ACC506 Major Assignment Details:
As at the 1st May, Katy Perry establishes a new business Katie’s Bridal Services as a sole trader. The business will hire out bridal gowns and other accessories as well as provide professional services to the general public. She registers the new business and opens a new bank account with the local branch of Eastside Bank. Note the business is also registered for GST.
May Transactions:
FIRST Month
• Monday 1st May
? Katy deposits cash of $25,000 into the new Bank
? Purchased the following non-current assets
Item Cheque Cost (Includes GST) Life Years Salvage / Residual value Depreciation Method
Store Hire Gowns #001 $6,600 2 Zero Straight Line
Transport Equipment #002 $4,400 2 $400 Reducing Balance
Office Equipment #003 $2,200 12 Zero Straight Line
Note the depreciation will be calculated at the end of Stage 2.
? Purchased $2,200 worth of General bridal accessories (expected to be used in the current year) from Gogo Suppliers – on Credit Invoice GS-234 . No discount has been offered for early payment. (asset 1010) (Don’t forget subsidiary ledger)
? Withdrew $100.00 cash from an ATM to establish a petty cash account. (No GST for this transaction)
? Katy has the telephone installed by Hotshot Communications - the contract is for a monthly line rental of $110.00 plus charges for calls made. Cheque # 004 for $330.00 for three months’ (12 Weeks) rent in advance is issued.
? Katy phoned Your Insurance Ltd and arranged for insurance of the new business and paid for one year’s coverage (52 Weeks) drew a cheque # 0005 amount $1,650.00.
? Purchased additional general supplies of $220.00 on credit from Gogo Suppliers – on Credit Invoice GS-254 . No discount has been offered for early payment. (Don’t forget subsidiary ledger)
? Katy the real estate company (Use your own name) $1,320 (includes GST) rent for the month of May.
• 23rd May
? Katy provided professional services for Mariah Carey on credit and invoiced her for $6,600.00 - invoice # KPS 0001. A new policy offering discounts for early payment has been implemented – 2/7, n/30. (Don’t forger Subsidiary ledgers)
• 25rd May
? Katy provided professional services for Julia Roberts on credit and invoiced her for $5,500.00 - invoice # KPS 0002. A new policy offering discounts for early payment has been implemented – 2/7, n/30. (Don’t forger Subsidiary ledgers)
• 27th May
? Katy provided professional services for Pink on credit and invoiced her for $2,200.00 - invoice # KPS 0003. A new policy offering discounts for early payment has been implemented – 2/7, n/30. (Don’t forger Subsidiary ledgers)
? The business has cash revenue from store hire income of $2,200 and store sales income of $6,600.00. Katy banks $5,800.00 and keeps $3,000.00 as drawings.
• 29th May
? Paid half of the amount owing to Gogo Suppliers invoice GS-234 using Cheque # 0006 (Don’t forget Subsidiary Ledgers)
• 31st May
? Employed new staff (Harry Potter, Ron Weasley & Steve Pepper) to be paid fortnightly starting on the 12th next month.
Employee Hours / per week 5 day week Weekly Gross Wage PAYG Withheld
Harry Potter 40 hours Mon-Fri $1000.00 See Tax Scales Round nearest $
Ron Weasley 40 hours Mon-Fri $850.00 See Tax Scales Round nearest $
Steve Pepper 40 Hours Mon-Fri $1200.00 See Tax Scales Round nearest $
• Tax Scales
Taxable income Tax on this income
0 – $18,200 Nil
$18,201 – $37,000 19c for each $1 over $18,200
$37,001 – $80,000 $3,572 plus 32.5c for each $1 over $37,000
$80,001 – $180,000 $17,547 plus 37c for each $1 over $80,000
$180,001 and over $54,547 plus 45c for each $1 over $180,000
o The above rates do not include the Medicare levy of 2% but as each has private health insurance is not necessary to deduct.
This is where you will start recording transactions
June
Mon Tue Wed Thu Fri Sat Sun
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30
• 1st June
? Julia Roberts pays her account in full taking advantage of the 2% discount. (Your tutor will show you how to record the discount) (Don’t forget Subsidiary Ledgers) (Done in Lecture 6 Slides)
? Purchased more office equipment on credit from Wayne Graham for $1,650.00 (includes GST) invoice WG 058. Wayne offers discount terms of 2/7, n30. (Don’t forget Subsidiary Ledgers) (Done in Lecture 6 Slides)
? Purchased more office equipment on credit from Bishnu Sharma for $1,100.00 (includes GST) invoice BS 011. Bishnu offers discount terms of 2/7, n30.
