ACCT1101 Financial Accounting: Charles Boutique Books Practice Set

This assignment presents a comprehensive accounting practice set for Charles Boutique Books Pty Ltd, a retail business. The objective is to provide students with practical experience in recording transactions, preparing adjusting and closing entries, and constructing financial statements. The assignment includes a detailed company background, accounting system information, an unadjusted trial balance, and subsidiary ledgers for accounts receivable and payable. Students are required to record transactions in special journals (Sales, Purchases, Cash Receipts, Cash Payments, and General Journal), post transactions to the general and subsidiary ledgers, and prepare a worksheet. The solution encompasses the preparation of adjusting entries, an adjusted trial balance, and the completion of financial statements, including the income statement, statement of changes in equity, and balance sheet, culminating in a post-closing trial balance. The assignment emphasizes the application of accounting principles and procedures to real-world business scenarios, providing a thorough understanding of the accounting cycle.

Team Project Cover Sheet
UNIT NAME Financial Accounting UNIT CODE ACCT1101
............................................................................. ...........................
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........................................................................... ...........................
...........................TITLE/TOPIC OF PROJECT
CHARLES BOUTIQUE BOOKS
PTY LTD
ACCOUNTING PRACTICE SET
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...........................
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TUTORIAL OR LECTURE DAY & TIME
(if applicable)
TEAM
NUMBER
(if applicable)
NAMEOFTUTOR (if applicable)
Late projects submitted outside office hours will be receipted at 8.30 a.m. the following working day.

2

CHARLES BOUTIQUE BOOKS
PTY LTD
–
ACCOUNTING PRACTICE SET

Table of Contents
INTRODUCTION................................................................................................................................................................ 6
Company Background................................................................................................................................................6
Accounting System Information.................................................................................................................................6
UNADJUSTED TRIAL BALANCE AND CHART OF ACCOUNTS...............................................................................7
As at 31 May 2020............................................................................................................................................7
SUBSIDIARY LEDGERS................................................................................................................................................... 8
Schedule of Accounts Receivable...............................................................................................................................8
As at 31 May 2020............................................................................................................................................8
Schedule of Accounts Payable....................................................................................................................................8
As at 31 May 2020............................................................................................................................................8
TRANSACTIONS................................................................................................................................................................ 9
For June 2020............................................................................................................................................................. 9
Instructions............................................................................................................................................................... 10
ADJUSTING ENTRIES..................................................................................................................................................... 11
Cash Receipts Journal...............................................................................................................................................15
Cash Payments Journal............................................................................................................................................. 16
Sales Journal............................................................................................................................................................. 18
Purchases Journal......................................................................................................................................................19
LEDGERS.......................................................................................................................................................................... 20
Accounts Receivable Subsidiary Ledger..................................................................................................................20
Accounts Payable Subsidiary Ledger.......................................................................................................................21
General Ledger......................................................................................................................................................... 22
WORKSHEET....................................................................................................................................................................31
FINANCIAL STATEMENTS............................................................................................................................................33
Schedules of Subsidiary Ledgers..............................................................................................................................33
Income Statement..................................................................................................................................................... 34
Statement of Changes in Equity................................................................................................................................36
Balance Sheet............................................................................................................................................................37
Post-closing Trial Balance........................................................................................................................................38
WRITTEN COMPONENT................................................................................................................................................. 39
STUDENT DECLARATION FOR COMPLETION OF WORK......................................................................................43

INTRODUCTION
The objective of this Accounting practice set is to provide students with an insight into the process of recording
transactions, completing adjusting and closing entries, and preparing financial statements for a retail business.
Company Background
Charles Boutique Books Pty Ltd has been in business in Melbourne since July, 2014. The company was
started by James Lowe and operates a shop which sells books on a wholesale basis to other businesses
on both credit and cash terms. The company's share capital consists of 162,000 ordinary shares, issued at
$1 each, that are owned by various members of the Lowe family. The company employs a combination of
sales and administration staff to operate the business.
Accounting System Information & Procedures
The company has a financial year end of 30 June and prepares adjusting entries at the end of the financial year.
To ensure efficiency of its accounting procedures, the company uses the following Special Journals to maintain
its accounting records:
1. Sales Journal (SJ): to record all sales of inventory on credit
2. Purchases Journal (PJ): to record all purchases of inventory on credit
3. Cash Receipts Journal (CRJ): to record all cash receipts
4. Cash Payments Journal (CPJ): to record all cash payments
5. General Journal (GJ): to record all transactions other than the above.
Business transactions are recorded for Charles Boutique Books on a daily basis in one of these five
journals in the accounts.
Additionally, the company maintains a general ledger to record postings from the journals. Subsidiary Ledgers
are used to record the separate details of Accounts Receivable and Accounts Payable. Transactions are posted
immediately to the relevant ledger account if they are entered into the general journal, the “other” column of the
Cash Receipts Journal or Cash Payments Journal, or if they affect any of the Accounts Receivable or Accounts
Payable subsidiary ledger accounts. Apart from these transactions, totals of the special journals are taken at the
end of the month and then posted to the appropriate accounts. The company uses a periodic inventory system.
In practice, the company would be required to collect and pay Goods and Services Tax (GST) on its sales and
purchases. However, for the purposes of this exercise, GST has been excluded.
Please Note: All amounts in this practice set should be rounded to the nearest dollar.

