(Get Answer) – Acct1101 edward’s electrical goods has been in business in sydney
EDWARD’S ELECTRICAL GOODS PTY LTD
– ACCOUNTING PRACTICE SET
The objective of this Accounting practice set is to provide students with an insight into the process of recording transactions, completing adjusting and closing entries, and preparing financial statements for a retail business.
Edward’s Electrical Goods has been in business in Sydney since July, 2011. The company was started by Edward Wright and operates a shop which sells electrical equipment on a retail basis to other businesses on credit and the public on cash terms. The company’s share capital consists of 126,000 ordinary shares, issued at $1 each, that are owned by various members of the Wright family. The company employs a combination of sales and administration staff to operate the business.
Accounting System Information & Procedures
The company has a financial year end of 30 June and prepares adjusting entries at the end of the financial year. To ensure efficiency of its accounting procedures, the company uses the following Special Journals to maintain its accounting records:
1. Sales Journal (SJ): to record all sales of inventory oncredit
3. Cash Receipts Journal (CRJ): to record all cashreceipts
4. Cash Payments Journal (CPJ): to record all cashpayments
Business transactions are recorded for Edward’s Electrical Goods on a daily basis in one of these five journals in the accounts.
Additionally, the company maintains a general ledger to record postings from the journals. Subsidiary Ledgers are used to record the separate details of Accounts Receivable and Accounts Payable. Transactions are posted immediately to the relevant ledger account if they are entered into the general journal, the “other” column of the Cash Receipts Journal or Cash Payments Journal, or if they affect any of the Accounts Receivable or Accounts Payable subsidiary ledger accounts. Apart from these transactions, totals of the special journals are taken at the end of the month and then posted to the appropriate accounts. The company uses a periodic inventorysystem.
In practice, the company would be required to collect and pay Goods and Services Tax (GST) on its sales and purchases. However, for the purposes of this exercise, GST has been excluded.
Please Note: All amounts in this practice set should be rounded to the nearest dollar.
UNADJUSTED TRIAL BALANCE AND CHART OF ACCOUNTS
As at 31 May 2017
Acc. No. Account Debit ($) Credit ($)
100 Cash at Bank 68,292
101 Accounts Receivable Control 26,460
102 Store Supplies 16,779
103 Inventory 86,800
104 Prepaid Store Rent (paid 1 March 2017) 82,180
105 Prepaid Insurance (paid 1 Nov. 2016) 1,260
150 Store Shelving & Fittings 56,700
151 Accum. Depreciation – Shelving & Fittings
160 Equipment 19,250
161 Accumulated Depreciation – Equipment 9,450
200 Accounts Payable Control 17,066
201 Interest Payable
202 Utilities Payable
203 Wages Payable
204 Salaries Payable
205 Tax Payable
206 Dividend Payable
250 Bank Loan (due 1 June 2022) 67,438
300 Share Capital 126,000
301 Retained Profits (1 July 2016) 107,058
302 Dividends Declared
303 Profit and Loss Summary
400 Sales Revenue 449,526
401 Sales Discounts (Discount Allowed) 3,451
402 Sales Returns and Allowances 973
500 Purchases 214,095
501 Purchase Discounts (Discount Received) 2,688
502 Purchase Returns and Allowances 1,127
600 Freight-Out 322
601 Wages Expense – Sales Staff 107,569
602 Depreciation Expense- Shelving & Fittings
603 Depreciation Expense – Equipment
604 Supplies Expense
605 Rent Expense
606 Insurance Expense
607 Advertising Expense 4,872
608 Interest Expense
609 Utilities expense 6,496
610 Tax Expense
611 Sundry Expense 336
612 Salaries Expense– Office Staff 84,518
613 Bad Debts Expense
1) Enter the transactions on pages 8-9 into the appropriate Journal for the month of June 2017, Remember to post Journal transactions to the ledger accounts as specified in the “Account System Information” section of theintroduction.
2) TotalallSpecialJournalcolumnsandposttotheappropriateledgeraccountattheendof themonth.
4) Prepare the adjusting entries shown on page 10 in the General Journal and post to the relevantledgeraccounts.Theentertheadjustmentsintherelevantworksheetcolumnsand prepare an adjusted TrialBalance.