This accounting exercise is designed to be completed using a manual accounting system….

This accounting exercise is designed to be completed using a manual accounting system.
A periodic inventory method is used. Inventory purchases should be debited to the relevant Purchases account. At the end of the month, a stocktake is performed to determine the closing balance of inventory. The cost of goods sold for the period can then be calculated.
Background
Mary Nguyen has left her job as a music teacher at the local TAFE and has invested in a new business venture. The business, called Mary’s Music Store will sell musical instruments as well as provide a repair service.
Mary commenced trading operations on the 1st February 2016 with the following assets and liabilities:-
EastPac Bank Business Account $50,000 Premises $375,000 Shop Fittings $40,000 Motor Vehicle $20,000 Loan: – Ezy Finance Co: $70,000 Mortgage – EastPac Bank $300,000 Mary Nguyen – Capital ??
Additional information: Mary will bank all receipts directly into the cheque account. All payments are to be made by cheque or direct debit. All expenses paid during February relate to that month. Monthly reports are to be prepared. Mary has registered for GST and from the commencement of business will need to account for GST. GST of 10% will apply to all purchase and sales unless specified otherwise.

 

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