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INFORMATION THAT MAY BE HELPFUL IN COMPLETING YOUR FINAL EXAMINATION.
The following pages provide information that you will need to refer to in order to answer specific questions in your final examination paper.

The Bare Necessities Store is owned by Moe Glee provides a variety of goods and services for outdoor adventurers. Below are a selection of transactions that occurred during October.

Oct 11 Cash purchase of 24 pairs of Jungle Walker Boots for $39.95 a pair, plus a total GST of $96 from Amus Teriosman (Cheque Number 280). The average cost for these shoes before the purchase was $38 per pair.
Oct 16 Purchased 20 pairs of Barely There Lightweight Pants from Baloo’s Emporium (Invoice Number 7092 and Order Number 99) for $57 a pair plus freight totalling $70 and total GST of $121.
Oct 17 Sold 10 pairs of See All Binoculars for $155 a pair plus total GST of $155 to A. Kayla (invoice number 4301 and Order Number 73 on the usual terms). The current average cost for these items is $72 a pair.
Oct 19 Paid $2740.10 (Cheque Number 281) to Kaa’s Khaki Warehouse to pay for invoice Number 4297. As payment was received within the discount period, Kaa’s allowed a discount amount of $174.90 which included GST of $15.90.
Oct 23 Purchased 80 pairs of Gator beach shoes Gator Limited (Invoice Number 3341 and Order Number 165) for $23 a pair plus freight totalling $50 and total GST of $189.
Oct 27 Paid $529 (Cheque Number 282) to Bag’s Here paying for Invoice Numbers 4293 and 4298.
Oct 27 Paid $94 to Just in Case Limited (Cheque Number 283) representing insurance on the company’s delivery truck for the months of June and July. There is no GST applicable to this transaction.

The Bare Necessities Store recently started selling a new travel shirt specifically designed to deter jungle bugs. Moe Glee has provided you with the following information to help track this new inventory. Each shirt sells for $36. The Bare Necessities Store began October with 40 shirts, with a total value $360.

Date Purchases Sales

October 25
November 40 @ $12.30 each
December 18
January 20 @ $10.83 each
February 22
March 14 @ $9.80 each
April 26

At the end of May, a physical stock take reveals 19 shirts on hand.

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Moe has asked for your assistance in reviewing his cash controls and has provided you with the following information:

The final balance on the Bank Statement for the month of September was $1444.99 Cr. Additional information that Moe located on the bank statement but had not yet recorded in the business’ journals included credit entries for a Direct Deposit (from customer Jasmine Rajah) of $750.00 and Interest earned of $18.96. In the debit column of the bank statement were Account keeping fees of $47.00 and a Dishonoured cheque (Iago Bird) for $185.42. Moe also noted that cheque # 842 for $927 had been incorrectly recorded in the Cash Payments Journal as $972.

A review of the Cash Receipts Journal showed a total in the Bank column of $16,565.20. This amount does not include any of the items listed above but did include cash receipts of $1785 for 30 September 2021 that were placed in the company safe overnight, and deposited the following day (1 October 2021).

A review of the Cash Payments Journal showed a total in the Bank column of $20,189.36. This amount does not include any of the items listed above but did include three cheques that did not show up on the bank statement, cheque # 864 for $70.00, cheque # 866 for $87.60, cheque # 870 for $127.59.

Cash at Bank
DATE Details Post Ref DEBIT CREDIT BALANCE
Sep 1 Opening Balance GJ 5987.42 5987.42 Dr

Moe has also been reviewing all the cash in his business and has noticed that his previous year’s profit is well above his cash inflows for the year, he would like to investigate this further and has provided you with the following accounting reports.

The Bare Necessities
INCOME STATEMENT
FOR THE YEAR ENDED JUNE 30
$

Net Sales 107,500
COGS 19,500 88,000
Other Revenue:
Discount Received 2,200

Expenses:
Operating Expenses 61,600
Doubtful Debts Expense 4,000
Depreciation Expenses 6,100
Interest Expense 10,500 82,200
Profit / Loss 8,000

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The Bare Necessities
COMPARATIVE BALANCE SHEETS
AS AT JUNE 30

