Ryan Captain is the owner of CaptainDJ Sounds, a specialty
sound system business he started several years ago. The business is
GST-registered.
Ryan Captain operates the business himself and employs one
person full-time to assist him. Ryan started by providing DJ services to both
clubs and private parties and then diversified into selling sound systems and
consulting services. Whilst selling sound systems and consulting services are
now the primary generators of revenue, Ryan still when time allows provides DJ
services at private parties. Hence, the business generates its revenue by:
• Selling 3 types of sound systems that are purchased from
manufacturers.
• Providing consulting services to private clients for
designing home audio systems.
• DJing services at private parties
CaptainDJ Sounds uses a perpetual inventory system, and uses
FIFO (First In First Out).
The business is operated from a commercial building that the
business purchased three years ago.
Ryan has a variety of clients with whom he has built up a
strong relationship. He offers them terms of 30 days. Ryan submits his Business
Activity Statements for GST monthly to the Australia Taxation Office on an
accruals basis.
Currently, the business uses a manual accounting system but
plans to test a MYOB accounting system in September.
Accounting Information
The business, CaptainDJ Sounds, uses the following specialized
and general journals to record business transactions.
• Sales Journal - to record all invoices issued for sales of
inventory
• Sales Returns Journal - to record all credit notes issued
for returned inventory
• Purchases Journal - to record all credit purchases of
inventory
• Cash Receipts Journal - to record all cash received
• Cash Payments Journal - to record all cash payments
• General Journal - to record all other transactions
CaptainDJ Sounds uses a general ledger in the form of a 4
column running balance (as described on page 78Exhibit 2-13 of Custom Text 3rd
Ed). An Accounts Receivable and Accounts Payable subsidiary ledger is also used
in this format.
Financial Statements are prepared at the end of each month.
The accounts are closed off at the end of each month.
Chart of Accounts
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