Lauren Flintoff is the owner of a retail sports equipment business

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.
Chart of Accounts and Trial Balance as at 1 April, 2014

Account No.

Account Name

Balance
DR

101

Cash at Bank - ANZ

27,580

110

Accounts Receivable

36,518

112

Inventory

46,770

115

Prepaid Insurance

118

Office Supplies Inventory

130

Office Equipment

131

Accumulated Depreciation Office Equipment

135

Computer Equipment

136

Accumulated Depreciation Computer Equipment

200

Tax Payable (GST)

201

Accounts Payable

203

Wages Payable

205

PAYG Tax Payable

301

Capital
Total

302

Drawings

307

Income Summary

401

Sales Revenue

402

Sales Returns & Allowances

1,520
29,080

24,460

165,928

405

Interest Revenue

501

Cost of Goods Sold

503

Bank Charges

505

Depreciation Expense - Computer Equipment

506

Depreciation Expense - Office Equipment

510

Entertainment Expense

520

Insurance Expense

542

Office Supplies Expense

560

Rent Expense

580

Telephone and Internet Expense

585

Wages Expense

Accounts Receivable Subsidiary Ledger as at 1 April

Dawson Training
Indigo Sports Centre
Weston High School
Total

Accounts Payable
Subsidiary Ledger as at 1
April

Premium Accountants
Ballistic Sports Equipment
Insight Computers
Odin Training &
Recruitment
Sports Wholesalers

Total

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:

Item Description

Units on Hand

Unit Cost

Total Value

(excl
GST)

(excl GST)

Unit Selling
Price
(excl GST)

$

$

$

Tennis racquets

64

160

10,240

320

Cross-Trainers

23

110

2,530

220

Skis

17

2,000

34,000

4,000

46,770
Accounting Information
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.
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April 1 Paid rent for April $4,400 with cheque number 46 ($4,000 plus GST
$400).
April 1 Purchased an Apple MacBook Pro on credit from Insight Computers for
$1,342 ($1,220 plus GST $122)
April 2 Purchased office supplies with cheque number 47 for $770 ($700 plus
GST $70)
April 2 Sold 5 pairs of skis on credit to Snowy Resort, invoice number AB32
$22,000 ($20,000 plus GST $2,000).
April 3 Purchased 40 tennis racquets on credit from Dunlop $ 7,040 ($6,400 plus
GST $640).
April 4 Paid for prepaid insurance of $1,320 for 12 months effective 1 April
($1,200 plus GST $120) with cheque number 48.
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.
April 4 Lauren withdrew $8, 000 cash for her personal use with cheque number
49 (no GST is applicable.)
April 4 Paid the monthly net wages of the staff of $10,400 with cheque number
50 (no GST is applicable.)
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).
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).
April 14 Paid Premium Accountants the balance owing of $3,850 with cheque
number 51.
April 21 Paid Ballistic Sports Equipment $15,400 with cheque number 52 as part
payment of prior month purchases of inventory.
April 21 Issued a credit note to Mainstream Adventures for return of 2 tennis
racquets, Credit Number 14 $704 ($640 plus GST $64).
April 22 Received $15,200 from Dawson Training as payment on account.
April 26 Paid the monthly telephone and internet expense with cheque number
53 for $275 (GST $25).
April 26 Invoiced Dawson Training for 40 tennis racquets, Invoice Number
AB34 for $14,080 ($12,800 plus GST $1,280).
April 28 Received $6,000 on account from Indigo Sports Centre.
April 28 Returned 5 pairs of cross trainers to Sports Wholesalers and received a
credit of $ 605 ($550 plus GST $55).
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).
April 30 Received $22,000 from Snowy Resort as payment on account.
April 30 Bank statement: Received interest into the bank account $125. (no GST
applicable)
April 30 Bank Statement: Bank charges of $25 (no GST applicable)
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)