TimePiece is a GST-registered entity in Australia that sells electric clocks with six months warranty and provides
Question:
TimePiece is a GST-registered entity in Australia that sells electric clocks with six months’ warranty and provides repair services on an annual contract basis to corporate customers. The business uses a periodic inventory system on accrual basis.
The unadjusted trial balance of TimePiece as at 30 April 2021 is shown below:
| Accounts | Debit | Credit |
| Accounts Payable | 25000 | |
| Accounts Receivable | 9000 | |
| Accrued Expenses | 1000 | |
| Bank Loan | 25000 | |
| Capital | 200000 | |
| Cash at bank | 102500 | |
| GST Payable | 2500 | |
| GST Receivable | 5900 | |
| Insurance Expenses | 22500 | |
| Inventory | 80000 | |
| Provision for warranty | 6500 | |
| Purchases | 572700 | |
| Purchases Returns and Allowances | 12000 | |
| Repair Services | 20000 | |
| Salaries Expenses | 80000 | |
| Sales | 600000 | |
| Sales return and allowances | 6000 | |
| Supplies | 38000 | |
| Supplies Expenses | 10000 | |
| Unearned Revenue | 38000 | |
| Utilities Expenses | 2700 | |
| Warranty Expenses | 700 | |
| Total | 930000 | 930000 |
At 30 April 2021, the following transactions were found not recorded:
i. A refund of $15,675 inclusive GST received for a box of recalled electric clocks returned to the manufacturer.
ii. One clock was returned by a debtor, who bought it at $1,000 plus GST. The clock that cost $700 plus GST was taken back into inventory.
iii. The monthly statement received from a service provider showed the amount of $6,424 inclusive GST for warranty claims for April to be paid in May 2021.
The following are additional information for month-end adjustments:
iv. A physical count of supplies on 30 April 2021 showed $18,000 remain unused.
v. The “Unearned Revenue” account included a maintenance service contract of $8,000 plus GST completed for a corporate customer in April 2021.
ACC10008 Financial Information Systems
Final Assessment (V1)
Semester 1, 2021 Page 4 of 11
REQUIRED:
Show all workings to secure maximum marks.
a. Prepare the general journal to record all the above transactions. Narrations are NOT required.
b. Prepare the Repair Services and Unearned Revenue T-ledger accounts after recording the adjustments in part a. for April 2021, showing the closing balance of each account.
Expert Answer:
