25. Closing entries illustrated PowerPoint presentation by Dr Anne Abraham, University of Western Sydney Dec 31 Sales 480 000 Profit and Loss Summary 480 000 (To close income statement account with credit balances) 31 Profit and Loss Summary 450 000 Sales Returns and Allowances 12 000 Sales Discounts 8 000 Cost of sales 316 000 Store Salaries Expense 45 000 Administrative Salaries Expense 19 000 Freight-out 7 000 Advertising Expense 16 000 Utilities Expense 17 000 Depreciation Expenses 8 000 Insurance Expense 2 000 (To close income statement accounts with debit balances) 31 Profit and Loss Summary 30 000 RA Lewis, Capital 30 000 (To close profit to capital) 31 RA Lewis, Capital 15 000 RA Lewis, Drawings 15 000 (To close drawings to capital)
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33. Simpler ‘nature of expense’ income statement PowerPoint presentation by Dr Anne Abraham, University of Western Sydney Income Net sales $460 000 Interest revenue 3 000 Rent revenue 400 Discount received 200 Total income 463 600 Expenses cost of sales $316 000 Selling expenses 76 000 Administrative expenses 38 000 Finance expenses 2 000 Total expenses 432 000 profit $ 31 600 SELLERS ELECTRICS Income Statement for the year ended 31 December 2010
34. Classified statement of financial position PowerPoint presentation by Dr Anne Abraham, University of Western Sydney Assets Current assets Cash $ 9 500 Accounts Receivable 16 100 Inventory 40 000 Prepaid insurance 1 800 Total current assets 67 400 Property, plant and equipment Shop equipment $80 000 Less: Accum. depreciation – shop equipment 24 000 56 000 Total assets $123 000 SELLERS ELECTRICS Statement of Financial Position (Partial) as at 31 December 2010
35. DETERMINING cost of sales UNDER A PERIODIC SYSTEM PowerPoint presentation by Dr Anne Abraham, University of Western Sydney LO7 Cost of sales Inventory, 1 January $ 36 000 Purchases $325 000 Less: Purchases returns & allowances $10 400 Discount received 6 800 17 200 Net purchases 307 800 Add: Freight-in 12 200 Cost of goods produced 320 000 Cost of goods available for sale 356 000 Inventory, 31 December 40 000 cost of sales $316 000 SELLERS ELECTRICS Cost of sales for the year ended 31 December 2010
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44. Comparison of entries: perpetual vs periodic PowerPoint presentation by Dr Anne Abraham, University of Western Sydney TRANSACTION PERPETUAL SYSTEM PERIODIC SYSTEM Apr 4 Purchase of Inventory 3800 Purchases 3800 inventory on A/C A/Cs Payable 3800 A/Cs Payable 3800 Apr 8 Purchases A/Cs Payable 300 A/Cs Payable 300 returns and Inventory 300 Purchase allowances Ret. & Allow. 300 Apr 9 Freight costs on Freight-in/Inventory 150 Freight-in 150 purchases Cash 150 Cash 150 Apr 14 Payment on A/Cs Payable 3500 A/Cs Payable 3500 account with a Cash 3430 Cash 3430 discount COS 70 Discount rec ’ d 70 ENTRIES IN BEYER VIDEO’S BOOKS
45. Comparison of entries: perpetual vs periodic continued PowerPoint presentation by Dr Anne Abraham, University of Western Sydney TRANSACTION PERPETUAL SYSTEM PERIODIC SYSTEM Apr 5 Sales of A/Cs Receivable 3800 A/Cs Receivable 3800 inventory on A/C Sales 3800 Sales 3800 COS 2400 No entry for COS Inventory 2400 Apr 8 Return of Sales Returns Sales Returns inventory sold and Allowances 300 and Allowances 300 A/Cs Receivable 300 A/Cs Receivable 300 Inventory 140 No entry for COS COS 140 Apr 15 Cash received Cash 3430 Cash 3430 on account Sales Discounts 70 Sales Discounts 70 with a discount A/Cs Receivable 3500 A/Cs Receivable 3500 ENTRIES IN SELLERS ELECTRICS BOOKS
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52. GST continued PowerPoint presentation by Dr Anne Abraham, University of Western Sydney