Posted: September 13th, 2017

Accounting

Task
Assume you have just been employed as the part-time accountant for ‘Celebrations’. The previous part-time accountant resigned at the end of May, 2015.

Celebrations is a small business which provides organisation services and supplies for parties, wedding receptions and other happy occasions. This business is based in Newcastle and is owned and operated by Ms Jenny Smiles. Jenny also employs a sales consultant (Pauline Happi) and both of you will be paid on a monthly basis.

The business uses a perpetual inventory system, noting the cost of all inventory sold is 70% of the sales (GST exclusive) price.

Due to the small size of the business Ms Smiles is unable to afford a computerised accounting system thus all accounting is completed manually. Prior to resigning, the previous part-time accountant completed all necessary accounting and produced a trial balance as at 30 April 2015.

Given it is now the end of May, 2015, Ms Smiles requests you to complete all necessary accounting to enable the preparation of a trial balance as at 31 May, 2015. Specifically Ms Smiles requests you to use Excel to:

1.Prepare general journal entries to record the May transactions as identified below. Notations/descriptions are required in the general journal entries.
2.Open general ledger accounts (T-Bar or Running Balance format) for each account shown on the 30 April 2015 trial balance and
•enter the opening balance for each account ie the balance as shown in the 30 April 2015 Trial Balance.
•post the entries from the general journal to the general ledger accounts and enter the posting references in the general journal.
3. Balance off each general ledger account and prepare a trial balance as at 31 May 2015.

NB: When a discount is received or allowed, there is no need to adjust the associated GST Paid or Collected.
Ms Smiles has provided a list of the transactions which occurred during the month of May, as well as the business’s trial balance as at 30 April, 2015.

The transactions for May 2015 were as follows:

Date Transaction
May 1 Sold inventory on credit to Wendy’s Parties $2,200 (includes 10% GST). Terms 3/7, n/30. Invoice No 1231.
May 2 Received $2,750 commission owing from parties organised in April. Issued receipt No. 800
May 3 Paid a cheque (No. 501) $1,870 to Party Supplies for purchase of inventory on credit in April.
May 5 Paid a cheque (No. 502) $1,430 to Nuptial Supplies for purchase of inventory on credit in in April.
May 6 Received a cheque (No. 220) from V Strong $1,320 for credit sale of inventory made in April. Issued receipt No. 801
May 7 Received $2,134 owing from Wendy’s Parties for May 1 sale. Issued receipt No. 802
May 8 Cash sale of inventory $1100 (includes 10% GST). Issued receipt No. 803
May 8 Paid freight inwards $66 (includes 10% GST) by cheque No 503.
May 9 Paid rent of $770 (includes 10% GST) for April, by cheque No. 504.
May 9 Purchased inventory on credit from Weddings R’US $2,750 (includes 10% GST). Terms 2/7, n/30.
May 10 Obtained a loan of $15,000 from Aunty Phebe. Principal and interest of 5% pa is to be paid by December 31, 2015. Cheque No 25 was immediately deposited into the bank.
May 11 Issued a $330 (includes 10% GST) credit to Wendy’s Parties for unsuitable inventory returned.
May 11 Sold inventory on credit to Australiana Entertainers $1,650 (includes 10% GST). Terms 2/7, n/30. Invoice No 1232.
May 12 Purchased inventory on credit from Party Outfits $1,100 (includes 10% GST). Terms 2/7, n/30.
May 13 Cash sale of inventory $770 (includes 10% GST). Issued receipt No. 804
May 15 Paid $2,695 owing to Weddings R’US for May 9 purchase, by cheque No. 505.
May 16 Purchased inventory from Nuptial Supplies $1,210 (includes 10% GST). Paid $700 by cheque (No 506) as part payment. The remainder of the purchase was on credit.
May 18 Paid electricity $1,980 (includes 10% GST) by cheque No. 507.
May 18 Received $1,617 owing from Australiana Entertainers. Issued receipt No. 805.
May 20 Sold inventory on credit to Happy Revellers $2,530 (includes 10% GST). Invoice No 1233.
May 24 Paid office salaries $1,750 (cheque No. 508) and sales salaries $1,900 (cheque No. 509).

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