UNADJUSTED TRIAL BALANCE AND CHART OF ACCOUNTS
As at 31 May 2020
Acc. No. Account Debit ($) Credit ($)
100 Cash at Bank 87,804
101 Accounts Receivable Control 34,020
102 Stationery Supplies 21,573
103 Inventory 111,600
104 Prepaid Store Rent (paid 1 March 2020) 105,660
105 Prepaid Insurance (paid 1 Nov. 2019) 1,620
150 Showroom Fittings 72,900
151 Accumulated Depreciation – Showroom Fittings
160 Equipment 24,750
161 Accumulated Depreciation - Equipment 12,150
200 Accounts Payable Control 21,942
201 Interest Payable
202 Utilities Payable
203 Wages Payable
204 Salaries Payable
205 Tax Payable
206 Dividend Payable
250 Mortgage Loan (due 31 July 2044) 86,706
300 Share Capital 162,000
301 Retained Profits (1 July 2019) 137,646
302 Dividends Declared
303 Profit and Loss Summary
400 Sales Revenue 577,962
401 Sales Discounts (Discount Allowed) 4,437
402 Sales Returns and Allowances 1,251
500 Purchases 275,265
501 Purchase Discounts (Discount Received) 3,456
502 Purchase Returns and Allowances 1,449
600 Freight-Out 414
601 Wages Expense - Sales Staff 138,303
602 Depreciation Expense – Showroom Fittings
603 Depreciation Expense - Equipment
604 Stationery Expense
605 Rent Expense
606 Insurance Expense
607 Advertising Expense 6,264
608 Interest Expense
609 Utilities expense 8,352
610 Tax Expense
611 Sundry Expenses 432
612 Salaries Expense – Office Staff 108,666
613 Bad Debts Expense
1,003,311 1,003,311

SUBSIDIARY LEDGERS
Schedule of Accounts Receivable As at 31 May 2020
Note: Charles Boutique Books offers all customers Credit Terms 2/10, n/30, unless otherwise stated
Acc. No. Account Invoice
date
Amount ($)
101-1 Ashburton Books 28 May 13,608
101-2 Blackburn Books 18 May 6,876
101-3 Kewtown Books 25 April 9,306
101-4 Montrose Books 12 May 4,230
$34,020
Schedule of Accounts Payable As at 31 May 2020
Acc. No. Account Invoice
date
Credit terms Amount ($)
200-1 Portarlington Publishers 30 May 2/10, n/60 6,210
200-2 Quantum Publishing 24 May 1/10, n/45 15,732
$21,942

TRANSACTIONS
For June 2020
Date Transaction W
e
June 1 Ashburton Books paid the entire balance of its account that was still outstanding.
Delivered goods to Blackburn Books for $9,756 and issued invoice #827. Issued cheque #303 to pay
$1,060 for delivery costs of inventory to their premises.
June 4 Paid the amount owing to Portarlington Publishing. Cheque #304 was sent.
June 5 Total Cash Sales for the week were $2,754.
W
e
June 9 Kewtown Books paid $3,906 toward the amount it owes us.
June 10 Made a purchase from Quantum Publishing for $8,370 for inventory: Terms are 1/10, n/45 and
date of invoice was 10 June.
The firm issued cheque #305 for the purchase of stationery supplies amounting to $792.
June 11 Ashburton Books purchased inventory of $9,828. Invoice #828 was issued.
June 12 Some of the inventory purchased on 10 June from Quantum Publishing were the incorrect
Edition of the book. Returned inventory in exchange for a Credit Note of $2,700.
June 13 Total Cash Sales for the week were $3,762.
W
e
June 16 Purchased inventory from Portarlington Publishing for $13,770. The invoice was dated 16 June.
Credit terms are 2/10, n/30.
June 17 Sold inventory to Kewtown Books for $17,766 on invoice #829. Issued cheque #306 to pay
for delivery costs of $1,350.
June 17 Paid office staff salaries of $10,494. Cheque #307 was issued for payment.
Cheque #308 was issued to pay sales staff wages, $8,910.
June 19 The company issued cheque #309 to pay the amount still owing to Quantum Publishing
June 20 Total Cash Sales for the week were $3,573.
Week 4