058
• 2nd June
? Paid the rent (Use your own name) Direct Debit $1,320 (includes GST) for rent for first week June (7 Days) (Done in Lecture 6 Slides)
? Paid the remaining half of the amount owing to Gogo Suppliers invoice GS-234 using Cheque # 0007 (Don’t forget Subsidiary Ledgers) (Done in Lecture 6 Slides)
? Pink paid her account in full taking advantage of the 2% discount. (Don’t forget Subsidiary Ledgers)
• 3nd June
? Katy provided professional services for Taylor Swift on credit and invoiced her for $3,300.00 - invoice # KPS 0004. A new policy offering discounts for early payment has been implemented – 2/7, n/30. (Don’t forger Subsidiary ledgers)
? Mariah Carey paid her account in full outside the discount period. (Don’t forget Subsidiary Ledgers)
? Katy provided professional services for Jane Campion on credit and invoiced her for $3,300.00 - invoice # KPS 0005. A new policy offering discounts for early payment has been implemented – 2/7, n/30. (Don’t forger Subsidiary ledgers)
• 4th June
? Paid Wayne Graham for invoice WG 58 using Cheque #00008 Taking advantage of the discount.
• 5th June
? The business has cash revenue from store hire income of $1,100 and store sales income of $2,200.00. Katy banks $2,300.00 and keeps $1,000.00 as drawings. (Done in Lecture 6 Slides)
? Paid the amount owing to Gogo Suppliers invoice GS-254 using Cheque # 0009 (Don’t forget Subsidiary Ledgers)
? Paid Bishnu Sharma for invoice BS 011 using Cheque #00010 Taking advantage of the discount.
June Week 2
Mon Tue Wed Thu Fri Sat Sun
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30
• Monday 8th June
Katy Has decided, on the advice of her accountant, to implement an inventory system. She wants to sell wedding gowns in addition to the gowns for hire in the store. Her accountant advises her to separate the Accessories into three categories namely; Bouquets, Buttonhole Spray and Headpieces for the accessories, to use a periodic inventory system on a First in First out (FIFO) basis.
• To facilitate this use the General Journal to shift $700.00 and $1,500.00 from account 1010 to accounts 5000 and 6020 respectively. Then record the accessories as shown in the table below.
• Beginning Inventory. (To be recorded on FIFO Accessories worksheet)
Accessories Quantity Cost recorded net GST Total
Bouquets 20 16 320
Buttonhole Spray 16 40 640
Headpieces 12 45 540
Total $1,500.00
The gowns will be split into three categories but will use a perpetual inventory system on a weighted average basis.
• Katy sourced a new supplier of accessories KPMG Suppliers who offered discount for early payment and purchased the following Accessories on credit.
Accessories Quantity Unit Cost (includes GST)
Bouquets 8 $16.50
Buttonhole Spray 8 $41.80
Headpieces 8 $61.60
KPMG Suppliers issued their invoice KP 0622 for $959.20 terms 2/7 n30.
• Katy ordered the following Gowns on credit from Don Kerr Suppliers
Gowns Quantity Unit Cost (Includes GST)
Luis Viton 5 $110.00
Stella McCartney 5 $165.00
Rossini 5 $220.00
• Don Kerr Suppliers delivered the gowns and issued invoiced DK 0115 for $2,475.00 offering terms of 2/7 n30 as an incentive for early payment
• Paid rent using Electronic Funds Transfer KP 001
• Tuesday 9th
• Taylor Swift paid her account in full taking advantage of the discount on offer.
Thursday 11th
• Jane Campion paid her account in full taking advantage of the discount on offer.
• Used $11.00 petty Cash for Postage Voucher 1 (Remember just use the petty cash book)
• Friday 12thJune
• Katy provided Professional services for Julia Roberts on credit and invoiced her for $5,280.00 - invoice # KPS 0006. Terms– 2/7, n/30. (Don’t forger Subsidiary ledgers) (Done in Lecture 6 Slides)
? Cash sales for the week are identified as:
Accessories # Sale Price/item
Bouquets 5 $ 33.00
Buttonholes 8 $ 83.60
Headpieces 8 $ 123.20

Gowns Sale Price/item
Luis Viton 2 $ 165.00
Stella McCartney 2 $ 330.00
Rossini 2 $ 440.00
(Note: the Accessories are recorded using the Periodic FIFO method while the Gowns are recorded using the Perpetual Moving Average method.)
? Total receipts for sales of inventory for the week amounts to $3,689.40
? Total receipts for Shop Hire revenue amounts to $1,650.00.
? Katy banks $3,339.40 and keeps $2000.00 as drawings.
• Paid KPMG Suppliers for their invoice KPM0622 with cheque # 0011 taking advantage of the discount.
• Paid Don Kerr Suppliers for their invoice DK0115 with cheque # 0012 taking advantage of the discount
• Paid all three employees two weeks’ pay using EFT
Harry Potter EFT 001
Ron Weasley EFT 002
Steve Pepper EFT 003
June Third Week
Mon Tue Wed Thu Fri Sat Sun
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30
Monday June 15th
• Katy ordered the following Gowns on credit from Don Kerr Suppliers
Gowns Quantity Unit Cost (Includes GST)
Luis Viton 3 $132.00
Stella McCartney 3 $198.00
Rossini 3 $220.00
• Don Kerr Suppliers delivered the gowns and issued invoiced DK 0118 for $1,650 offering terms of 2/7 n30 as an incentive for early payment
? Paid rent using Direct Debit
• Thursday 18th
o Julia Roberts paid her account in full taking advantage of the discount on offer.
• Used $16.50 petty Cash for Office Supplies Voucher 2 (Remember just use the petty cash book)
• Friday 19thJune
• Katy provided Professional services and sold a Rossini Gown to Pink on credit and invoiced her for $1,650.00 for the services and $660.00 for the Gown Total $2,310.00- invoice # KPS 0007. Terms– 2/7, n/30. (Don’t forger Subsidiary ledgers and inventory ledgers) (Done in Lecture 6 Slides)
? Cash sales for the week are identified as:
Accessories # Sale Price/item
Bouquets 8 $ 33.00
Buttonholes 10 $ 83.60
Headpieces 10 $ 123.20

Gowns Sale Price/item
Luis Viton 4 $ 198.00
Stella McCartney 4 $396.00
Rossini 4 $ 495.00
(Note: the Accessories are recorded using the Periodic FIFO method while the Gowns are recorded using the Perpetual Moving Average method.)
? Total receipts for sales of inventory for the week amounts to ????
? Total receipts for Shop Hire revenue amounts to $2,200.00.
? Katy banks $5,888.00 and keeps $3000.00 as drawings.
• Paid Don Kerr Suppliers for their invoice DK0118 with cheque # 0013 taking advantage of the discount
• Katy arranged for advertising costing $3,300 from UBiz Advertisers to be run for 30 days starting on Saturday 20th June. Katy used Cheque #0014 to pay for thr service in advance.
June Fourth Week
Mon Tue Wed Thu Fri Sat Sun
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30
• 22nd June
• Katy purchased the following Accessories on credit from KPMG Suppliers who offered discount for early payment.
Accessories Quantity Unit Cost (includes GST)
Bouquets 8 $17.60
Buttonhole Spray 8 $42.90
Headpieces 8 $62.70
KPMG Suppliers issued their invoice KP 0666 for $985.60 terms 2/7 n30.
• Katy ordered the following Gowns on credit from Don Kerr Suppliers
Gowns Quantity Unit Cost (Includes GST)
Luis Viton 2 $132.00
Stella McCartney 2 $198.00
Rossini 2 $220.00
• Don Kerr Suppliers delivered the gowns and issued invoiced DK 0215 for $1,100.00 offering terms of 2/7 n30 as an incentive for early payment
• Paid rent using Electronic Funds Transfer KP 001
• Tuesday 23th
• Pink paid her account in full taking advantage of the discount on offer.
