discount of $33, from V. Weeke as payment for a credit sale of inventory made in January. Issued receipt No. 351.
7 February	Paid Party Outfits $965 (Cheque No. 203) owing from a January purchase of inventory.
7 February	Received $2,881 from Wendy’s Parties being payment for the February 1 sale of inventory. Issued Receipt No. 352.
8 February	Cash sale of inventory $1,210 (GST inclusive). Issued Receipt No. 353.
9 February	Paid Prime Real Estate Pty Ltd $825 (GST inclusive) for February rent. Cheque No. 204.
10 February	Purchased inventory on credit from Weddings R’US $2,860 (GST inclusive). Terms 2/7, n/30.
11 February	Obtained a loan of $15,000 from Aunty Phyllis. Principal and interest of 5% pa is to be paid by August 31, 2018. The proceeds were immediately deposited into the bank. NB: there is no need to make allowance for interest payable.
12 February	Returned unsuitable inventory $429 (GST inclusive) to Weddings R’US.
13 February	Sold inventory on credit to Australiana Entertainers $1,320 (GST inclusive). Terms 2/7, n/30. Invoice No 1102.
14 February	Purchased inventory on credit from Party Outfits $1,870 (GST inclusive). Terms 2/7, n/30.
17 February	Paid $2,382 (Cheque No. 205) owing to Weddings R’US for the February 10 purchase of inventory.
19 February	Purchased inventory from Nuptial Supplies $1,430 (GST inclusive). Paid $800 by cheque (No. 206) as part payment. The remainder of the purchase was on credit.
20 February	Received $1,294 owing from Australiana Entertainers, the amount owing on the February 13 sale of inventory. Issued Receipt No. 354.
22 February	Cash purchase on inventory $550 (GST inclusive). Cheque No. 207.
24 February	Sold inventory on credit to Blinky Bill $1,430 (GST inclusive). Terms 2/7, n/30. Invoice No. 1103.
26 February	Paid monthly electricity account to Origin Power $979 (GST inclusive) by cheque (No. 208).
28 February	Issued Cheque No. 209 for $1,980 to pay sales consultant’s salary.
28 February	The current month’s interest $144 on the bank loan was paid to BAN bank via a direct debit to the business’s bank account.
28 February	The current month’s bank charges of $23 was paid via a direct debit to the business’s bank account

Note: No end of month adjusting entries are required.

Celebrtaions Pty Ltd Trial Balance as at 31 January 2018
Acc. No.	Account	Debit $	Credit $
1-100	Bank	39,000
1-200	Accounts Receivable	15,680
1-210	Provision for Doubtful Debts		1,850
1-300	Commission Receivable	2,570
1-400	Inventory	17,510
1-500	Equipment	13,700
1-510	Equipment - Accumulated depreciation		3,560
1-600	Office Supplies	2,320
2-100	Accounts Payable		6,880
2-110	GST Collected		7,230
2-120	GST Paid	4,980
2-200	Short Term Loans		0
2-300	Bank Loans		23,300
3-100	Capital		30,000
3-200	Retained Earnings		29,398
4-100	Sales Revenue		62,350
4-110	Sales Returns & Allowances	1,350
4-200	Commissions Revenue		12,640
4-300	Discount Received		1,200
5-100	Cost of Sales	43,645
6-100	Office Supplies Expense	2,200
6-200	Discount Allowed	1,360
6-300	Salaries Expense	17,100
6-400	Electricity Expense	5,200
6-500	Rent Expense	6,300
6-600	Depreciation Expense	4,520
6-700	Interest Expense	1,008
6-800	Bank Charges	165
		$178,608	$178,608

