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| Country : | Australia |
Assignment Task
Case Study Background
BuyIt&Sell’em Pty Ltd (ABN 12 345 678 901) operates as a company and you are the accountant for them. BuyIt&Sell’em Pty Ltd is a wholesale business specialising in electronic equipment made in Australia. The business is in its first month of the new year which started on 1st February 2021.
Business Background
The business was established by Maurice Moneybags from his garage and has now expended to a small warehouse and two part time employees. Maurice believes that with careful management that the business could expand to have a regular workforce within a few months and is looking to expand the operation soon.
The products that are sold are exclusively available to BuyIt&Sell’em Pty Ltd, so the aim is to expand the reputation of the products on offer and have an online business specialising in electronic products within 2 years. Another goal of Maurice’s is that the business introduces accounting software this year as the current system is manual.
Employees
BuyIt&Sell’em Pty Ltd employs two casual assistants. Michelle Pappas works as a salesperson, and Tony Edwards works in the warehouse filling orders. Each employee works between 30 to 40 hours per week, depending on the demand and the timing of the shipments of inventory.
Payday is every second Thursday. The following information is used to calculate their wages:
|
Name |
Role |
Gross pay- Per hour ($) |
Tax file number |
|
Michelle Pappas |
Salesperson
|
29 |
123 456 789 |
|
Tony Edwards |
Warehouse assistant
|
28 |
234 567 890 |
At the 31st of Jan
Goods and Services Tax (GST)
There is no GST applied in this part of the assignment. All transactions should be recorded without GST.
Merchandise Inventory
The following is a list of closing inventory and the suppliers as of January 31st.
|
Quantity on hand |
Item Code |
Description |
Cost Price |
Sale Price |
Supplier |
|
25 |
SDR |
SungSam Digital recorder |
$190 |
$520 |
SungSam Australia Pty Ltd |
|
19 |
SST |
Slimline Smart TV |
$380 |
$750 |
Banana Australia Pty Ltd |
Suppliers account balances as of 31st January 2021:
|
Name |
Address |
ABN |
Terms of Credit |
Account Balance |
Date of Purchase |
|
SungSam Australia Pty Ltd |
21 Macquarie St Melbourne 3000 |
45 667 778 888 |
2/15 net 30 |
$3,800 |
16th January |
|
Banana Australia Pty Ltd |
35 Lorimer St South Melbourne 3205. |
56 778 889 999 |
2/15 net 30 |
$5,700 |
26th January |
The required inventory is purchased mostly on credit under the terms of payment required by the suppliers. The business has a good relationship with each of the suppliers once the company places an order, the suppliers will deliver the inventory free of charge the same day. Due to this good relationship, the suppliers have offered discount terms, indicated below.
uary the business owed the employees 21 hours to Michelle and 21 hours to Tony.
Customer Information:
BuyIt&Sell’em Pty Ltd sells most of its inventory strictly on a cash basis, but the business has three credit customers. The valued customers have been offered discount terms and these terms of payment are listed below. The outstanding account balance and the date of their purchase is also indicated in the account information.
|
Name |
Address |
ABN |
Terms of Credit |
Date of Invoice |
Account Balance |
|
Harvey Norman |
450 Bourke St Melbourne 3000 |
60 504 030 201 |
1/15 net 30 |
20th January |
$4,330 |
|
The Good Fellas |
300 Smith street Collingwood 3068 |
50 999 555 666 |
1/15 net 30 |
26th January |
$1,270 |
|
Bee Jay HiFi |
296 Riversdale road Camberwell 3021 |
89 911 222 333 |
Net 30 |
$0 |
Transactions: February 2021
|
Date |
Description |
|
3 |
Paid rent to Land Lord Pty Ltd for the next 2(two) months - $3,000 |
|
4 |
Paid Cash for vehicle expenses- $400 to Toyota Ltd |
|
5 |
Received payment from Harvey Norman for January account. |
|
6 |
Received and paid electricity bill from Citipower for January $375 |
|
7 |
Received payment from The Good Fellas Pty Ltd for January account. |
|
8 |
Paid SungSam Pty Ltd. for January account. |
|
10 |
Paid Banana Australia Ltd. for January account. |
|
11 |
Pay day. Michelle was paid for 65 hours and Tony was paid for 65 hours, which includes wages owing from January |
|
12 |
Cash sales to Bee Jay HiFi for the following items: 19 x SDR, 13 x SST. |
|
13 |
Bee Jay HiFi returned 2 SST, due to an order mistake, the goods were returned to inventory. |
|
14 |
Cash sales to Harvey Norman Pty Ltd Inventory sold: 6 x SDR and 8 x SST |
|
17 |
Paid Telstra invoice for Telephone Expenses $430 |
|
24 |
Purchased more inventory 15 x SDR, 14 x SST, on credit |
|
25 |
Pay day. Michelle was paid for 62 hours and Tony was paid for 64 hours. |
|
26 |
Returned 4 SDR to SungSam Ltd due to the inventory being damaged |
|
28 |
Borrowed money from the ABC bank, $18,000 at an interest rate of 7% |
Adjustments at 28th February 2021
-
Depreciation of computer equipment is $2,400 per annum.
-
Depreciation of Warehouse equipment is $3,000 per annum.
-
Accrued wages: Michelle – 15 hour and Tony 15 hours.
-
Stationery on hand as of 28th February 2021 totalled $ 650.
-
The portion of prepaid insurance expired as of 28th February 2021 is $300.
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