June 23 Kewtown Books returned $3,366 of inventory purchased on 16 June. Issued a Credit Note for the
transaction.
June 24 Issued Cheque #310 for $1,800 to pay for the annual gift the company donates to the Victoria
Smith Family Charity Fund. The gift is to be recorded as a sundry expense in the accounts.
June 25 Purchased inventory from Quantum Publishing, worth $13,410. The terms were 1/10, n/45. Date of
the
invoice was 25 June. (pj)
June 26 Received the total amount owing from Kewtown Books.
June 27 Total Cash Sales for the week were $5,616.
W
e
June 29 Blackburn Books paid the entire balance of its still outstanding account.
June 29 Reduced $10,800 of the amount owing to Quantum Publishing and Cheque #311 was issued.
June 29 A dividend of $25,300 was declared to the company shareholders. However, the dividend will
not be paid until September 30, 2020.
Paid sales staff wages, $8,910 and Cheque #312 was issued to meet the payment.
June 30 Issued additional shares to the owners of the Company for cash, and $18,000 was received and
banked.
Total Cash Sales for the week were $3,348.

INSTRUCTIONS
1) Enter the transactions on pages 8-9 into the appropriate Journal for the month of June 2020, Remember to
post Journal transactions to the ledger accounts as specified in the “Account System Information” section of
the introduction.
2) Total all Special Journal columns and post to the appropriate ledger account at the end of the month.
3) Prepare the unadjusted Trial Balance as at 30 June 2020 on the Worksheet provided.
4) Prepare the adjusting entries shown on page10 in the General Journal and post to the relevant ledger accounts.
Now enter the adjustments in the relevant worksheet columns and prepare an adjusted Trial Balance.
5) A Stocktake on 30 June 2020 indicates that the balance of Closing Inventory is $202,356. Use this information
to complete the remaining columns of the worksheet.
6) Use the worksheet to prepare the Income Statement and Balance Sheet.
7) Complete the Schedule of Accounts Receivable and Schedule of Accounts Payable. Ensure the balances agree
with the totals in the control accounts.
8) Prepare closing entries and post to the relevant general ledger accounts.

9) Complete the post-closing Trial Balance as at June 2020.
ADJUSTING ENTRIES
a) The Showroom Fittings were installed on 1 July, 2019. They have a useful life of 9 years and no salvage
value.
b) The Equipment was installed on 1 July, 2014. They have a useful life of 10 years and estimated salvage value of $450.
c) Twelve months of store rent was prepaid on 1 March, 2020. Of the original prepaid amount, $35,219
worth of store rent has now expired.
d) A count of Stationery Supplies indicates that $12,195 still remain on hand at year end.
e) A one-year insurance policy was purchased on 1 November 2019 for $1,620.
f) Interest on the Westpac Bank Mortgage Loan is charged at 7% per annum and is paid annually on 1 August
(the interest expense should be rounded up to the nearest dollar). The Westpac Bank Mortgage Loan was originally
taken out on the 1 August, 2019.
g) The company has been informed that Montrose Books has been declared bankrupt and Charles Boutique
Books Pty Ltd has agreed to write off the amount owing as a bad debt. The company uses the direct write-off
method to account for any bad debts in the books.
h) A telephone bill for $918 for June was received on 4 July, 2020. The amount has not yet been recorded. The
company records them as a utilities expense.
i) Office Staff are paid once per month, $10,494. The Office Staff were last paid on the 15 June, 2020.
Exactly half of one month Office Staff wages are still owing.
j) Sales Staff are paid fortnightly and work 7 days per week. The sales staff were last paid on the 29 June,
2020. One day of the wages bill is still owed to the Sales Staff.
k) The estimated Tax Payable for the year ended 30 June, 2020 is $12,343. This amount is to be paid on 31 October, 2020.