DRUMMERS’ CHOICE LTD
17 TIPPERS STREET
ST ABLANS 3021
Damian Drickers is a semi-retired music teacher and is starting a wholesale drum set sales business on the 1st September 2016, he is contributing the following assets and liabilities to commence the business: Cash at Bank $2,000, Motor Vehicles $30,000, Office Supplies $300, Motor Vehicles Financing Loan $10,000.
The terms of the Loan are: interest rate of 12% per annum payable at the end of each month and repayment of principle of $90 at the end of each month.
He has employed your accounting firm to design and set up the accounting journals and ledgers, and to complete the financial statements for the month ended 30th September 2016.
Damian supplies two types of Drum Sets. All sales are on credit. Rock n’ Roll Drum Sets are sold at $700.00 per unit and Blues Drum Sets are sold at $450.00 per unit, credit terms are 2/10 30 nett.
All purchases of Drum Sets are also on credit.
All major costs are paid by cheque and a Petty Cash fund is used for minor expenses.
Transactions for the month of September 2016:
1st September Drew cheque no. 1001 to establish a Petty Cash Advance of $200.
2nd September Paid annual Insurance on Motor Vehicles by cheque $300, and two months rent amounting to $8,000.
3rd September Purchased on credit from Tiger King Drums Ltd Invoice No 7595, 80 units of Rock n’ Roll Drum sets at $500 each, credit terms 3/10 nett 60. Also purchased credit 300 units of Blues Drum sets from Best Drums Ltd at $300 each, Invoice Number 8490, credit terms 5/15 nett 30.
4th September Sold 60 Rock n’ Roll Drum sets to Foxy Drummers Ltd Invoice no. 4001 and 200 Blues Drum Sets to Creative Music Ltd.
5th September Returned 4 defective Rock n’ Roll Drum sets to the supplier and received Credit Note no. 6789.
6th September Paid for taxi from petty cash and voucher No 1001 was issued for $75.00
7th September Received payment in full and granted discount to Foxy Drummers Ltd, issuing Receipt No 2501.
8th September Sold 12 Rock n’ Roll Drum sets to Music is Us.
9th September Paid Tiger King Drums Ltd in full.
10th September Paid for signage with petty cash $95.00.
15th September Drew two cheques to pay for Wages $1,000, and Electricity $300.
17th September Sold 4 Rock n’ Roll Drum sets to a new customer Drummers Feast same price and credit terms.
18th September Drummers Feast returned two Rock n’ Roll Drum sets and was issued Credit Note No. 9001.
18th September Damian withdrew $1,000 using the business Cheque Book.
19th September Purchase 24 Rock n’ Roll Drum sets from a new supplier: Best Drums Ltd at $510 per unit, credit terms 5/10 nett 30 days and received Invoice Number 30020.
Paid by cheque, Auto Smart Servicing for servicing the motor vehicles, $170
21st September Reimbursed petty cash and increased the Petty Cash Advance to $250.
22nd September Drew two cheques to pay for Wages $1,000 and Telephone services $240.
23rd September Received from commission of $500 for a promotional event to take place late October.
WESTERN BANK LTD
Statement of Account for:
DRUMMERS’ CHOICE LTD
17 TIPPERS STREET
ST ABLANS 3021
PARTICULARS DEBIT $ CREDIT $ BALANCE$
1ST September Opening Balance 2,000 Cr
2nd September Ch. No. 1001 200 1,800 Cr
3rd September Ch. No. 1003 8,000 6,200 Dr
4th September Ch. No. 1002 300 6,500 Dr
8th September C&C 41,160 34,660 Cr
16th September Ch. No. 1006 300 34,360 Cr
18th September Ch. No. 1005 1,000 33,360 Cr
20th September Ch. No. 1007 1,000 32,360 Cr
22nd September Ch. No. 1008 170 32,190 Cr
23rd September Ch. No. 1010 1,000 31,190 Cr
24th September FBT 10 31,180 Cr
25th September Ch. No 1011 240 30,940 Cr
26th September Bank account fee 25 30,915 Cr
30th September Drummers Feast 1,400 32,315 Cr
ADDITIONAL INFORMATION AS AT 30TH SEPTEMBER 2016
- The Motor Vehicles contributed were acquired on the 30th August 2016 and are to be depreciated on a reducing balance at 12% per annum.
2 The repayment of the loan and interest due for the month of September is yet to be made.
- Wages of $600 have accrued as at balance day.
- Office Supplies on Hand as at 30th September are valued at $100.
- Create an Allowance for Doubtful Debts equal to 1% of Accounts Receivables as at 30th September 2016.
- A physical stock take of inventory reveals:
25 Rock n’ Roll Drum Sets and
100 Blues Drum Sets.
Your accounting firm is required to complete the following:
- General and Special Journals to record all transactions, balance day adjustments, closing and reversing entries where required.
- Inventory cards.
- A Bank Reconciliation Statement.
- The three trial balances required.
- A fully classified Income Statement for the month and a Balance Sheet including Net Assets.
Individually you are required to:
- Enter into the drop box on collaborate for your tutor, your progress report at the end of week 9.
- Enter into the drop box on collaborate for your tutor, a reflective journal highlighting the trials and tribulations of group work, word limit 150 words. This report must be submitted at the end of week 11.
MARKING SCHEME MARKS
CASH RECEIPTS JOURNAL 5
CASH PAYMENTS JOURNAL 31
SALES JOURNAL 3
SALES RETURNS JOURNAL 2
PURCHASES JOURNAL 4
PURCHASES RETURNS JOURNAL 2
STOCK CARD FOR ROCK AND ROLL GYM SETS 11
STOCK CARD FOR BLUES GYM SETS 4
GENERAL JOURNAL 40
PETTY CASH BOOK 8
BANK RECONCILIATION STATEMENT 7
GENERAL LEDGER 43
ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER AND SCHEDULE 6
ACCOUNTS PAYABLE SUBSIDIARY LEDGER AND SCHEDULE 5
THREE TRIAL BALANCES 39
INCOME STATEMENT 15
BALANCE SHEET 15
TOTAL GROUP MARK 250
INDIVIDUAL PROGRESS REPORT DUE WEEK 9 25
INDIVIDUAL REFLECTIVE JOURNAL 25
TOTAL INDIVIDUAL GRADE 300
FINAL GRADE 20%
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