The firm's in-house accountant has gone overseas for one month. You have been hired by Scallion Ltd to carry out the accounting duties in the accountant's absence. This assignment provides you with the unadjusted trial balance at the end of May and requires you to record typical transactions for a retail business for the last month of the financial year. Once these transactions have been recorded and posted, you are required to complete the accounting cycle by journalising and posting adjusting and closing entries and preparing financial statements.

UNADJUSTED TRIAL BALANCE

The unadjusted trial balance as at 1 June 2023 is presented below:

ACCOUNT NAME	1 June Opening Balances
Cash	$ 70,785
Accounts Receivable	25,740
Allowance for doubtful debts	2,645
Inventory	32,400
Office Supplies	1,800
Prepaid General Insurance	3,600
GST Paid	6,300
Equipment	13,500
Machinery	65,000
Truck	46,100
Land	350,000
Accounts Payable	69,300
GST Collected	15,795
Share Capital	340,000
Discount received	13,200
Repairs and maintenance	7,400
Purchases	486,200
Purchases returns & allowances	7,040
Salaries expense	83,600
Sales	789,800
Sales returns & allowances	8,800
Electricity expense	12,100
Telephone expense	2,505
Office expenses	13,500
Discount allowed	8,450

SUBSIDIARY LEDGERS

The individual balances of Accounts receivable and Accounts payable as at 1 June 2023 are shown below. Amounts include GST.

Accounts Receivable Subsidiary Ledger

CUSTOMER	1 June Opening Balances
Croft Ltd	$ 2,970
M. Biller	14,850
O. Mowen	7,920
TOTAL	25,740

Accounts Payable Subsidiary Ledger

CREDITOR	1 June Opening Balances
Tumult Ltd	$ 17,820
Lynwood Ltd	29,700
Dyson Ltd	21,780
TOTAL	69,300

ACCOUNTING PROCEDURES

Transactions are recorded by the accountant on a daily basis in the appropriate journal. Transactions are posted daily from the General Journal and the Cash Receipts and Cash Payments Journal to the Accounts receivable and Accounts payable subsidiary ledgers. Totals of the special journals are posted to the appropriate accounts at the end of the month.

Note: Amounts are to be recorded as the exact amounts in the journals and ledgers but are to be rounded to the nearest dollar when preparing financial statements.

TRANSACTIONS

The following transactions occurred during June 2023 and are INCLUSIVE of GST where appropriate.

2023

June 1Scallion Ltd shareholders invested $60,000 cash in the business.

Purchased land and an existing retail store for $110,000 of which $77,000 is considered land cost. Paid $33,000 by cheque no. 98 for the retail store and signed a mortgage payable for the balance. The retails store is depreciated over its useful life of 10 years.

2Paid Lynwood Ltd $14,700 less a discount of $594 with cheque no. 99.

Received cheque from M. Biller for $10,000 as part payment of his account

Purchased store furniture on credit terms from Corma Ltd for $7,480, terms n/60.

5Purchased inventory on credit terms from Tumult Ltd $4,400; invoice date 6 June, terms 2/10, n/60.

6Purchased a 3-year fire insurance policy for $792, cheque no. 100.

7Sent cheque no. 101 to Tumult Ltd in full settlement of May invoice

8Purchased inventory for $5,500, cheque no. 102.

Paid Lynwood Ltd $15,000 cheque no. 103 for balance owing on May account.

9Returned unsatisfactory goods to Tumult Ltd and received a credit note for $880.

13Sold inventory to M. Biller on account, $9,020; invoice no. 210, terms 1/10, n/30.

15O. Mowen paid his account in full.

Paid Tumult Ltd amount due for June 6 invoice, cheque no.104.

Cash sales for period to 15 June were recorded today, $3,740.

16Sold inventory to O. Mowen on account $5,170; invoice no. 211, terms 1/10, n/30.

Paid salaries for period to 15 June totaling $2,650, cheque no. 105.

17M. Biller paid the balance of his May invoice.

20Purchased inventory on credit terms, from Lynwood Ltd, $5,390; invoice date 20 June, terms 1/10, n/30.

