Willow Deng is the sole owner of Spinnaker Pty Ltd, a private company selling sailing accessories in Adelaide. He has been experiencing tremendous growth in his business in recent years.  He has approached Best Accounting Solutions Pty Ltd to help develop improved accounting systems for his business. Assume you are a graduate accountant working for Best Accounting Solutions Pty Ltd and you are required to prepare the year-end Balance Day Adjustments Journals for Spinnaker Pty Ltd.                             SPINNAKER PTY LTD UNADJUSTED TRIAL BALANCE AS AT 30 JUNE 2020   Debit ($) Credit ($)   Cash at Bank   90,700   Accounts Receivable 60,000   Inventory (30 June 2020) 48,845   Prepaid Insurance 6,000   Supplies 5,600   Office Equipment  80,000   Accumulated Depreciation– Off. Equip.    30,800 Land  Bank Loan  25,600     50,000 Willow Deng , Capital (1 July 2019)   192,420 Willow Deng , Drawings 23,500   Sales Revenue Unearned Sales Revenue   345,400 6,870 Sales Returns & Allowances 9,670   Salaries Expense 34,600   Cost of Sales 187,500   Freight inward  7,865   Rental Income    20,100 Rent Expense 33,000   Interest Expense 4,900   Electricity and Gas Expense Discount allowed 4,690 9,000   Insurance Expense 6,230   Advertising Expense      7,890 .           .   $645,590 $645,590       Continued over the page   Additional information:   Office Equipment is expected to have a useful life of 10 years and will then be sold for an estimated amount of $3,000. Accrued salaries expense at 30 June is $4,876. $9,500 of the recorded sales represents payments for goods which will not be delivered until July 2020. A physical count shows supplies of $1,450 on hand at 30 June. The prepaid insurance was paid for twelve months commencing 1st March. A physical stock take of inventory at 30 June reveals $47,000 on hand. Upon receipt of the business’s bank statement, it was observed that the business had earned $1,050 rental income on 30 June 2020. This amount was directly paid by a tenant into the business’s bank account. The accounting records need to be updated for this transaction. It is estimated that 3% of the 30 June balance of accounts receivable are unlikely to be received. A payment of $5,029 on 20 May for advertising expense has been incorrectly debited to freight inward account.   REQUIRED:   It is now the end of the financial year and based on the information Willow has provided above, the CEO of Best Accounting Solutions Pty Ltd (Lisa Turner) has asked you to prepare any necessary balance day adjusting journals.   Use the General Journal document provided on the following page to record any journal entries required.   All journals must be correctly formatted and include a narration (explanation) for each entry.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Willow Deng is the sole owner of Spinnaker Pty Ltd, a private company selling sailing accessories in Adelaide. He has been experiencing tremendous growth in his business in recent years.  He has approached Best Accounting Solutions Pty Ltd to help develop improved accounting systems for his business. Assume you are a graduate accountant working for Best Accounting Solutions Pty Ltd and you are required to prepare the year-end Balance Day Adjustments Journals for Spinnaker Pty Ltd.

 

 

                        SPINNAKER PTY LTD

UNADJUSTED TRIAL BALANCE

AS AT 30 JUNE 2020

 

Debit ($)

Credit ($)

 

Cash at Bank

 

90,700

 

Accounts Receivable

60,000

 

Inventory (30 June 2020)

48,845

 

Prepaid Insurance

6,000

 

Supplies

5,600

 

Office Equipment 

80,000

 

Accumulated Depreciation– Off. Equip. 

 

30,800

Land 

Bank Loan 

25,600

 

 

50,000

Willow Deng , Capital (1 July 2019)

 

192,420

Willow Deng , Drawings

23,500

 

Sales Revenue

Unearned Sales Revenue

 

345,400

6,870

Sales Returns & Allowances

9,670

 

Salaries Expense

34,600

 

Cost of Sales

187,500

 

Freight inward 

7,865

 

Rental Income 

 

20,100

Rent Expense

33,000

 

Interest Expense

4,900

 

Electricity and Gas Expense

Discount allowed

4,690

9,000

 

Insurance Expense

6,230

 

Advertising Expense 

    7,890

.           .

 

$645,590

$645,590

 

 

 

Continued over the page

 

Additional information:

 

  1. Office Equipment is expected to have a useful life of 10 years and will then be sold for an estimated amount of $3,000.
  2. Accrued salaries expense at 30 June is $4,876.
  • $9,500 of the recorded sales represents payments for goods which will not be delivered until July 2020.
  1. A physical count shows supplies of $1,450 on hand at 30 June.
  2. The prepaid insurance was paid for twelve months commencing 1st March.
  3. A physical stock take of inventory at 30 June reveals $47,000 on hand.
  • Upon receipt of the business’s bank statement, it was observed that the business had earned $1,050 rental income on 30 June 2020. This amount was directly paid by a tenant into the business’s bank account. The accounting records need to be updated for this transaction.
  • It is estimated that 3% of the 30 June balance of accounts receivable are unlikely to be received.
  1. A payment of $5,029 on 20 May for advertising expense has been incorrectly debited to freight inward account.

 

REQUIRED:

 

It is now the end of the financial year and based on the information Willow has provided above, the CEO of Best Accounting Solutions Pty Ltd (Lisa Turner) has asked you to prepare any necessary balance day adjusting journals.

 

Use the General Journal document provided on the following page to record any journal entries required.

 

All journals must be correctly formatted and include a narration (explanation) for each entry.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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