Preparation of accounting records – using spreadsheets

The trial balance for Pete’s Handyman Services (a small business operated by Pete Smith, as a sole trader) as at 30 June 2019 is as follows (after closing entries prepared on 30 June 2019):

Pete’s Handyman Services
Trial Balance
as at 30th June 2019
Debit Credit
$ $
Bank 3,600
Accounts receivable 800
Prepaid expenses 300
Supplies 400
Equipment 1,800
Less: Accumulated depreciation 800
Motor vehicle 12,000
Less: Accumulated depreciation 3,600
Accounts payable 300
Unearned revenue 600
Pete Smith, capital 13,600
Pete Smith, drawings
Service revenue
Advertising
Depreciation
Insurance
Interest expense
Motor vehicle expenses
Repairs
Supplies expense
Telephone
Total 18,900 18,900

During July 2019, the following transactions took place:

Date Detail
1-Jul Purchased a tool trailer for $4,200.  Pete took out a business loan to pay for the trailer (repayable within 12 months).  Interest is charged at 8% p.a. to the loan account, and monthly repayments are $400, due on the last day of each month.
2-Jul Paid $300 owing to a supplier in relation to June 2019 expenses, from the bank account.
4-Jul Provided handyman services to Mrs Jones on credit, for $700.
7-Jul Received $500 in the bank from a customer in relation to services provided in June 2019.
8-Jul Provided handyman services to Mrs Smart for $600.  Mrs Smart had paid for these services in June 2019.
9-Jul Purchased supplies from Bunnings for $350 (paid from the bank account).
10-Jul Provided handyman services to Mr Budd on credit, for $1,300.
12-Jul Withdrew $2,500 from the bank account for personal expenses.
14-Jul Provided handyman services to Mrs Hunt for $1,250. Mrs Hunt paid by electronic funds transfer.
15-Jul Purchased fuel for the business vehicle, for $80 (paid from the bank account).
16-Jul Received $1,300 in the bank from Mr Budd in relation to services provided on 10 July.
22-Jul Provided handyman services to Mr Diaz on credit, for $500.
23-Jul Received $2,600 from a customer, Mr Hatter, for services to be provided in August.
23-Jul Entered into a contract with Hit Radio, for radio advertising for August – October, for $1,200. $1,200 was paid from the bank account.
23-Jul Received $700 in the bank from Mrs Jones in relation to services provided on 4 July.
26-Jul Withdrew $2,500 from the bank account for personal expenses.
26-Jul Provided handyman services to Mr Catt for $280. Mr Catt paid by electronic funds transfer.
30-Jul Paid $320 for business insurance, for the month of August.
31-Jul Interest is charged on the business loan, and the $400 loan repayment for July is paid from the bank account.
31-Jul Received an invoice from Mower Repairs Ltd, for repairs to equipment, for $320. The due date for payment 14 August.
31-Jul Received an invoice from Telstra, for July telephone, for $150. The due date for payment 20 August.

Additional information as at 31 July 2019:

  • Depreciation to be recognised for July is $80 for the equipment, and $100 for the vehicle.
  • There were supplies on hand on 31 July of $260.
  • In June 2019, $300 was paid for insurance relating to the month of July 2019.
  • Ignore any GST.

Required:

i)    Prepare journal entries for July 2019 transactions listed above (including any adjusting entries).  Include dates, references and narrations.

ii)   Prepare T-accounts in an Excel spreadsheet, and enter the opening balances from the Trial Balance from 30 Jun 2019.  Post all of the above journal entries to the T-accounts.  Include dates and references for each entry.  Total all of the T-accounts to determine their balances at the end of the July 2019.  You are not required to prepare closing entries.

iii)   Prepare the ‘Adjusted Trial Balance’ in an Excel spreadsheet as at 31st July 2019.  Use formulas to generate all of the figures in the ‘Adjusted Trial Balance’ from the balances in the T-Accounts.

iv)  Prepare the income statement, balance sheet, and statement of changes in equity in Excel. Use formulas to generate all of the figures in the financial statement reports from the ‘Adjusted Trial Balance’.  When preparing the balance sheet, classify assets and liabilities as current or non-current.

v)   Calculate and evaluate the business’s current ratio and debt ratio.

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