Question

You have been provided with the Unadjusted Trial Balance for Whiteley Ltd. as at June 30, 2019. The company uses the periodic system for inventory management. All sales revenue is recorded on credit, no cash sales are made by the company. There are four (4) parts to this question including PART A: General Journal entries, PART B: Classified Income Statement, PART C: Equity ledger account closing balance calculation and PART D: Classified Balance sheet. WHITELEY LTD Unadjusted Trial Balance as at 30 June 2019 Account Debit Credit $960 000 260 000 72 000 30 000 24 800+ 60 300- 450 000 36 000- 38 800 157 2002 115 400 Share capital (960 000 shares fully paid) General reserve Retained earnings Revaluation surplus Current tax liability Accounts payable Debentures Bank overdraft (current) Other liabilities (current) Land $480 000 Buildings 828 000 Accumulated depreciation - buildings Office equipment 192 000- Accumulated depreciation - n-office equip. Delivery vehicles 84 000 Accounts receivable 87 200 Allowance for Doubtful debts Inventory (1 July 2018) 288 000 Investments 190 000 Prepaid insurance 10 000 Sales Interest revenue Purchases 298 000- Sales returns and allowances 2 600 Purchases returns and allowances Freight inwards 12 900 Freight outwards 10 800 Wages expense 128 200 Interest expense 12 250 Advertising expense 37 000 Income tax expense 24 800 Administrative expenses 120.750 $2 806 500 2 500+ 589 900- 7 200 2 400- $2 806 500 Required: Prepare General Journal entries, including narrations, to record the following transactions in the template provided. Whiteley Ltd transactions during 2019/2020:

Answer 1

WHITELEY LTD.

Income Statement

for the year ended June 30, 2019

Descriptions	$	$	$
INCOME
Sales		589900
Less:Return and allowances		(2600)
Net Sales			587300
Cost of sales:
Beginning Inventory	288000
Purchases	298000
Less:Returns and Allowances	(2400)
Freight Inward	12900
		596500
Less:Ending Inventory		(398000)
			198500
GROSS PROFIT			388800
Other Income:Interest on Investment (7200+4800)			12000
			400800
EXPENSES:
Selling and Distribution Expenses:
Freight Outward	10800
Depreciation expenses-delivery vechiles (Refer note 1)	15200
Advertisement expenses	37000
Wages expenses	128200
Total Selling and Distribution Expenses		191200
Administrative Expenses:
Administrative expenses	120750
Depreciation -Office equipment(Refe note 2)	19200
Depreciation -Building ( Refer note 3)	41400
Insurance expenses (10000-3000)	7000
Total Administrative expenses		188350
Finance Expenses:
Interest on debentures and overdaft	12150
Bad debts	2036
Total Fianace expenses		14186
TOTAL EXPENSES			393736
Profit before Income tax			7064
Income tax expense			(24800)
LOSS

Reference Note:-

​​​​​1.Calculation of Depreciation on Delivery vechicales:

Cost $84000

Residual Value ($8000)

$76000

Esimated useful life 200000km

Depreciation per km = $76000/200000km

=$0.38

Depreciation on 40000km= $0.38×400000=$15200.

2.Calculation of Depreciation on Office Equipment :

cost $192000

Rate 10% p.a.

Depreciation =$192000×10% =$19200

3.Calculation of Depreciation on Building :-

Cost $828000

Rate 5% p.a.

Depreciation =$828000×5%= $41400.