L Mcintosh Owns and Runs BBT Centre a Shop Selling Only 2 Stock Lines Baths and Basins

BBT CENTRE

L McIntosh owns and runs BBT Centre – a shop selling only 2 stock lines – baths and basins. He sells on cash and for credit. He has 2 main suppliers.

At 28 February 2005, he provides you with a trial balance and asks you to process the transactions for March 2005.

BBT CENTRE Trial balance at 28 February 2005

Debtors 6233 Creditors 8795 Stock 26500 Bank 7056 Delivery van 30000 Accumulated depreciation of delivery van 4000 Capital 56994 $69789 $69789

Stock schedule at 28 February

Item No on Cost Inc Value Selling Inc hand Price GST of Price GST stock Baths 20 700 770 14000 1400 1540 Basins 25 500 550 12500 1000 1100 26500

Debtors Schedule at 28 February

Accounts Receivable Amount Short 2410 Long 3823 $6233

Creditors Schedule at 28 February

Accounts Payable Amount Plumbers Supplies 1420 Corona 7375 $8795

The following transactions took place in March 2005 Date Transaction Document 3 March Sold 8 baths to Short on credit $11200 (plus $1120 Inv 298 GST) 4 March Paid electricity account to Yarra Power $420 (plus $42 Chq 6909 GST) 8 March Paid wages for 2 weeks – 2 employees $600 each per Chq 6910 week Drew cash for own use $1000 Chq 6911 9 March Paid rent for 6 months $12000 (plus $1200 GST) to Chq 6912 Flecher Real Estate 10 March Cash sale of 1 basin $1000 (plus $100 GST) Sale no 71 13 March Paid administrative expenses $500 (plus $50 GST) to Chq 6913 M Malone 15 March Paid advertising to Local Newspapers for 3 ads to Chq 6914 appear weekly $6000 (plus $600 GST) 20 March, 27 March, 2 April 16 March Bought 5 baths from Corona $3500 (plus $350 GST) Inv C3012 18 March Paid telephone account $550 (plus $55 GST) to Telstra Chq 6915 20 March Paid Plumbers Supplies the amount owing at 1 March Chq 6916 21 March Short paid the amount owing at 1 March Rec 117 22 March Bought office supplies from Normans $300 (plus $30 Chq 6917 GST) 23 March Sold 2 baths on credit to Broad $2800 (plus $280 GST) Inv 299 24 March Paid for petrol and servicing of van to Mobil $610 Chq 6918 (plus $61 GST) 25 March Sold 13 basins to Wide on credit $13000 (plus $1300 Inv 300 GST) 26 March Long paid $2000 on account Rec 118 27 March Bought 10 basins from Plumbers Supplies $5000 (plus Inv P2468 $500 GST) 28 March Paid Corona the amount owing at 1 March Chq 6919 31 March Sold 2 basins for cash $2000 (plus $200 GST) Sale no 72 Bought office equipment $10000 (plus $1000) from Chq 6920 Mamco Ltd L McIntosh contributed $20000 cash as a capital contribution to the business

At 31 March 2005 the following adjustments need to be made:

1. Depreciation is to be charged on the delivery van 15% per annum straight line for 1 month 2. Wages are accrued for 2 weeks for both employees 3. Rent and advertising are both prepaid.

McIntosh counted the stock and found 14 baths and 20 basins in the warehouse. Bank statement at 31 March 2005

BANK OF ANYWHERE Acc no 99998 Statement date 31 March 2005 Acc name BBT CENTRE Date Details Debit Credit Balance 2005 1 March Balance 7056 Cr 7 6909 462 6594 Cr 8 6910 2400 4194 Cr 11 Cash/Chqs 1100 5294 Cr 12 6911 1000 4294 Cr 15 Bank fee 25 4269 Cr 18 6913 6600 2331 Dr 6914 605 2936 Dr 22 Cash/Chqs 2410 526 Dr 24 6916 1420 1946 Dr 25 6917 671 2617 Dr 27 Cash/Chqs 2000 617 Dr

Teacher notes

A few things to be alert to:

WATCH THE DATES. These cause most of the problems in computer processing because the students put some in the current month and some in the month of the exercise and then wonder why the reports aren’t right when they have processed everything!

The aged listings for A/R and A/P will sometimes be based on when the amounts are due – and not on when the sales are made – depending on how your system was set up.

The students need to adjust the dates for the reports so that they are consistent with the period of processing.

Students need to open new accounts for some of the payments, purchase of the non current asset and the balance day adjustments.

Students need to watch the field in the Receive Payments for ‘deposit to’ so that the amounts are entered into the bank account and not left in the ‘undeposited funds’.

Two QuickBooks Pro files accompany this exercise – the first has the opening balances entered and is ready for the students to enter the transactions. The second is the exercise completed.