Accrual Accounting
“Great Explorations” is a shop which sells hiking gear, including backpacks, hiking shoes and tents. It is owned and run by Nellie Bly. The following trial balance has been prepared at year end:
GREAT EXPLORATIONS
TRIAL BALANCE AS AT 30 JUNE 2020
| Debit ($) | Credit ($) | |
| Cash on Hand | 12,500 | |
| Accounts Receivable | 16,000 | |
| Inventory (30 June 2020) | 32,500 | |
| Prepaid Shop Rent | 24,000 | |
| Shop Shelving | 120,000 | |
| Accum. Depreciation Shop Shelving | 40,000 | |
| Bank Overdraft | 6,000 | |
| Accounts Payable | 9,300 | |
| N. Bly, Capital (1 July 2019) | 141,700 | |
| N. Bly, Drawings | 12,500 | |
| Sales | 256,800 | |
| Sales Returns & Allowances | 1,200 | |
| Discount Received | 1,800 | |
| Cost of Sales | 128,000 | |
| Sales Staff Salaries Expense | 42,000 | |
| Advertising Expense | 1,800 | |
| Discount Allowed | 240 | |
| Freight Outwards | 360 | |
| Interest Expense | 1,400 | |
| Council Rates Expense | 1,300 | |
| Administrative Salaries Expense | 28,000 | |
| Rent Expense | 32,000 | |
| Sundry Administration Expense | 1,800 | |
| 455,600 | 455,600 |
The following additional information is also provided for the year ended 30 June 2020:
- A physical stocktake of inventory as at 30 June 2020 revealed $31,000 on hand.
- Nellie has estimated that 6% of the 30 June 2020 balance of Accounts Receivable will never be collected from the customers.
- Sales staff salaries of $6,200 are still owed and have not been paid as at balance date.
- A tent with a sale price of $793 was delivered to a customer on 28 July 2020. The sale of this tent was recorded in the Sales account on the 28th June.
- The Shop Shelving is expected to have a useful life of five years and will then be sold for an estimated amount of $10 000.
- The Prepaid shop rent has been paid four months in advance and covers the rent until 31 July 2020.
- Nellie bought herself a pair of awesome Doc Marten boots from a local Op Shop for $45. She paid for the purchase using her personal bank account.
- $250 of the recorded sales represents cash received in advance from a customer on 16 June 2020 for a large pack of dehydrated meals for a 3 week hiking trip. The food pack will not be delivered to the customer until 10 July 2020.
- The council rates bill of $1 850 for the quarter ending the 30 June 2020 was received in the mail on 27 June 2020. The bill has not yet been recorded or paid.
REQUIRED:
- Based on the information provided above, record any necessary adjusting journal entries.
- Complete the Sales Staff Salaries Expense ledger provided below only.
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