Answer 1

Celebrations Pty Ltd.
Journal Entries for February 2018
Date	Particulars		Amount (debit)	Amount (credit)
February 1, 2018	Wendy Parties (Debtor) A/c	Dr.	$3,300
	To Sales A/c			$3,143
	To GST A/c			$157
	(Being, goods sold on credit to Wendy's Parties, invoice no. 1101, terms 3/7, n/30.)
February 2, 2018	Bank A/c	Dr.	$2,570
	To Commission received A/c			$2,570
	(Being, commission from parties organised in January, receipt no. 350.)
February 3, 2018	Party Supplies (Creditor) A/c	Dr.	$2,848
	To Bank A/c			$2,760
	To Discount received A/c			$88
	(Being, creditors paid to the tune of $2,848 & received a discount of $88, cheque no. 201.)
February 4, 2018	Purchases A/c	Dr.	$1,257
	GST A/c	Dr.	$63
	To Bank A/c			$1,320
	(Being, purchases made on cash, cheque no. 202)
February 5, 2018	Sales A/c	Dr.	$314
	GST A/c	Dr.	$16
	To Wendy's Parties (Debtor) A/c			$330
	(Being, credit to Wendy's Parties for unsuitable inventories)
February 6, 2018	Bank A/c	Dr.	$1,320
	Discount A/c	Dr.	$33
	To V. Weeke (Debtor) A/c			$1,353
	(Being, received from debtors. Cheque no 1020, receipt no. 351)
February 7, 2018	Party Outfits (Creditor) A/c	Dr.	$965
	To Bank A/c			$965
	(Being, paid to creditor, cheque no 203)
February 7, 2018	Bank A/c	Dr.	$2,881
	Discount allowed A/c	Dr.	$89
	To Wendy's Parties			$2,970
	(Being, received from debtor & allowed 3% discount as per terms, receipt no 352)
February 8, 2018	Bank A/c	Dr.	$1,210
	To Sales A/c			$1,152
	To GST A/c			$58
	(Being, inventory sold for cash, receipt no 353)
February 9, 2018	Rent A/c	Dr.	$786
	GST A/c	Dr.	$39
	To Bank A/c			$825
	(Being, rent paid for February, cheque no. 204)
February 10, 2018	Purchases A/c	Dr.	$2,724
	GST A/c	Dr.	$136
	To Weddings R'US (Creditor) A/c			$2,860
	(Being, inventory purchased on credit, terms 2/7, n/30)
February 11, 2018	Bank A/c	Dr.	$15,000
	To Loan from Phyllis A/c			$15,000
	(Being, loan taken at 5% interest per annum, to be repaid by 31st Aug 2018)
February 12, 2018	Weddings R'US (Creditor) A/c	Dr.	$429
	To Purchases A/c			$409
	To GST A/c			$20
	(Being, unsuitable goods returned)
February 13, 2018	Australiana Entertainers (Debtor) A/c	Dr.	$1,320
	To Sales A/c			$1,257
	To GST A/c			$63
	(Being, inventory sold, terms 2/7, n/30, invoice no 1102)
February 14, 2018	Purchases A/c	Dr.	$1,781
	GST A/c	Dr.	$89
	To Party Outfits (Creditor) A/c			$1,870
	(Being, inventory purchased on credit, terms 2/7, n/30)
February 17, 2018	Weddings R'US (Creditor) A/c	Dr.	$2,431
	To Bank A/c			$2,382
	To Discount received A/c			$49
	(Being, creditors paid, and recieved discount of 2% for prompt payment)
February 19, 2018	Purchases A/c	Dr.	$1,362
	GST A/c	Dr.	$68
	To Bank A/c			$800
	To Nuptial Supplies (Creditor) A/c			$630
	(Being, goods purchased on part credit & part cash)
February 20, 2018	Bank A/c	Dr.	$1,294
	Discount A/c	Dr.	$26
	To Australiana Entertainers (Debtor) A/c			$1,320
	(Being, cash received from debtors, 2% discount allowed)
February 22, 2018	Purchases A/c	Dr.	$524
	GST A/c	Dr.	$26
	To Bank A/c			$550
	(Being, goods purchased on cash)
February 24, 2018	Blinky Bill (Debtor) A/c	Dr.	$1,430
	To Sales A/c			$1,362
	To GST A/c			$68
	(Being, inventory sold, terms 2/7, n/30, invoice no 1103)
February 26, 2018	Electricty Expenses A/c	Dr.	$932
	GST A/c	Dr.	$47
	To Bank A/c			$979
	(Being, electricity account paid for, cheque no 208)
February 28, 2018	Salary to Sales Consultant A/c	Dr.	$1,980
	To Bank A/c			$1,980
	(Being, sales consultant's salary paid, cheque no 209)
February 28, 2018	Interest on bank loan A/c	Dr.	$144
	To Bank A/c			$144
	(Being, bank interest paid via direct debit)
February 28, 2018	Bank charges A/c	Dr.	$23
	To Bank A/c			$23
	(Being, bank charges paid via direct debit)
			$49,457	$49,457
* GST rate has been assumed to be 5%