RTK BUDERIM MOWERS - BACKGROUND

Introduction

Ross Tiberius Kirk is the sole proprietor of RTK Buderim Mowers - a GST-registered independent Mower Sales and Service business. The business focuses solely on STNG mowers and equipment. It undertakes the promotion, sales and servicing of the mowers and equipment. Note that no small items that are required for the servicing of mowers or equipment are kept as inventory, this is because of the close proximity to a major auto parts shop and petrol station and most importantly the manufacturer STNG Manufacturing Ltd operates a same day delivery service for all parts. Such items are therefore purchased (on accounts payable or cash) as required and charged to the customer, this reduces costs and the need to hold inventory of small parts for servicing. The actual major items of equipment (mowers etc) are kept on the premises and are therefore inventory.

Ross prides himself on providing the highest quality mowers, ancillary equipment and service to his customers. Since its formation, the business has been relatively profitable. Ross now has a complement of staff looking after various aspects of the operations, and has three basic sections sales, servicing and administration. Currently, the business uses a manual accounting system managed by the accountant, LindaDatar. However, Ross has decided to use MS Excel spreadsheet software to maintain the accounting records for the transactions in the month of June 2016, which is the final month of the financial year.

Adjustments (Adjustments never involve cash or GST):

a. Physical Stock-take of office supplies revealed supplies used for June - $620.00.

b. Calculate and record the adjusting entry for the Wages Payable for the month of June that have not as yet been paid.

c. Insurance - the $2,000.00 (previously paid) is now fully used (expired) and 15 days coverage from the recent insurance policy paid also needs to be expensed. For the recently paid amount simply divide by 12 months and then by 2.

d. Calculate and record the adjusting entry for rent for the month of June.

e. Sun Radio advertising for the entire month of June was carried out and the amount for one month should now be expensed.

f. Calculate the amount for Provision of Doubtful Debts and make the necessary journal entry.

g. Calculate the amounts for the depreciation of the non-current assets and make the necessary journal entries - there are 3 depreciation expense accounts so do a separate journal entry for depreciation of each asset.

h. Adjust for the prepaid Phone & Internet rental paid on the 28th (exclude GST).

i. Based on the average use of electricity for the year and the seasonal usage an amount of $1,498 is estimated for June.

PART A - ACCOUNTING REQUIREMENTS - FOR JUNE

1. Record all the necessary entries in the relevant journals and ledgers, excluding balance day adjustments, to maintain proper accounting records for June. Please note that you may need to create new accounts using subsequent account numbers where necessary.

2. Prepare an Unadjusted Trial Balance on the worksheet provided.

3. Record all the necessary balance day adjustments for June in the General Journal and post to the General Ledger accounts.

4. Prepare an Adjusted Trial Balance on the Worksheet provided and complete the worksheet.

5. Record all closing entries in the General Journal, however, do not post them to the relevant general ledger accounts until you have checked that the Trial Balance is correct.

6. Prepare the Income Statement (using the Functional format) for the year ending 30 June2016.

7. Prepare the Statement of Changes in Equity for the year ending 30 June 2016.

8. Prepare the classified Balance Sheet as at 30 June2016.

9. Prepare the Cash Flows (Simplified Statement) for the month ending 30 June 2016.

a. Note: without the balances as at the 1st July 2015 (or alternatively the Cash Receipts and Cash Payments Journals for the entire year) it is not possible to calculate the proper Statement of Cash Flows!

b. A simplified approach has been provided in the Excel template!

PART B - CRITICAL ANALYSES

You are required to complete the questions that are in the special Test of Knowledge section on Blackboard for the proportion of marks from the major assignment. The questions are pertinent to your completion of the learning from the major assignment and from the application of basic accounting knowledge as well as critical thinking skills.

Attachment:- Assignment Files.rar