Alfie Lockyer decides to start up a business as a sole trader on 1 July 2020. Alfie’s Rugby League Memorabilia and Framing Services will sell a range of different memorabilia items including framed jerseys, signed footballs and signed photos of famous rugby league players both online and from a retail shop in Caloundra, Queensland. The business will also provide professional framing services for customers from its retail shop. The chart of accounts for the business is shown below: Account number Account name Assets 1001 Cash at bank 1002 Accounts receivable 1003 Inventory 1004 Office supplies 1005 Prepaid rent 1006 Framing supplies 1101 Shop fixtures and fittings 1102 Accumulated depreciation – shop fixtures and fittings 1103 Office equipment 1104 Accumulated depreciation – office equipment Liabilities 2001 Accounts payable 2002 Wages payable 2003 Interest payable 2004 Electricity payable 2101 Bank loan Equity 3001 A. Lockyer, capital 3002 Drawings 3101 Profit or loss summary Income 4001 Sales income 4002 Framing services income Expenses 5001 Cost of sales 5002 Advertising expense 5003 Wages expense 5004 Insurance expense 5005 Phone and internet expense 5006 Electricity expense 5007 Office supplies expense 5008 Framing supplies expense 5009 Rent expense 5010 Interest expense 5011 Depreciation expense – shop fixtures and fittings 5012 Depreciation expense – office equipment Below are the transactions for the business for its first month of operations: 1 July 2020 Alfie Lockyer invests $50,000 cash to start the business. 1 July 2020 Borrowed $10,000 cash from the Southpac Bank at an interest rate of 5% per annum payable in arrears on 31 December and 30 June each year. 1 July 2020 Paid $12,000 cash for 12 months’ rent on the shop till 30 June 2021. 1 July 2020 Sunny Coast Shopfitters completed the fixtures and fittings for the shop at a total cost of $19,880 which is due to be paid by the end of July. 1 July 2020 Purchased office equipment for $5,000 cash and office supplies for $350 cash. 2 July 2020 Purchases framing supplies for $590 cash. 2 July 2020 Purchased the following memorabilia items for cash: • Framed Brisbane Broncos jersey signed by all members of the 1992 premiership winning team: Cost = $1,100 (Item BB1992); • Signed Billy Slater football boots: Cost = $575 (Item BS2004); • Football signed by all members of the 2010 Queensland State of Origin team: Cost = $1,530 (Item QLD2010); • Signed photo of 2010 NSW State of Origin team: Cost = $195 (Item NSW2010); • Signed photo of 1957 Australian Kangaroos team that won the Rugby League World Cup: Cost = $855 (Item WC1957). 2 July 2020 Incurred online advertising expenses of $3,000. Half of this amount is due to be paid by 23 July, with the remainder due on 13 August. 3 July 2020 Provided framing services for $1,350 cash. 4 July 2020 Sold item BS2004 for $940 cash. 6 July 2020 Sold item WC1957 for $1,560 to a customer on credit. Amount is due in 14 days. 7 July 2020 Paid $250 wages in cash to casual employee. 9 July 2020 Provided framing services for $1,075 cash. 11 July 2020 Purchased framing supplies for $665 cash. 12 July 2020 Provided framing services for $742 cash. 13 July 2020 Purchased the following memorabilia items for cash: • Signed and framed Jonathon Thurston poster: Cost = $475 (Item JT2017); • Framed photo of North Queensland Cowboys 2015 Premiership team: Cost = $350 (Item NQ2015); • Framed South Sydney jersey signed by a
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