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 1^st 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 30^th 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:

1^st September   Drew cheque no. 1001 to establish a Petty Cash Advance of $200.

2^nd September  Paid annual Insurance on Motor Vehicles by cheque $300, and two months rent amounting to $8,000.

3^rd 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.

4^th September   Sold 60 Rock n’ Roll Drum sets to Foxy Drummers Ltd Invoice no. 4001 and 200 Blues Drum Sets to Creative Music Ltd.

5^th September   Returned 4 defective Rock n’ Roll Drum sets to the supplier and received Credit Note no. 6789.

6^th September   Paid for taxi from petty cash and voucher No 1001 was issued for $75.00

7^th September   Received payment in full and granted discount to Foxy Drummers Ltd, issuing Receipt No 2501.

8^th September   Sold 12 Rock n’ Roll Drum sets to Music is Us.

9^th September   Paid Tiger King Drums Ltd in full.

10^th September Paid for signage with petty cash $95.00.

15^th September Drew two cheques to pay for Wages $1,000, and Electricity $300.

17^th September Sold 4 Rock n’ Roll Drum sets to a new customer Drummers Feast same price and credit terms.

18^th September Drummers Feast returned two Rock n’ Roll Drum sets and was issued Credit Note No. 9001.

18^th September Damian withdrew $1,000 using the business Cheque Book.

19^th 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

21^st September Reimbursed petty cash and increased the Petty Cash Advance to $250.

22^nd September                Drew two cheques to pay for Wages $1,000 and Telephone services $240.

23^rd 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

 

SEPTEMBER 2016

 

PARTICULARS                                                                    DEBIT $                 CREDIT $              BALANCE$

1^ST September Opening Balance                                                                                                                 2,000 Cr

2^nd September Ch. No. 1001                                           200                                                        1,800 Cr

3^rd September Ch. No. 1003                                        8,000                                                      6,200 Dr

4^th September Ch. No. 1002                                             300                                                       6,500 Dr

8^th September C&C                                                                                         41,160                   34,660 Cr

16^th September Ch. No. 1006                                         300                                                      34,360 Cr

18^th September Ch. No. 1005                                      1,000                                                     33,360 Cr

20^th September Ch. No. 1007                                      1,000                                                     32,360 Cr

22^nd September Ch. No. 1008                                          170                                                     32,190 Cr

23^rd September Ch. No. 1010                                      1,000                                                     31,190 Cr

24^th September FBT                                                              10                                                     31,180 Cr

25^th September Ch. No 1011                                            240                                                     30,940 Cr

26^th September Bank account fee                                   25                                                     30,915 Cr

30^th September Drummers Feast                                                                1,400                   32,315 Cr

 

 

 

 

 

ADDITIONAL INFORMATION AS AT 30^TH SEPTEMBER 2016

 

1. The Motor Vehicles contributed were acquired on the 30^th 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.

3. Wages of $600 have accrued as at balance day.
4. Office Supplies on Hand as at 30^th September are valued at $100.
5. Create an Allowance for Doubtful Debts equal to 1% of Accounts Receivables as at 30^th September 2016.
6. 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:

1. General and Special Journals to record all transactions, balance day adjustments, closing and reversing entries where required.
2. Inventory cards.
3. A Bank Reconciliation Statement.
4. The three trial balances required.
5. A fully classified Income Statement for the month and a Balance Sheet including Net Assets.

Individually you are required to:

1. Enter into the drop box on collaborate for your tutor, your progress report at the end of week 9.
2. 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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