Middleton Store is a GST-registered business in Australia that sells mobile phone with one year warranty and
Question:
Middleton Store is a GST-registered business in Australia that sells mobile phone with one year warranty and maintenance services. The business uses a perpetual inventory system on accrual basis. Its unadjusted trial balance as at 30 November 2020 is as follows:
At 30 November 2020, the following transactions were found not recorded:
A refund of $16,775 inclusive GST received for a box of recalled mobile phones
returned to the manufacturer.
The bank statement also showed a monthly interest of $235 charged for the bank loan.
The monthly statement received from a service provider showed the amount of $15,840 inclusive GST for warranty claims for November to be paid in December 2020.
The following are additional information for month-end adjustment:- The closing balance of the Provision for warranty account to be adjusted to 5% of mobile phone sales after the warranty claims in transaction iii.
- A stock take on 30 November 2020 showed that physical inventory on hand reconciled with the inventory ledger balance but the physical supplies on hand were $27,000. The difference had been used but was not recorded.
- The “Insurance expenses” account is for a payment made earlier in the year for a policy covering 1 April 2020 to 31 March 2021.
Required:
a. Prepare the general journal entries to record all the above transactions. Narrations are NOT required.
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones