Question

5,715 The business has the following opening balances: Cash At Bank Account Receivable Motor Vehicle Account Payable Bank Loan (due 2023) Gym Equipment Stationery Supplies Capital $17,199 $19.023 $35.160 $7.783 $22.102 $21,813 $497 Additional Information: Bank loan interest rates % per year) Motor vehicle useful life (years) Motor vehicle scrap value (S) Insurance paid for (months) Rent paid for (months) Gym equipment useful life (years) Gym equipment scrap value ($). Closing stock of stationery supplies on 30/6 ($) Staff work a 14 day fortnight and are paid on the 15th day. 4,870 594 2 Amount $1,289 $3,728 $660 Transactions: Date Description 1-Jun Paid General Insurance 3-Jun Gym fees - Cash 4-Jun Receive Payment from Account Customers 5-Jun Gym fees - Account 8-Jun Sundry Expenses 13-Jun Advertising Expense - Cash 15-Jun Staff Wages 20-Jun Payment to Account Payable 22-Jun Membership fees - Cash 26-Jun Gym fees - Cash 26-Jun Squash fees - Cash 26-Jun Equipment hiring expense - Account 27-Jun Advertising Expense - Account 29-Jun Staff Wages Amount $2.860 $1,616 $1,029 $1,160 $211 $776 $2.221 $1,458 $2.774 $1,682 $2,385 $524 $1,108 $2,221 Date Description 2-Jun Squash fees - Account 3-Jun Rent of Business Premises 4-Jun Purchase stationery Supplies 7-Jun Membership fees - Cash 12-Jun Cash Withdrawals by Owner 13-Jun Receive Payment from Account Customers 17-Jun Equipment hiring expense - Cash 21-Jun Gym fees - Account 24-Jun Payment to Account Payable 26-Jun Squash fees - Account 26-Jun Additional cash contributed by owner 27-Jun Motor Vehicle Expenses 29-Jun Squash fees - Cash $2,112 $839 $1,792 $482 $980 $949 $1,154 $4,468 $330 $1,670 Comments: - Assume that this assignment involves an existing business that was purchased by the new owner on 1 June 2020. - Note the list of transactions is in date order, left to right, line by line. - Use three separate ledger accounts for revenue, namely gym fees, squash fees and membership fees. All revenues relate to the month of June - Transactions involve cash unless specified as 'Account'. - Record payments for rent and insurance in prepaid accounts initially. - Information relevant to complete adjusting entries can be found in the top right section of this page. - The periods to which the rent and insurance apply commence on 1 June. Round your calculations to the nearest dollar.

Prepare:

1. The 10-Column Worksheet

2. A brief analysis of the difference between accrual and cash profit of the business

Answer 1

Working as follows:

Ledger posting of journal entries excluding adjusting entries as follows:

Cash Explanation Debit Beginning balance $1,616 Date Jun. 01 Ju. 02 Jun. 04 Jun. 05 Jun. 13 Jun. 21 Jun. 26 Accounts Receivable Explanation Debit Credit Balance Beginning balance $19,023 $1,289 $20.312 $1,029 $19,283 $1,160 $20.443 $1,792 $18.651 $980 $19.631 $1,154 $20,785 $1,029 $2,112 Date Ju. 01 Jum. 01 Jun. 03 Ju. 03 Jun. 04 Jun. 04 Jun. 07 Jun 08 Jun. 12 Jun. 13 Jun. 13 Ju. 15 Jun. 17 Jun. 20 Jun. 22 Jun. 24 Jun. 26 Jun. 26 Jun. 26 Jun. 27 Jun. 29 Jun. 29 Credit Credit Balance $17,199 $2.860 $14,339 $15.955 $3,728 $12,227 $13,256 $660 $12,596 $ 14,708 $211 $14.497 $839 $13,658 $776 $ 12.882 $ 14,674 $2,221 $12.453 $482 $11.971 $1,458 $10,513 $13,287 $949 $12,338 $14,020 $16,405 $20.873 $330 $20,543 $22.213 $2,221 $19,992 Motor Vehicle Explanation Debit Beginning balance Date Ju. 01 Balance $35.160 $1,792 $2.774 Date Jun. 01 Jun. 20 Jun. 24 Jun. 26 Ju. 27 Accounts payable Explanation Debit Credit Beginning balance $1,458 $949 $524 $1.108 Balance $7,783 $6,325 $5,376 $5,900 $7.008 $1,682 $2,385 $4,468 $1,670 Date Jun. 01 Bank Loan Explanation Debit Beginning balance Credit Balance $22.102

Date Jun 08 Sundry Expenses Explanation Debit Credit $211 Balance $211 Date Jun 07 Jun. 22 membership fees Explanation Debit Credit Balance $2,112 $2,112 $2.774 $4.886 Date Jun. 13 Jun 27 Advertising Expense Explanation Debit Credit $776 $1,108 Balance $776 $1.884 Date Jun. 12 Owners' Withdrawal Explanation Debit Credit $839 Balance $839 Date Jun. 15 Jun. 29 Staff wages expense Explanation Debit Credit $2.221 $2,221 Balance $2.221 $4.442 Date Jun. 17 Jun. 26 Equipment hiring Expense Explanation Debit Credit $482 $524 Balance $482 $1,006 Date Jun. 27 Motor vehicle expense Explanation Debit Credit $330 Balance $330

Gym Equipment Date Explanation Debit Credit Jun. 01 Beginning balance Balance $21,813 Date Jun. 01 Jun. 26 Capital Explanation Debit Beginning balance Credit Balance $63,807 $4,468 $68,275 Date Jun. 01 Jun. 04 Stationery Supplies Explanation Debit Credit Beginning balance $660 Balance $497 $1,157 Date Jun. 01 Prepaid insurance Explanation Debit Credit $2.860 Balance $2.860 Gym Fees Debit Explanation Squash fees Debit Explanation Date Jun. 03 Jun 05 Jun. 21 Jun. 26 Credit Balance $1,616 $1,616 $1,160 $2,776 $980 $3,756 $1,682 $5,438 Date Jun 02 Jun. 26 Jun. 26 Jun. 29 Credit Balance $1,289 $1.289 $1.154 $2,443 $2.385 $4.828 $1,670 $6,498 Prepaid Rent Explanation Debit $3,728 Date Jun. 03 Credit Balance $3,728

_____________________________________________________________________________________

Worksheet as follows:

Unadjusted Trial Balance
	Debit	Credit
Cash	$19,992
Accounts Receivable	$20,785
Prepaid Insurance	$2,860
Prepaid rent	$3,728
Stationery supplies	$1,157
Motor vehicle	$35,160
Equipment	$21,813
Accounts payable		$7,008
Banl loan		$22,102
Capital		$68,275
Withdrawal	$839
Squash fees		$6,498
Membership fees		$4,886
Gym fees		$5,438
Salaries & Wages expense	$4,442
Advertising Expense	$1,884
Sundry Expense	$211
Equipment hiring expense	$1,006
Motor vehicle expense	$330
	$114,207	$114,207