1. You have been presented with the following information relating to Jack Crisp’s Call Centre, a business selling mobile phones at the 1st of July 2015.
Jack Crisp’s Call Centre – Post Closing Trial balance – 1 July 2015
103 Sales Income -
105 Sales Returns and Allowances -
203 Purchases -
207 Freight Inwards -
301 Commission Income -
403 Salesperson’s Salary -
405 Salesperson’s Commission -
407 Advertising Expense -
409 Travel Expense -
411 Depreciation Expense—Premises -
413 Depreciation Expense—Salesperson’s Vehicle -
415 Depreciation—Office Furniture -
423 Administrative Salary Expense -
425 Insurance Expense—Premises -
427 Council Rates Expense -
431 Postage -
433 Office Supplies Expenses -
435 Telephone Expense -
443 Doubtful Debts Expense -
445 Discount Expense -
447 Discount Received -
449 Interest and Bank Charges -
503 Capital, Jack Crisp (1/7/15) ???
507 Drawings, Jack Crisp -
603 Petty Cash Account 450.00
605 Cash at Bank (1,319.90)
607 Accounts Receivable Control 66,003.00
609 Allowance for Doubtful Debts 1,248.80
611 Inventory (1/7/15) 112,852.00
613 Office Supplies 220.00
615 Prepaid Expenses 5,780.00
619 GST Outlays -
653 Premises 330,000.00
655 Accumulated Depreciation—Premises 44,000.00
657 Salesman’s Vehicle 48,000.00
659 Accum’ted Depreciation— Salesperson’s Vehicle 17,454.54
661 Office Furniture 20,000.00
663 Accumulated Depreciation— Office Furniture 2,000.00
703 Accounts Payable Control 16,745.00
705 Sundry Creditor — Outdoorz Furniture 15,380.00
707 Accrued Expenses 3,405.00
708
711 Interest Payable
GST Collections -
-
713 ATO Clearing (Credit Balance) 2,750.00
753 Bank Mortgage Loan (6 years) 70,000.00
*Note: If you need to create any additional accounts, please assign the account(s) an account number which has not already been assigned in the above chart of accounts.
Additional Notes
• Jack Crisp began operations on Friday the 1st of July 2011
• Prepaid Expenses are comprised of
Advertising 1,300+
Insurance – Salesperson’s Vehicle 580*
Prepaid Rent 3,900**
+ The prepaid advertising relates to an advertising campaign on radio in the month of July. For simplicity, the accountant waits until the end of the month before recording any adjustments to prepayments.
*The prepaid insurance relates to a policy which was paid for twelve months on the 1st of September 2014. The $580 represents the amount unused at the 30th of June 2015.
**The prepaid rent of $3,900 relates to unused rent (at the 30th of June) for the administrative offices of the business. The rent was paid on the 1st of April 2015 for 6 months until the end of September 2015.
Any adjustments you feel are necessary to account for the information related to prepaid expenses can use the account “Prepaid Expenses” instead of using “Prepaid Wages”, “Prepaid Insurance” etc. Either approach is acceptable.
• The Sundry creditor (Outdoorz Furniture) refers to the purchase of office furniture by Jack Crisp on the 1st of December 2014 from Outdoorz Furniture on credit (no cash deposit was paid at the time of the purchase of the furniture) for $20,000. The agreement between Jack and Outdoorz required Jack to make equal monthly repayments on the last day of every month, with the first repayment starting from the 31st of December 2014. You will need to calculate the repayment amount as it has not been provided. There is sufficient information contained in this assignment to allow you to calculate the repayment amount.
• All non-current assets (except for the office furniture referred to above) were purchased when the business began operations on the 1st of July 2011. To make it easier for the accountant, straight line depreciation has been used to calculate depreciation for all non-current assets controlled by the business. In addition, the residual values for all non-current assets in the business at the end of their useful lives are also all assumed to be zero.
• The ATO Clearing account in the trial balance has a credit balance.
• The bank mortgage loan is repaid at the rate of $1,100 on the 1st day of every month. Interest is 6.5% per annum and is paid on the bank loan every quarter. The last payment for interest occurred on the 30th of June 2015.
• For simplicity, you are not required to account for PAYG on salaries and salesperson’s commissions. This assignment is focusing on accounting concepts – issues related to real world tax will not need to be considered.
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Additional Notes
• The balances in the prepaid expense accounts and accrual accounts are assumed to have “normal” balances. For example, any prepaid expenses are assumed to have a debit balance in the trial balance.
• The owner is evaluating the performance of the business due to the downturn in income for the business in the first 6 months of 2015. As a result, the owner has decided to prepare financial reports on a monthly basis. Therefore, to evaluate the performance of the business, the owner has also asked you to make any necessary adjustments (assuming an accrual accounting system) as at 31st July 2015. You need to ensure that you have accounted for all of the information provided – remember, an accrual accounting system is being used. (NOTE: In relation to any adjustments required, you are not required to process an adjustment for the Allowance for Doubtful Debts). This means that some events (including the depreciation of non-current assets and accrued expenses when applicable) have occurred and do not involve cash, but may still need to be recorded as the owner wants the accountant to prepare information that accurately reflect the position of the business at the end of July 2015. (ie You will need to adjust for depreciation for the month of July 2015). You are not required to prepare financial reports.
• Jack Crisp’s Call Centre uses a periodic inventory system.
• To assist with budgeting, depreciation expense is calculated and recorded at the end of each month.
• The business opens on weekdays (Monday – Friday) ONLY. It does not open for business on weekends. Staff are not paid overtime and have a set salary paid to them.
• Credit terms offered by the business for credit sales are normally 3/7, n/30 unless otherwise specified. Discounts are given for part payments of an account – that is, if some of the account is paid off early, a discount will be applied to the amount which has been paid by the customer to the business. (Please refer to the textbook for a more detailed explanation of the discount notation referred to above).
• Doubtful Debts adjustments are made at the end of the financial year, not on a monthly basis – again, you are not required to process any allowances for doubtful debts.
• A stocktake on the 31st of July 2015 revealed that inventory on hand was $108,180.
• The purchase of office supplies is always recorded as an asset (ie “Office Supplies”) at the time of purchase and expensed at the end of the reporting period.
• GST is applicable to transactions unless stated otherwise. In other words, you will need to account for GST unless the transaction clearly states that GST is not applicable to the transaction. You are not required to make any assumptions regarding whether GST should be applicable or not.
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Accrued Expenses are comprised of
Salesperson’s Salary* 930
Salesperson’s Commission* 865
Administrative Salary* 1,020
Accrued Telephone Expense 320
Accrued Electricity Expense 270
*The amounts above represent accrued salary(s) and commission at 30th June 2015. Staff are paid salary(s) and commission every 14 calendar days. The last 2 dates that amounts were paid were the 5th and the 19th of June (that is, all salaries and commissions up to and including Friday the 19th of June had been paid and recorded on the 19th of June 2015). The amounts shown represent accrued expenses at the 30th of June 2015. (Disregard PAYG).
Additional Notes
Schedule of Accounts Receivable
as at 1st July 2015
Account No.
60701 Glen Maxwell 0
60703 Travis Head 17,195
60705 Dodgi Phones 0
60707 Epsilon Phone 32,550
60709 Sharonberg Enterprises 9,578
60711 Mitchell Marsh 6,680