Sent cheque, no. 106 to Dyson Ltd in full settlement of the account.

22Received account for $143 from M. Parson for items chargeable to office expenses, terms n/30.

23Received inventory returned by O.Mowen and issued a credit note for $2,200.

Received a cheque from M. Biller for invoice no. 210.

26Received a cheque from O. Mowen for balance due on invoice no. 211

Purchased inventory from Dyson Ltd for $35,750, terms, 1/20, n/30.

29Sold inventory worth $15,400 on credit to J. Rowls; invoice no. 212, terms 1/10, n/30.

Paid $220 for electricity expenses, cheque no. 107.

Paid Lynwood Ltd for the invoice dated 20 June, cheque no. 108.

30Purchased inventory on account from Amcor Ltd $26,400, terms 2/10, n/30.

Cash sales from 16 June to 30 June were $2,145.

Paid salaries for period 16-30 June totaling $2,850, cheque no. 109.

Purchased office supplies for $330, cheque no. 110.

Received account from C. Bond for $110 for delivery expenses for the month.

Sold inventory on credit to O. Mowen for $17,600, invoice no. 213, terms 1/10, n/30.

Purchased printer for use in the business office at a cost of $825 using a short-term loan.

Required

a) Record the transactions in the special journals in the following order: sales journal, purchases journal, cash receipts, cash payments and general journal. You will need to use the general journal for more adjusting entries coming up, so make sure you leave room. The business uses sales and purchases journals for inventory transactions on credit only. Returns are processed through the general journal. (Remember that special journals replace the general journal, so transactions will be recorded in a special journal or the general journal but not both).

b) Prepare the accounts receivable control account as it would appear in the general ledger at the end of the reporting period, together with the related subsidiary ledger. Provide the accounts payable control account as per the general ledger at the end of the financial year and the subsidiary ledger.

c) Prepare general journal entries to record the following information.

1. Office supplies on hand at 30 June total $900

2. The one-year general insurance policy expires on 31 October 2023

3. Equipment has a useful life of 4 years with no residual value. Store furniture and printer have useful life of 5 years with no residual value. Scallion Ltd uses straight-line depreciation for these assets. (Round all depreciation amounts upwards to nearest whole $).

4. Commission revenue of $39 600 has accrued during June

5. Inventory at 30 June is $28 800

Additional Information

At the end of the 2023 financial year, Scallion Ltd identified the following items that need to be resolved before financial statements are prepared. GST has been correctly accounted for on these non-current asset transactions.

1. On 1^st July 2022, Scallion Ltd purchased a used machine for $65,000 cash. The cost was debited to the "Machinery" account in the ledger. Prior to use, additional expenses were incurred for installing and testing the machine. These costs amounted to $7,400 and were debited to the "repairs and maintenance expenses" account. The installation and testing was completed on 1^st October 2022, and the machine was brought into use on that date. The machine has an estimated useful life of 5 years, with a residual value of $6,000. Scallion uses straight-line depreciation for machinery and records depreciation to the nearest month. No depreciation has yet been provided in respect of this asset in the current year.

2. On 2^nd July 2022, a small building and land were purchased for $350,000. The purchase price was determined by appraisers based on a fair value of $250,000 for the land, and $100,000 for the building. The total purchase consideration of $350,000 was debited to the "land" account. The building has an estimated useful life of 10 years with no residual. Scallion uses straight line depreciation for buildings. No depreciation has yet been provided for the building in the current year. On 1 June 2023, Scallion decided to adopt the revaluation model and to measure its land and buildings at fair value in the balance sheet. A valuation was carried out on 30 June 2023, and the land was valued at $295,000, and the building was valued at $120,000. No entries have yet been passed in relation to these fair values. The fair value of the land and retail store acquired on 2^nd June 2020 had not changed.

3. A new truck was purchased on 31^st March 2023. Scallion Ltd paid cash of $46,100.The truck has an estimated useful life of 4 years with a residual value of $13,300 and is to be depreciated using the reducing balance method (using a rate of 1.5 times the straight-line rate). No depreciation has yet been provided in respect of this asset in the current year.