Question 1. Larkspur Furniture uses a perpetual inventory system and pays GST on an accrual basis. Larkspur engaged in the following transactions during July 2021. Transactions are inclusive of GST where relevant. July 2 Purchased inventory for cash, $1 045 5 Purchased store supplies on credit for $495 8 Purchased inventory of $3 300 on account. Freight charges of $253, were added to the purchase invoice. 9 Sold goods for cash, $1 320. The cost of these goods was $700. 10 Received the electricity bill, $302.50. 11 Returned $220, of the inventory purchased on 8 July. It was damaged in transit. 12 Purchased inventory for cash for $3 663. 14 Sold inventory on credit terms $11 160, less a $600 quantity discount (cost, $5000). Note: GST applies after the discount. 24 Received returned inventory from the 14 July sale, $440. Larkspur Furniture had despatched the wrong goods by mistake. A credit note was issued. Larkspur’s cost of the inventory received was $250. Ignore previous quantity discount. Borrowed $5,000 from the bank. Signed a bill payable to the bank for this amount. Purchased a computer on credit for $2,200. Required: Journalise payment of GST to the ATO on August 1, 2021. A junior accountant is confused about why GST appears on the statement of financial position but not the statement of financial performance. Explain how and why this happens. Chart of Accounts 101 Cash at bank 203 GST collected 102 Inventory 204 GST paid 103 Store supplies 401 Sales revenue 104 Accounts receivable 402 Sales returns and allowances 150 Office Equipment 501 Cost of goods sold 201 Accounts payable 601 Freight-in 202 Bill payable 602 Electricity expense
Question 1. Larkspur Furniture uses a perpetual inventory system and pays GST on an accrual basis. Larkspur engaged in the following transactions during July 2021. Transactions are inclusive of GST where relevant.
July 2 Purchased inventory for cash, $1 045
5 Purchased store supplies on credit for $495
8 Purchased inventory of $3 300 on account. Freight charges of $253, were added to the purchase invoice.
9 Sold goods for cash, $1 320. The cost of these goods was $700.
10 Received the electricity bill, $302.50.
11 Returned $220, of the inventory purchased on 8 July. It was damaged in transit.
12 Purchased inventory for cash for $3 663.
14 Sold inventory on credit terms $11 160, less a $600 quantity discount (cost, $5000). Note: GST applies after the discount.
24 Received returned inventory from the 14 July sale, $440. Larkspur Furniture had despatched the wrong goods by mistake. A credit note was issued. Larkspur’s cost of the inventory received was $250. Ignore previous quantity discount.
- Borrowed $5,000 from the bank. Signed a bill payable to the bank for this amount.
- Purchased a computer on credit for $2,200.
Required:
- Journalise payment of GST to the ATO on August 1, 2021.
- A junior accountant is confused about why GST appears on the
statement of financial position but not the statement of financial performance. Explain how and why this happens.
Chart of Accounts
101 Cash at bank 203 GST collected
102 Inventory 204 GST paid
103 Store supplies 401 Sales revenue
104 Accounts receivable 402 Sales returns and allowances
150 Office Equipment 501 Cost of goods sold
201 Accounts payable 601 Freight-in
202 Bill payable 602 Electricity expense
Step by step
Solved in 3 steps with 2 images