Thursday 25th
• Used $33.00 petty Cash for Taxi (Remember just use the petty cash book)
• Friday 26thJune
• Katy provided Professional services$2,200.00 and one Louis Viton gown $550.00 for Taylor Swift on credit and invoiced her for $2,750.00 - invoice # KPS 0008. Terms– 2/7, n/30. (Don’t forger Subsidiary ledgers)
• Katy provided Professional services$3,300.00 and one StellaMcCartney gown $990.00 for Jane Campion credit and invoiced her for $?????nvoice # KPS 0009. Terms– 2/7, n/30. (Don’t forger Subsidiary ledgers)
• Katy provided Professional services$4,400.00 and one Rossini gown $1.650.00 for
Julia Roberts on credit and invoiced her for $??? - invoice # KPS 0010. Terms– 2/7, n/30. (Don’t forger Subsidiary ledgers)
? Cash sales for the week are identified as:
Accessories # Sale Price/item
Bouquets 5 $ 33.00
Buttonholes 8 $ 83.60
Headpieces 4 $ 123.20

Gowns Sale Price/item
Luis Viton 2 $ 165.00
Stella McCartney 2 $ 330.00
Rossini 2 $ 440.00
(Note: the Accessories are recorded using the Periodic FIFO method while the Gowns are recorded using the Perpetual Moving Average method.)
? Total receipts for sales of inventory for the week amounts to $?????
? Total receipts for Shop Hire revenue amounts to $1,650.00.
? Katy banks $???? and keeps $2000.00 as drawings.
• Paid KPMG Suppliers for their invoice KPM0666 with cheque # 0015 taking advantage of the discount.
• Paid Don Kerr Suppliers for their invoice DK0215 with cheque # 0016 taking advantage of the discount
• Paid all three employees two weeks’ pay using EFT
Harry Potter EFT 004
Ron Weasley EFT 005
Steve Pepper EFT 006
June Fifth Week
Mon Tue Wed Thu Fri Sat Sun
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30
• 29th June
• Katy purchased the following Accessories on credit from KPMG Suppliers who offered discount for early payment.
Accessories Quantity Unit Cost (includes GST)
Bouquets 2 $17.60
Buttonhole Spray 2 $42.90
Headpieces 2 $62.70
KPMG Suppliers issued their invoice KP 0696 for $??? terms 2/7 n30.
• Katy ordered the following Gowns on credit from Don Kerr Suppliers
Gowns Quantity Unit Cost (Includes GST)
Luis Viton 2 $132.00
Stella McCartney 2 $198.00
Rossini 3 $220.00
• Don Kerr Suppliers delivered the gowns and issued invoiced DK 0315 for $??? offering terms of 2/7 n30 as an incentive for early payment
• Paid rent using Electronic Funds Transfer KP 001
30th June
• Repaid petty Cash $60.50 from funds withdrawn from bank teller
• Taylor Swift was unhappy with the Professional services provided on invoice KBS005 and requested, and was granted a refund of $165.00 using credit note KBSCR 001.
• Returned a faulty Rossini gown and was given a credit for $220.00 against invoice DK0315 1278
• Do the Bank Reconciliation
Adjustments
• Calculate the outstanding payroll liability (2 days for each employee)
• Calculate and record the insurance expense for the two months
• Calculate and record the Telephone expense for the two months
• Calculate and record the prepaid rent (5 Days)
• Calculate and record the depreciation expense for the 2 Months
• A stocktake of the Accessories revealed that there were:
o 19 Bouquets
o 7 Buttonhole Sprays
o 4 Headpieces
• Any discrepancy with the calculated FIFO inventory is to be written off to account 6065 Stock write off expense
• Only 10 days of the 30 days advertising has been used.
Note All adjustments rounded up to nearest full dollar amount.
Part B. (This should be done in your assignment in the Report Worksheet)
Write a brief report to Julie and Katy commenting on the financial performance of the business:
• Calculate the following financial ratios and provide comments –
o Current ratio
? Industry average is 5:1
? Accounting Norm is 3:1
o Quick ratio
? Industry average is 4 : 1
? Accounting Norm is 1:1
• Calculate and provide a cash flow statement for the first month of trading.
• List and briefly explain the registrations and legal requirements that Katy would have undertaken to establish the business name as a sole trader.
• Katy is contemplating for Alex Perry a partnership or a company. What extra General Ledger accounts would have to be created for
? A Partnership
? A Company