Task 1 - Case study

Ben Cook owns and operates a business called Ben Cook Traders, which sells products to retail outlets throughout the country.

The business has been trading for 10 years. On the3rd July 2014 a fire destroyed the building in which all the accounting documentation was held. All business documentation was burned however, Ben had recently prepared his end of financial year business trial and had kept a copy on his computer at home.

Ben needs to get some documentation completed again and has asked you to do it for him. He has provided you with the trial balance sheet from home and has requested you complete the following tasks:

1. Record the account balances in the general ledger accounts
2. Record the adjustment for 30^th June 2014 in the general journal
3. Post the journals to the ledger, including an asset register card for the motor vehicle that was sold through the year. Ben has provided you with acquisition details he obtained from the vehicle supplier
4. Prepare a trial balance once adjustments have been posted
5. Record the journal entries to close accounts at 30 June 2014
6. Post the closing entries to the general ledger
7. Prepare a trial balance after accounts have been closed
8. Prepare the financial reports for the year ending 30 June 2014

Ben has requested that the accounts and reports be prepared in a professional manner and presented within one week.

Ben Cook Traders Trial Balance As at 30 June 2014
Account name	Debit	Credit
Advertising	55000
Bad debts	12000
Bank		30000
Buildings	800000
Buying expenses	14800
Cartage outwards	120000
Commission revenue		59900
Discount expense	2500
Discount received		1800
Donations	5000
Electricity	40000
GST payable		15000
Input tax credits	10000
Interest expense	176000
Lease expense	6000
Legal costs	75000
Loan BL Finance due 2020		600000
Mortgage		400000
Motor vehicle expense	50000
Office salaries	40000
Manager salaries	100000
Wages	80000
Office stationary	4000
Petty cash advance	500
Provision for annual leave		25300
Provision for long service leave		15000
Purchases	360000
Purchases returns and allowances		27000
Rates and taxes	15250
Rent revenue		300000
Sales		900000
Stock (1/7/14)	120000
Creditors control		50000
Debtors control	80000
Provision for doubtful debts		2800
Equipment	900000
Accumulated depreciation - equipment		315000
Drawings	63750
Motor vehicle	320000
Accumulated depreciation motor vehicle		168000
Capital		540000
	3449800	3449800

Adjustments:

• Interest owing on loan $4000
• Wages owing to employees $10000
• Additional bad debts to be written off (inclusive of GST) $5500
• Provision for doubtful debts to be equal to 4% of debtors
• Commission revenue yet to be received $5100
• The provision for long service leave is to be increased by 3% of all salaries and wages
• Provision for annual leave is to be doubled
• Advertising paid in advance $5000
• Equipment is being depreciated @15% p/a using the reduced balance method depreciation
• Motor vehicles are being depreciated @20% p/a using the straight line method of depreciation
• On April 1 2014 one of the vehicles (BMW) Registration number STR333 was traded for $25000 on a new Volvo costing $66000 GST Inc, the balance payable over 3 years financed by a loan from ACG Finance. The BMW was purchased on 1 January 2010 from Smart car sales with an expected life of 5 years with no residual payment
  • Cost price INC GST $120000
  • Delivery costs INC GST $5000
  • Registration and insurance $2500

Note: the disposal of the vehicle has not been recorded in the accounts

Stock on hand @ 30 June 2014 is $100000