Assessment Question 1 – Balance Day Adjustments
Jane Lent, has provided you with the following information in relation to her business Jane’s Design World, for the year ended 30 June 2021.
You are required to:
Prepare General Journal entries to record the balance day adjustments at 30 June 2021
include a brief narration for each journal
All work must be carried out in accordance with Jane’s Design Worlds policies and procedures which are available in Canvas.
Information regarding the balance day adjustments:
Tax Invoice No. JZ620 for the sale of stock – dated 31 May 2021, for $825 (incl. GST) was omitted from the Sales Journal and needs to be recorded before year end.
Business Insurance expense of $6,600 (incl. GST) was paid on the 1st May 2021 for the next 12-month period: May 1st, 2021 – April 30th, 2022.
Jane rents out a section of her showroom to a 3rd party for $220 (incl. GST) per month for some extra income. As at June 30th the tenant owes Jane 3 months’ rent.
The business owes its employees unpaid wages for the period 25th – 30th June 2021: This amounts to a total of $3,275
Water Rates expense owing but not yet paid by the business, $730 (GST Free)
A client has prepaid a deposit for work that is to be carried out in August 2021 (the next financial year!) The amount is $1,650 (incl. GST). This affects the Consultancy Fees (Income) Account.
Debtors total was $23,995, however, an additional bad debt of $495 (incl. GST) still needs to be accounted for. This amount relates to goods sold during the current year.
Allowance for Doubtful Debts was $790. This now needs to be at 4% of total debtors after additional bad debts have been recorded.
Depreciate motor vehicles at 20% p.a. Straight Line. (Original Cost is $37,000 and accumulated depreciation to date is $7,400).
Computer equipment is to be depreciated at 33%p.a. reducing balance (Original Cost is $25 000; Accumulated Depreciation is $8,000).
Currently the Provision for Long Service Leave is at $6,200. This needs to be increased to $7,500.
Create a provision for annual leave of $4,250.
Question 2 – Closing the Ledger
You have been asked to help a friend of Jane’s close off their accounts for the year to determine if they have made a profit.
They have presented you with the following trial balance, after all entries for balance day adjustments had been recorded in the general ledger.
Using the information, you are required to:
Prepare general journal entries to close the ledger as 30 June 2021
Post the closing entries to the Capital, Trading and Profit & Loss ledger accounts
Samnang’s Trading Co.
Adjusted Trial Balance as at 30 June 2021
Debit Credit
$ $
Accounts Receivable 35,400.00
Accounts Payable 17,200.00
Accrued Income 2,650.00
Accrued expenses 3,580.00
Accumulated Depreciation – Motor Vehicles 15,000.00
Accumulated Depreciation – Computer Equip 5,200.00
Allowances for Doubtful Debts 1,320.00
Annual leave expense 3,400.00
Advertising 8,700.00
Bank Fees and Charges 820.00
Bad Debts 1,300.00
Capital: S Khmer 183,400.00
Cartage Inward 4,250.00
Cash at bank 14,890.00
Commission Income 6,500.00
Computer Equipment 33,000.00
Customs Duty 3,875.00
Delivery expenses 5,252.00
Depreciation – Motor Vehicles 10,000.00
Depreciation – Computer equipment 2,200.00
Discount Expense 3,450.00
Doubtful Debts 2,500.00
Drawings 7,230.00
GST Collected 7,907.00
GST Paid 5,450.00
Insurance – General 5,600.00
Interest on Loan 6,400.00
Land and buildings 375,000.00
Long Term Loan 35,000.00
Motor Vehicles 65,000.00
Motor Vehicle Expenses 9,250.00
Office Wages 23,600.00
Petty Cash 500.00
Prepaid Income 2,400.00
Prepaid Expenses 6,700.00
Provision for Annual Leave 12,000.00
Provision for Long Service Leave 23,000.00
Purchases Returns and Allowances 4,800.00
Purchases 275,650.00
Rental Income 8,870.00
Rates expense 1,850.00
Sales Returns and Allowances 7,860.00
Sales 675,000.00
Stock (1/7/20) 79,400.00
Total 1,001,177 1,001,177
Additional Information: Stock as per stocktake 30 June 2021 is $87,500
