Background and Facts:
Tom Tuna is the owner of Jet Fishing, a business he started two years ago. Tom sells 2 types of fishing reels that he purchases from manufacturers. He operates the business himself and employs one person full-time as an assistant. Tom also provides specialty training services to private clients on how to make the most of their fishing gear.
2108AFE Financial Accounting Practice Set Assignment-Griffith University Australia.
Jet Fishing is operated from a rented premise and the business pays rent quarterly in advance.
The business has a variety of clients with whom Tom has built up a strong relationship. He offers them terms of 2/10, net/30.
The business is registered for GST. Business Activity Statements (BAS) are submitted quarterly to the Australia Taxation Office on an accrual basis.
Currently, the business uses a manual accounting system but plans to test an integrated accounting system later in the year.
Accounting Information
Jet Fishing uses the following specialised and general journals to record business transactions.
• Sales Journal – to record all invoices issued for sales of inventory
• Purchases Journal – to record all credit purchases
• Cash Receipts Journal – to record all cash received
• Cash Payments Journal to record all cash payments
• General Journal – to record all other transactions
Jet Fishing uses a general ledger in the form of a 4-column running balance. An Accounts Receivable and Accounts Payable subsidiary ledger is also used in this format.
Financial Statements are prepared at the end of each month, and the accounts are closed off at the end of each month.
All necessary pro-form as are included and are to be used to complete the manual practice set for April. The assignment can be completed using the templates provided in Excel.
Chart of Accounts and Opening Balances 1st April
All account balances at 1st April are normal in nature.
Subsidiary Ledgers
Accounts Receivable Subsidiary Ledger
As at 1 April
Accounts Payable Subsidiary Ledger
As at 1 April
Inventory on Hand
As at 1 April
APRIL TRANSACTIONS
The transactions for Jet Fishing during April are listed below.
Note: All amounts are GST-inclusive where applicable.
Credit sales are made on credit terms of 2/10, n/30
Round all amounts to the nearest dollar.
Instructions for Completion of Practice Set
A.Open all general ledger accounts by inserting the opening balances at 1 April as shown in the Chart of Accounts on page 3. For example, the balance of account 110 – Cash at Bank is $18,385 debit. Write “Opening Balance” in the “Details” column, and place $18,385 in the “Debit” balance column.
B.Open all subsidiary ledger accounts for accounts receivable and accounts payable by inserting the opening balances as at 1 April as shown in the schedule of accounts receivable and accounts payable on page 4. Insert the opening inventory balances into the inventory cards.
Note: For the general ledger, accounts receivable subsidiary ledger and accounts payable subsidiary ledgers, all accounts have normal balances
C.Record the transactions for April in the appropriate journals provided (narrations are not required).
D.Post daily to the accounts receivable and accounts payable subsidiary ledgers. Post daily from the general journal. All other amounts will be posted at the end of the month.
Note: For posting reference purposes, use the journal page names and numbers. For example, when posting from the sales journal the reference will be “SJ9”.
E.Total all columns of the special journals. Post from the special journals to the general ledger.
F.Prepare schedules of Accounts Receivable and Accounts Payable. Check that the total of the Schedule of Accounts Receivable equals the Accounts Receivable Control account in the general ledger and that the Schedule of Accounts Payable equals the Accounts Payable account in the general ledger.
G.Use the worksheet provided to prepare an Unadjusted Trial Balance as at 30 April.
Check figures for this stage of the assignment are as follows:
• Total of the Cash in the Cash Receipts Journal (column B in Excel) – $22,212
• Cash at Bank account balance – Dr $14,071
• Inventory account balance – $20,050.
• GST Clearing account balance – Dr $1,100
• Unadjusted trial balance from worksheet – $116,153
Note: If any of your figures do not match those above, you have made an error which you will need to find and correct.
2108AFE Financial Accounting Practice Set Assignment-Griffith University Australia.
H.Using the following information record the necessary adjusting journal entries at 30 April in the general journal. Post these to the general ledger.
1.Insurance
Tom paid 5 months insurance in advance on April 1.
2.Depreciation
On April 1, the business purchased a delivery van. It has a useful life of 10 years and a residual value of $6,000. The vehicle is depreciated using the straight-line method. Record depreciation for one month.
3.Accrued Wages
Wages owing at 30 April totalled $880.
4.Superannuation
Superannuation contributions accrued for April total $871.
5.Office Supplies
A stock take of office supplies was performed on April 30. It was noted that $650 of supplies remain.
2108AFE Financial Accounting Practice Set Assignment-Griffith University Australia.
6.Bad Debts
An assessment of bad and doubtful debts at April 30 showed an increase in the amount falling into this category. Tom has decided to increase the Allowance for Doubtful Debts to 6% of the accounts receivable balance at April 30.
7.Rent
Rent of $4,500 is paid every quarter and was last paid on the 1st of March.
I.Record these adjustments in the ‘adjustments column’ of the worksheet.
J.Complete the worksheet.
K.Record all closing entries in the general journal and post them to the general ledger.
L.Prepare a Post-closing Trial Balance as at 30 April.
M.Prepare the Income Statement (functional format), Statement of Changes in Equity, and Classified Balance Sheet.
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