Schedule of Accounts Payable
as at 1st July 2015
Account No.
70301 Wayne Prior 0
70303 Di Maria Limited 4,820
70305 NCE Limited 1,630
70307 Optis Australia 4,115
70309 Tony Yeboah 6,180
Required:
Part (a) (3 Marks)
Determine the balance for the Capital as at 1st July 2015. (The answer can be written into the chart of accounts found on page 3 of this document or it can be written here.)
Answer to (a) Please type answer here
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Required:
Part (b) (3 Marks)
Process the necessary reversing entry(s) in the General Journal based on the information provided (you are not required to reverse prepaid expenses).
Part (c) (44 Marks)
Record the following transactions from Jack Crisp’s Call Centre for the month of July 2015.
For only for the ledger accounts provided, post the necessary amounts (from the specialised journals) as appropriate. That is, you are only required to complete the ledger account(s) and subsidiary account(s) provided in the question. You are not required to create additional ledger accounts. Narrations are not required for the general journal entries.
(You are required to total all specialised journals at the completion of recording all transactions). Failure to total the columns will result in a loss of marks.
July 2 Sold mobile phones on credit to Mitchell Marsh worth $1,452 (Invoice number 305). (GST has already been included in the $1,452).
July 4 Purchased office supplies (for use in the business) worth $352 on credit. (GST has already been included in the $352).
July 5 Received the telephone bill in the mail for the home telephone for Jack Crisp for the month of June 2015. The bill was for $380. The bill relates to his home phone. Jack paid the bill using cash from the business. (No GST is payable on this transaction).
July 5 Paid, using direct deposit, employee salaries and commissions owing (that is, 2 weeks of salary for the salesperson, the administrative staff member and the commission). Remember, disregard PAYG.
July 9 Sold mobile phones to Glen Maxwell for $2,300 (Invoice number 306). A discount of 5% is available if payment is made immediately. Glen decided to pay for the goods immediately. (GST has not been calculated or included in the figure of $2,300).
July 10 Sharonberg Enterprises paid the full amount owing on their account with Jack.
July 11 Paid the amount owing for the accrued telephone expense from the 1st of July 2015.
July 12 Purchased mobile phones on credit from Wayne Prior worth $6,300. Credit terms were 5/10, n30. The terms provide for discount to be allowed by Wayne Prior on any part repayment(s) made by Jack. (GST has not been included in the figure of $6,300).
July 13 Received $10,400 cash from Epsilon Phones as part-payment for amounts owing to Jack Crisp.
July 16 Sold mobile phones on credit to Dodgi Phones for $2,447.50 (Invoice 307). (GST has been included in the figure of $2,447.50).
July 19 Paid using direct deposit, 2 weeks salaries and commissions (disregard PAYG).
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July 21 The owner of the business took 2 mobile phones out of the inventory held by the business to give as presents to his children. The cost of the mobile phones were $350 each (that is, their original cost when purchased by the business for the purposes of resale). GST is not applicable for this transaction.
July 22 Received the monthly telephone bill for the business. The total amount owing was $310. No GST is applicable for this transaction.
July 23 Paid the amount owing for the accrued electricity expense from the 1st of July 2015.
July 24 Sold mobile phones for cash to Cyrus Stores worth $1,450 (Invoice number 308). (GST has not been calculated or included in the $1,450).
July 25 Paid $180 of the amount owing for stationery purchased on credit (Cheque 311).
July 25 Purchased $2,120 worth of mobile phones from Tony Yeboah (Credit Terms 4.5/10, n/60). (GST has not been calculated or included for the $2,120).
July 26 Paid the amount outstanding for NCE Limited. No discount was applicable.
July 26 Received the monthly bill for the electricity used in the business. The total for the electricity bill was $248. GST is not applicable for this transaction.
July 27 Paid $780 cash to Wayne Prior for the mobile phones purchased on the 12th of July.
July 28 Paid the amount outstanding for Di Maria Limited. No discount was applicable.
July 30 Received $8,430 cash from Travis Head as part-payment for amounts owing to Jack Crisp.
July 31 Paid in cash, the full amount owing for the Tony Yeboah purchase on the 25th of July.
July 31 Office supplies on hand at 31/7/13 were $90.
NOTE: STUDENTS ARE NOT REQUIRED TO CLOSE THE INCOME AND EXPENSE ACCOUNTS AT THE END OF JULY.

