Skate ‘n’ Surf began operations on 1 June, buying and selling…Skate ‘n’ Surf began operations on 1 June, buying and selling surfboards, skateboards, wetsuits and the protective gear for skateboarding. The structure of the business is that of a sole trader.The business employed a sales assistant during the month who is to be paid fortnightly. Tax is deducted from the employee’s wages (PAYG withholding tax) and remitted to the Australian Taxation Office (ATO) on a quarterly basis.The business hasnotregistered with the ATO for the goods and services tax (GST) and has elected to use the accrual basis of accounting.Accounting recordsThe business records all transactions in the general journal. These transactions are then posted to the appropriate account(s) in the general ledger and the accounts receivable or accounts payable subsidiary ledgers, where separate accounts are maintained for each customer or supplier.Chart of accountsThe chart of accounts for Skate ‘n’ Surf contains the accounts and account numbers below.100Cash at bank110Accounts receivable120Inventory130Prepaid insurance171Shop equipment (cost)172Accumulated depreciation – shop equipment200Accounts payable210PAYG withholding payable220Superannuation payable230Bank loan300Capital310Drawings320Profit or loss summary400Sales revenue410Sales returns and allowances420Discount received500Cost of sales600Advertising expense610Depreciation expense620Discount allowed630Electricity expense640Insurance expense650Interest expense660Postage and stationery expense670Superannuation expense680Telephone expense690Wages expenseTransactionsJune1The owner opened a bank account for the business with a deposit of $30,000. This is capital provided by him.1Purchased display stands, shelving etc. (shop equipment) from Shop Displays Pty Ltd for $30,000and computer equipment for the shop from Computer Wizards for $6,000. These were paid for with a loan of $32,000from the bank and cheque for $4,000from the business bank account. The bank loan is repayable over 4 years.2Paid $4,080for a 1-year insurance policy covering fire, theft, and public liability.2Paid $1,160to Local Newspapers for advertising for the shop for the month.5Purchased inventory (skateboards and protective gear) from Excitement Plus for $27,000on terms on net 30.7Purchased surfboards and wetsuits from Surf Imports for $23,000on terms of10/10, n/30.8Credit sale to Serious Fun of skateboards and protective gear for $5,900(cost of sales $2,200). This customer was given terms of5/10, n/30.8Cash sale of a skateboard and protective gear for $590(cost of sales $300).11Cash purchase of postage stamps and stationery from Australia Post for $120.12Credit sale to Surfing World of various inventory items for $7,970(cost of sales $4,600). Terms net 30.12Returned some protective gear to Excitement Plus that was faulty and received an adjustment note (credit note) from them for $170.13Received a cheque from Serious Fun for the amount owing by them after deducting the prompt payment discount.14Paid Surf Imports the amount owing to them less the prompt payment discount.17Credit sale to Academy Diving School of15wetsuits at a discounted price of $300each on terms of net 15. Cost of sales $3,000.23Paid Excitement Plus $4,100of the amount owing to them.24Issued an adjustment note (credit note) to Academy Diving School for1wetsuit at $300each that was not the size they required. The cost of the wetsuit to us was $200and it was put back into inventory.24Purchased wetsuits from Surf Imports for $9,500on terms of10/10, n/30.25Credit sale to Serious Fun of skateboards for $8,500(cost of sales $4,300). Terms5/10, n/30.27Received and banked a cheque from Academy Diving School for the amount owing by them.30A repayment of $900was made on the bank loan.30The owner cashed a cheque for $970to pay wages to Scott Walker the sales assistant of $1,000less PAYG Withholding of $30.The end of month adjustments are below.a.Depreciation on shop equipment for the month is15% p.a. prime cost (straight line).b.One-twelfth of the insurance expired.c.Superannuation payable for the month is10% of the gross wages paid.d.Interest charged on the bank loan for the month was $152.The transactions above have been journalised and posted. The statement or profit or loss for June is below.Skate ‘n’ SurfStatement of profit or lossfor the period 1 June to 30 June 20XXRevenueSales revenueSales revenue27,460Less: Sales returns and allowances300Net sales revenue27,160Less: Cost of sales14,200Gross profit12,960Other revenue:Discount received2,30015,260ExpensesAdvertising expense1,160Depreciation expense450Discount allowed295Insurance expense340Interest expense152Postage and stationery expense120Superannuation exepnse95Wages expense1,000Total expenses3,612Net profit/(loss)$11,648 textThe transactions above have beenjournalised and posted. The statementor profit or loss for June is… Show more… Show more textDebit Credit Sales revenue 27460Discount received 2300 Profit or losssummary 29760 (To close… Show more… Show moreb)Post end-of-year closing entries and complete the closing process in the general ledger.Accounting Business Financial Accounting ACCT 1000