Current Previous
Current Assets
Cash on Hand 200 400
Cash at Bank – 3,000
Accounts Receivable 7,200 7,300
Less Allowance 2,300 4,900 2,300 5,000
Inventory 12,000 5,200
Prepaid Expenses 1,750 18,850 900 14,500,
Non Current Assets
Equipment 35,000 35,000
less Acc. Depreciation 6,600 28,400 5,500 29,500
Van 40,000 40,000
less Acc. Depreciation 35,000 5,000 30,000 10,000
Land 400,000 400,000
Total Assets 452,250 454,000,

Current Liabilities
Bank Overdraft 4,200 –
Accounts Payable 1,850 1,500
Accrued Expenses 800 6,850 900 2,400
Non Current Liabilities
Loan 316,000 326,000
Total Liabilities 322,850 328,400
Net Assets 129,400 125,600

Shareholders’ Equity
Capital 120,000 120,000
Retained Profits 9,400 129,400, 5,600 125,600

Moe is also keen for you to review the methods The Bare Necessities Store uses when dealing with Accounts Receivable. You have spoken with the business’ Debtors Manager, Payne Oworelss and they have provided you with the following information.

On June 30, 2019, the Account Receivable balance for The Bare Necessities Store was $20,493 Dr. The company uses an Allowance for Doubtful Debts account, which had a balance of $3,500 Cr. For the year ended 30 June 2019, credit sales totalled $58,900 (net of GST) and sales returns equalled $1,160 (net of GST). Cash received from Debtors totalled of $44,128.70 and the discount expense for the period equalled $113.30 (including GST). Cash sales for the period were $2,277 (including GST).

Payne also informed you that despite his best efforts, Bad Debts totalling $3,190 (including GST) were written off during the year. He also provided you with the following ageing of the Account Receivables as at June 30, 2019.

Amount doubtful %
Accounts not yet due $12 100 0.5
Accounts overdue:
1-30 days 9 680 3.0
31-60 days 6 930 10.0
61-150 days 5 170 30.0
151 days and over 3 179 80.0
$37 059

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Moe Glee’s business acquired a group of assets two years ago to help with expansion plans , but Moe would now like to review the use of some of those assets. Moe’s close friend Ana Maui Harry’s has been helping out and started to record some details about the assets purchased but never quite completed the job.

Purchase Date Asset Name Depreciation Details Original Cost Expected Disposal Value
1/7/19 Inventory 15,000 1,500
Land 120,000
Off Road Truck 40% per annum 38,000 7,500
Parachute Training Simulator Maximum usage – 50,000 jumps 142,000 42,000

Notes:
Assets that are depreciated using the straight-line method are deemed to have a useful life of 10 years and residual value equal to 10% of their cost.
The Parachute Training Simulator performed 15,000 jumps in its first year of use.
All relevant depreciation has been recorded in the company’s books up until June 30, 2020.

During the year ended 30/6/21, the following transactions took place:

On August 1 2020, Deep in the Jungle sold their Parachute Training Simulator. A local flying school agreed to purchase the machine for $150,000 cash. An additional 1,000 jumps had been done between July 2020 and the date of sale.

On January 1 2021, Deep in the Jungle traded in their Off Road Truck for an APC, a vehicle that will allow them to take a group of adventurers deeps into the jungle. Moe received a trade-in of $20,000 for the Truck and paid an additional $60,000 cash to purchase the APC. Ana has worked out the accumulated depreciation on the truck was $19,760 at the date of the trade-in.

On March 30 2021, Deep in the Jungle exchanged the land they had purchased for a Warehouse that could store their vehicles and equipment. The Warehouse was being advertised for $140,000. The land had a fair value of $117,000 at the time of the exchange.

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Moe and Ana have decided to set up a partnership on the weekends that will allow them to indulge their other passion, teaching people to sing songs from movies, and have invited Alistair to join them.

The singing classes have proved to be quite a lucrative side business and fortunately the three were sensible enough to have drawn up a partnership agreement outlining how any profits will be distributed.

The agreement states that Ana will receive a $30,000 salary as she spends most of the time organising the lessons. Moe will receive a $20,000 salary but Alistair is often away so will only receive $5,000. In addition to this, to encourage one another to minimise their drawings from the business, interest of 10% will be paid on the capital balance of each partner at the end of the period. Any remaining profits will be split equally in thirds between the partners.

In the past 12 months, the store made a profit of $62,000 and the ending capital balances were:

Moe $50,000, Alistair, $28,000 and Ana $22,000.

END OF EXAMINATION INFORMATION