Question

Loxley Farms' is owned and operated by Ms. Robyn Hoodling. Robyn opened the business some time ago and has had some training in basic bookkeeping. Robyn has been keeping a pretty good record of her business so far and has even managed to do some of the needed balance day adjustments already. There are a few balance day adjustment items remaining that she was unsure on and so she has enlisted your help and has provided you with her unadjusted trial balance for Jan 2020. Your task is to record the adjusting entries in the "Journal", post these entries to the "Ledger", and finally help fill out the "Income Statement" and "Balance Sheet" based on the "Adjusted Trial Balance". You can assume all other balance day adjustments not listed have already been accounted for.

31/1/2020 The business has 12 sales staff. Each sales staff member is paid a GROSS wage of $836 per week [PAYG withheld of $134]. At the end of the month, the business owed its 2-weeks of wages to the sales team that has yet to be recorded.

31/1/2020 Received $20592 (including GST) from customer at the start of the month for delivery of some service and it was recorded as unearned revenue and GST Collected. The business manages to deliver these on the 31 Jan 2020.

31/1/2020 A bank loan for the amount of $108000 was taken out on the 1 Jan 2020. The bank charges interest of 5% per annum and interest payments are due quarterly.The interest on $108000 is yet to be recorded. The bank loan is due in July 2025.

31/1/2020 On 1 Jan 2020, the business paid $16940 (including GST) for 11-months worth of rent for the office. This was recorded at the time as Prepaid Rent and GST Paid.

31/1/2020 The motor vehicle is depreciated using the straight line method. It has a useful life of 7 years and a zero residual value.

31/1/2020 The business hires 7 general office assistants. Each assistant is paid a NET wage of $924 per week [PAYG withheld of $140]. At the end of the month, the business owed its the office assistants 1-week of wages that has yet to be recorded.

31/1/2020 The office furniture is depreciated using the straight line method. It depreciates at 10% per annum and is assumed to have a zero residual value.

31/1/2020 On 1 Jan 2020, the business paid $13068 (including GST) for 11-months worth of business insurance. This was recorded at the time as Prepaid Insurance and GST Paid.

31/1/2020 On 2 Jan 2020, the business purchased 18 packs of sticky notes worth of $198 (including GST) and recorded the amounts as Office Supplies and GST Paid. Robyn counted these packs of sticky notes on 31 Jan 2020 and found that 13 packs have been consumed in addition to other office supplies that has already been accounted for.

	Unadjusted trial balance "for month ending 31/1/2020"
Acc no	Account	dr	cr
101	cash	333024
102	accounts receivable	25488
103	Inventory	78946
104	Office Supplies	10294
111	GST Paid	13576
141	prepaid insurance	13068
142	Prepaid Rent	15400
143	Interest receivable	9991
155	Office furniture	68400
156	Accum Depreciation - Office furniture		20520
158	Motor Vehicle	62160
159	Accum Depreciation - Motor Vehicle		35520
201	Accounts Payable		9474
222	GST collected		34050
240	Interest Due		0
241	Unearned Revenue		33942
242	Wages Payable		2784
243	Utilities Payable		2650
244	Consulting Fees Payable		3000
251	Bank Loan		108000
261	PAYG Withheld	0	10234
301	Capital		209043
302	Drawings	27450
401	Sales Revenue		266962
402	Service Revenue	0	73542
403	Interest Revenue		834
501	Cost of goods sold	80089
601	Computer Expense	2256
602	Office Supplies Expense	0
603	Interest Expense	0
604	Consulting Expense	6000
605	Insurance expense	0	0
606	Rent Expense	0
607	Sales commission expense	18687
608	Utilities Expense	7950
609	Wage Expense	27826
610	Advertising Expense	9950	0
651	Depreciation expense - motor vehicle	0	0
655	Depreciation expense - office furniture	0

Total: Dr 810,555 CR 810,555

Answer 1

Journal Entries

1. Wages A/c Dr. 20064

To Wages Payable A/c 20064

2. Unearned Revenue A/c Dr. 20592

To Service Revenue A/c 20592

3. Rent Expense A/c Dr. 1540

To Prepaid Rent A/c 1540

4. Depreciation expense - Motor Vehicle A/c Dr. 740

To Motor Vehicle A/c 740

5.  Depreciation expense - Office furniture A/c Dr. 570

To Office Furniture A/c. 570

6. Wage Expense A/c Dr. 6468

To Wages Payable A/c 6468

7. Insurance expense A/c Dr. 1188

To prepaid insurance A/c 1188   

Income And Expenditure: