Molly Smith opened Molly’s Cleaning Services on June 1. During the month ofJune,

Question

Molly Smith opened Molly’s Cleaning Services on June 1. During the month ofJune, the following transactions were completed:

June 1

Invested $15,000 cash in the business

June 2

Purchased a ute for $10,500 + GST, paying $3

,500 cash & the

balance on account.

June 4

Purchased cleaning supplies for $1,320 (incl

usive of GST) on

account

June 8

Paid $1,800 cash on one year insurance polic

y effective June 1.

(The amount includes GST of $60)

June 13

Billed customers $3,520 for cleaning servic

es (incl. of GST). Terms

2/10 net 30

June 20

Paid $1,600 cash on amount owed on truck &

$550 on amount

owed on cleaning supplies.

June 21

Paid $1,850 cash for employee salaries.

June 23

Collected $1,960 cash from customers billed

on June 13. These

customers had availed of the sales discount.

June 27

Billed Customers $3,080 for cleaning servic

es (incl. of GST).

Terms 2/10 net 30.

June 30

Paid gas & oil for the truck $165 inclusive

of GST.

June 30

Withdrew $850 for personal use.

Note: Molly’s Cleaning Services is registered for

GST.

Required:

a) Journalise the June transactions.

b) Prepare a trial balance on a worksheet

c) Enter the following adjustments on the work sheet & complete theworksheet.

1) Earned but unbilled revenue at June 30 was $950 (excl. GST)

2) Depreciation on the truck for the month was $18

3) An inventory count showed $750 of the cleaningsupplies were still on hand.

4) Accrued but unpaid employee wages were $550.

5) One month’s insurance expired.

d)Prepare the income statement for the month of June.

e) Journalise closing entries & complete the closin g process.

f) Prepare T accounts for Cash, Service Revenue & GST Clearing. Include closing entries wherever appropriate

g) Prepare a post-closing trial balance as at 30 June.

Explanation / Answer

1-Jun Cash A/c Dr 15000 To Capital 15000 2-Jun Purchase a/c dr 10500 To Cash 3500 To Party 7000 4-Jun Cl supplies expense dr. 1320 To Cash 1320 (assumed purchase on cash) 8-Jun Insurance a/c dr 1800 To Cash 1800 13-Jun Debtors Dr. 3520 To service Income 3520 20-Jun party Dr. 2150 To Cash 2150 21-Jun Salaries Dr. 1850 To Cash 1850 23-Jun Cash Dr. 1960 To Debtors 1960 27-Jun Debtors Dr. 3080 To Service Income 3080 30-Jun Gas & Oil expense dr. 165 To Cash 165 30-Jun Drawings Dr. 850 To Cash 850 Trial Balance Dr Cr. Capital 15000 Cash 5325 Purchases 10500 party 4850 Cl Supplies expenses 1320 Insurance 1800 Debtors 4640 Service income 6600 Salaries 1850 Gas & Oil expense 165 Drawing 850 Total 26450 26450

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