Question

Little Red Riding' began business on 1 June 2019. The business is a partnership, between Mr Wheeler and Mrs

Wheeler. The business will sell children's bicycles at the local markets. The business is not registered for GST. The following transactions occurred during June 2019:
Date:
Details:
1-Jun
Mr and Mrs Wheeler deposited $30,000 into the business bank account.
2-Jun
Purchase of bicycles (100 small bicycles, and 100 large bicycles) from Red Bikes Rock Ltd on account for $10,000 ($50 per bicycle) on terms of 2/10, n/30.
4-Jun
Little Red Riding received an invoice from Fast Freight Ltd relating to delivery costs for the bicycles purchased on 2 June. The amount due is $300, and is due on 18 June.
5-Jun
Sent a cheque in the mail to Groove Markets Ltd for $300, for stall fees at the local markets for the month of June.
6-Jun
Sale of 30 bicycles (20 small bicycles, and 10 large bicycles) at the local markets, at $100 each. All of the customers paid by cash. The money was banked at the end of the day.
10-Jun
Paid Red Bikes Rock Ltd for purchases made on 2 June (net of the early payment discount), by electronic funds transfer.
13-Jun
Sale of 10 small bicycles to a local childcare centre, at $100 each, on 30 day credit terms. 
15-Jun
Sent a cheque in the mail to Fast Freight Ltd, in relation to the invoice received on 4 June.
22-Jun
Purchase of bicycles (30 small, and 10 large) from Red Bikes Rock Ltd on account for $2,200 ($55 per bicycle) on terms of 2/10, n/30.
23-Jun
Little Red Riding received an invoice from Fast Freight Ltd relating to delivery costs for the bicycles purchased on 22 June 2019. The amount due is $180, and is due on 6 July 2019.
24-Jun
Returned 20 of the small bicycles purchased on 22 June as they were damaged.
28-Jun
Sale of 40 bicycles (25 small, and 15 large) at the local markets, at $100 each. All of the customers paid by cash. The money was banked at the end of the day.
30-Jun
A stocktake was completed, and the number of bicycles on hand was 139 (54 small bicycles, and 85 large bicycles).

Mr and Mrs Wheeler have come to you for assistance, as they would like to use the perpetual inventory system and the First-in-first-out (FIFO) costing method, but are not sure how to set this up. 
Required:
i)   an Excel worksheet for each of the bicycle lines for June (one for the small bicycles, and one for the large bicycles) using the FIFO costing method to keep track of the number of bicycles purchased, bicycles sold, bicycles on hand, cost of goods sold and gross profit made.
ii)  journal entries (including any adjusting entries) for all of the business's transactions for June (using the perpetual inventory system and FIFO costing method). Include dates, references and narrations.
iii)   T-accounts in an Excel spreadsheet, and post all of the above journal entries to the T-accounts. Include dates and references for each entry. Total all of the T-accounts to determine their balances at the end of the June 2019. 
iv)   the 'Adjusted Trial Balance' in an Excel spreadsheet as at 30^th June 2019. Use formulas to generate all of the figures in the 'Adjusted Trial Balance' from the balances in the T-Accounts.
v)  The business has a year-end of 30^th June. Prepare the closing entries as at 30^th June 2019.
Please also refer to the 'Requirements' section below for additional submission and spreadsheet requirements.

Bank reconciliations and cash

This question continues on from question 1 above.
It is now September 2019, and two months have passed since you first met with Mr and Mrs Wheeler to assist them with implementing their inventory system and preparing their accounting records.

They have come to you for some assistance as the balance in the 'bank' T-Account at the end of August 2019 doesn't agree with the closing balance on the August bank statement... and they are not sure what they have done wrong.

The August 2019 bank statement appeared as follows:

Bank statement for August 2019
date Description deposit withdraw balance
1/8/2019 opening balance $12060
2/08/2019 Deposit 500 $12560
5/08/2019 cheque 3 200 $12360
7/08/ 2019 cash deposit 36000 $15960
12/08/19 EFT - red bikes rock ltd 2200 $13760
16/08/2019 EFT -red bikes rock ltd 190 $13570
16/08/2019 cash deposit 4200 $17770
19/08/19 cheque 5 280 $ 17490
20/08/19 cheque 6 250 $17240
23/08/19 EFT-Red bikes rock ltd 4300 $12940
23/08/19 cash deposit 3400 $16340
25/08/19 cheque 7 2000 $14340
26/08/19 cheque 10 260 $14080
30/08/2019 cash deposit 5000 $19020
31/08/2019 Annual bank fee 60 $ 19020
31/08/19 interest 20 $19040
31/08/19 closing balance $19040

Little Red Riding's accounting records for August 2019 showed an opening balance for the 'bank' account of $12,060, which agreed with the bank statement at 31 July 2019. Following is a summary of deposits and withdrawals recorded by Mr and Mrs Wheeler in their accounting records during August:

With drawls Deposit
Amounts
date details amounts date banked
2/08/19 cheque 3 200
15/08/19 EFT- Fat freight ltd 199 7/08/19 3600
16/08/19 cheque 4 160 16/08/19 4200
18/08/19 cheque 5 280 23/08/19 4300
18/08/19 cheque 6 250 30/08/19 500
23/08/19 EFT- red bikes rock ltd 3400
22/08/19 cheque 7 2000
23/08/19 cheque 8 260
25/08/19 cheque 9 390
25/08/19 cheque 10 260

Total 7399
Required:

i)    letter to Mr & Mrs Wheeler, explaining why the bank balance in the ledger account (or T-Account) won't always equal the balance on the bank statement on a particular date, and common reasons for differences. Also provide an introduction and overview of bank reconciliations - What is a bank reconciliation? What is its purpose? How is it prepared?

ii)  Prepare the bank reconciliation for Little Red Riding at 31 August 2019.

iii)  Prepare the journal entries to correct any errors made by Little Red Riding, and to record transactions that have not yet been entered into the business's accounting records. (Note: The correction of any errors relating to the recording of cheques or EFT payments should be made to 'Accounts payable'. The correction of any errors relating to deposits (other than interest received) should be made to 'Accounts receivable'.)

iv)  Prepare the 'bank' T-Account account for August 2019, in order to determine the balance in the ledger account after the above journal entries have been recorded and posted.

Answer 1

As per Chegg ethics, I have answered first four questions as below:-

i)

Little Red Riding
Stock Management Sheet
as per FIFO method
for Small Bicycles
Date	Party Name	Purchases (in qty.)	Purchased Amount ($)	Sales/Damage Stock (in qty.)	Sale Amount ($)	Cost of Goods Sold ($)	Gross Profit/(Loss) ($)	Bicycle in hand (in qty.)
2-Jun	Red Bike Rock Ltd	100	5,000	-	-			100
6-Jun	Cash Sale	-	-	20	2,000	1,000	1,000	80
13-Jun	Credit Sale	-	-	10	1,000	500	500	70
22-Jun	Red Bike Rock Ltd	30	1,650	-	-			100
24-Jun	Purchase Return	(20)	(1,100)	-	-			80
28-Jun	Cash Sale	-	-	25	2,500	1,250	1,250	55
30-Jun	Damage Stock	-	-	1	-	50	(50)	54
30-Jun	Closing Stock							54
	Total Gross Profit						2,700
Little Red Riding
Stock Management Sheet
as per FIFO method
for Large Bicycles
Date	Party Name	Purchases (in qty.)	Purchased Amount ($)	Sales/Damage Stock (in qty.)	Sale Amount ($)	Cost of Goods Sold ($)	Gross Profit/(Loss) ($)	Bicycle in hand (in qty.)
2-Jun	Red Bike Rock Ltd	100	5,000	-	-			100
6-Jun	Cash Sale	-	-	10	1,000	500	500	90
13-Jun	Credit Sale	-	-	-	-			90
22-Jun	Red Bike Rock Ltd	10	550	-	-			100
28-Jun	Cash Sale	-	-	15	1,500	750	750	85
30-Jun	Closing Stock							85
	Total Gross Profit						1,250

ii)

Date	Particulars	Dr	Cr
1-Jun	Bank	30000
	To Capital A/c		30000
2-Jun	Purchases	10000
	To Red Bike Rock Ltd.		10000
4-Jun	Cartage	300
	To Fast Freight Ltd		300
5-Jun	Marketing Cost	300
	To Groove Markets Ltd.		300
5-Jun	Groove Markets Ltd.	300
	To Bank		300
6-Jun	Cash	3000
	To Sales		3000
6-Jun	Bank	3000
	To Cash		3000
10-Jun	Red Bike Rock Ltd	10000
	To Bank		9800
	To Discount Received		200
13-Jun	Local Childcentre	1000
	To Sales		1000
15-Jun	Fast Freight Ltd	300
	To Bank		300
22-Jun	Purchases	2200
	To Red Bike Rock Ltd.		2200
23-Jun	Cartage	180
	To Fast Freight Ltd		180
24-Jun	Red Bike Rock Ltd	1100
	To Purchase Return		1100
28-Jun	Cash	4000
	To Sales		4000
28-Jun	Bank	4000
	To Cash		4000
30-Jun	Damaged Stock	50
	To Stock		50

iii)

Marketing Cost Account
Date	Particulars	Amount	Date	Particulars	Amount
5-Jun	To Groove Markets Ltd.	300	5-Jun	By Bank	300
		300			300
Sales Account
Date	Particulars	Amount	Date	Particulars	Amount
30-Jun	To P & L A/c	8000	6-Jun	By Cash	3000
			13-Jun	By Local Childcentre	1000
			28-Jun	By Cash	4000
		8000			8000
Cash Account
Date	Particulars	Amount	Date	Particulars	Amount
6-Jun	To Sales	3000	6-Jun	By Bank	3000
28-Jun	To Sales	4000	28-Jun	By Bank	4000
		7000			7000