NOTE: THE NUMBER OF LINES PROVIDED IN EACH JOURNAL IS NOT AN INDICATION OF HOW MANY ENTRY(S) NEED TO BE PROCESSED IN EACH JOURNAL.
Sales Journal (4 Marks)
Date Invoice Number Details Post Ref GST Amount Debtors

PLEASE DO NOT FORGET TO TOTAL THE COLUMNS – YOU WILL BE PENALISED 2 MARKS FOR EACH JOURNAL THAT DOES NOT HAVE THE COLUMNS TOTALLED.
Purchases Journal (4 Marks)
Date Details Terms Post Ref Purchases GST Creditors

PLEASE DO NOT FORGET TO TOTAL THE COLUMNS – YOU WILL BE PENALISED 2 MARKS FOR EACH JOURNAL THAT DOES NOT HAVE THE COLUMNS TOTALLED.

Cash Payments Journal (12 Marks)
DATE DETAILS Ref DISCOUNT CREDIT-ORS SALARIES MISCELL-ANEOUS GST BANK
net GST

PLEASE DO NOT FORGET TO TOTAL THE COLUMNS – YOU WILL BE PENALISED 2 MARKS FOR EACH JOURNAL THAT DOES NOT HAVE THE COLUMNS TOTALLED.
Cash Receipts Journal (4 Marks)
DATE DETAILS Post Ref DISCOUNT DEBTORS SALES MISCELL-ANEOUS GST BANK
net GST

PLEASE DO NOT FORGET TO TOTAL THE COLUMNS – YOU WILL BE PENALISED 2 MARKS FOR EACH JOURNAL THAT DOES NOT HAVE THE COLUMNS TOTALLED.
Total for Journals – 24 Marks
General Journal – 16 Marks (Parts (b) and (c))
DATE PARTICULARS P/R DEBIT CREDIT
$ $

NOTE: NARRATIONS FOR ANY GENERAL JOURNAL ENTRIES, ARE NOT REQUIRED
General Journal – 16 Marks (Parts (b) and (c))
DATE PARTICULARS P/R DEBIT CREDIT
$ $

NOTE: NARRATIONS FOR ANY GENERAL JOURNAL ENTRIES, ARE NOT REQUIRED
Cash at Bank (605) – 3 Marks
DATE Details Post Ref DEBIT CREDIT BALANCE

Bank Mortgage Loan (753) – 1 Mark
DATE Details Post Ref DEBIT CREDIT BALANCE

You are not required to prepare financial reports for the period ended July 2015. You are only required to answer the questions asked in the assignment. Please answer to the best of your ability. If you are not sure, answer things as best you can. Please do not post on the discussion forum how to get the answer – this assignment is about identifying your understanding of the material. Not everyone will score or is expected to score 100% for this assignment.
To the best of the knowledge of the teaching staff, there are no errors (typos) in the information provided. Unless otherwise indicated, the information provided can assume to be correct – ie it is assumed that the information in the chart of accounts has already been recorded correctly. You are not looking for any errors in the information.
Please take the time to read all of the information – there is sufficient information to process all items including loan repayments and deprecation of the non-current assets.
TOTAL MARKS 3 + 3 + 44 = 50
Mark for Assignment Mark Given

Total
50

PLEASE DO NOT DELETE THIS TABLE WHEN YOU SUBMIT THE ASSIGNMENT. THE TABLE ASSISTS WITH FINALISING THE RESULT AND SPEEDS UP THE GRADE FINALISATION PROCESS AND RETURN OF YOUR PAPER.