VCE Accounting Unit 4

1. 19.6
PREPAID REVENUE
FOR DEPOSITS

2. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
 Choice Clothing makes and sells uniforms for waiters and
hotel staff. The following transactions occurred:
19.6 PREPAID REVENUE
FOR DEPOSITS
4 Dec An order is received from Hilton’s Hotels for 50 uniforms (Order
No. 17):
• Selling price = $50 per unit (plus GST)
• Cost price = $30 per unit (plus GST)
20 Dec A deposit of 20% of the selling price is left by Hilton’s Hotels
(Receipt 86)
31 Jan All 50 uniforms are delivered to Hilton’s Hotels and the
customer is invoiced (Invoice CC39)
4 Dec An order is received from Hilton’s Hotels for 50 uniforms (Order
No. 17):
• Selling price = $50 per unit (plus GST)
• Cost price = $30 per unit (plus GST)
20 Dec A deposit of 20% of the selling price is left by Hilton’s Hotels
(Receipt 86)
31 Jan All 50 uniforms are delivered to Hilton’s Hotels and the
customer is invoiced (Invoice CC39)
4 Dec An order is received from Hilton’s Hotels for 50 uniforms (Order
No. 17):
• Selling price = $50 per unit (plus GST)
• Cost price = $30 per unit (plus GST)
20 Dec A deposit of 20% of the selling price is left by Hilton’s Hotels
(Receipt 86)
31 Jan All 50 uniforms are delivered to Hilton’s Hotels and the
customer is invoiced (Invoice CC39)
4 Dec An order is received from Hilton’s Hotels for 50 uniforms (Order
No. 17):
• Selling price = $50 per unit (plus GST)
• Cost price = $30 per unit (plus GST)
20 Dec A deposit of 20% of the selling price is left by Hilton’s Hotels
(Receipt 86)
31 Jan All 50 uniforms are delivered to Hilton’s Hotels and the
customer is invoiced (Invoice CC39)
Choice Clothing Hilton’s Hotels

3. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
4 Dec An order is received from Hilton’s Hotels for 50 uniforms (Order
No. 17):
• Selling price = $50 per unit (plus GST)
• Cost price = $30 per unit (plus GST)
20 Dec A deposit of 20% of the selling price is left by Hilton’s Hotels
(Receipt 86)
31 Jan All 50 uniforms are delivered to Hilton’s Hotels and the
customer is invoiced (Invoice CC39)
JanuaryDecember
4 December
Order received
from Hilton’s
Hotels
4 Dec An order is received from Hilton’s Hotels for 50 uniforms (Order
No. 17):
• Selling price = $50 per unit (plus GST)
• Cost price = $30 per unit (plus GST)
20 Dec A deposit of 20% of the selling price is left by Hilton’s Hotels
(Receipt 86)
31 Jan All 50 uniforms are delivered to Hilton’s Hotels and the
customer is invoiced (Invoice CC39)
31 January
Uniforms delivered
to customer and
invoice given
4 Dec An order is received from Hilton’s Hotels for 50 uniforms (Order
No. 17):
• Selling price = $50 per unit (plus GST)
• Cost price = $30 per unit (plus GST)
20 Dec A deposit of 20% of the selling price is left by Hilton’s Hotels
(Receipt 86)
31 Jan All 50 uniforms are delivered to Hilton’s Hotels and the
customer is invoiced (Invoice CC39)
20 December
20% deposit
received from
customer
4 Dec An order is received from Hilton’s Hotels for 50 uniforms (Order
No. 17):
• Selling price = $50 per unit (plus GST)
• Cost price = $30 per unit (plus GST)
20 Dec A deposit of 20% of the selling price is left by Hilton’s Hotels
(Receipt 86)
31 Jan All 50 uniforms are delivered to Hilton’s Hotels and the
customer is invoiced (Invoice CC39)
19.6 PREPAID REVENUE
FOR DEPOSITS
Choice Clothing Hilton’s Hotels

4. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
 What action is required when the order is taken?
4 Dec An order is received from Hilton’s Hotels for 50 uniforms (Order
No. 17):
• Selling price = $50 per unit (plus GST)
• Cost price = $30 per unit (plus GST)
No entry is required for orders – no legal obligation has been made
19.6 PREPAID REVENUE
FOR DEPOSITS
Choice Clothing Hilton’s Hotels

5. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
20% Deposit
19.6 PREPAID REVENUE
FOR DEPOSITS
Choice Clothing Hilton’s Hotels
4 Dec An order is received from Hilton’s Hotels for 50 uniforms (Order
No. 17):
• Selling price = $50 per unit (plus GST)
• Cost price = $30 per unit (plus GST)
 How much is the deposit of 20%?
Sale = 50 uniforms @ $50 = $2,500
+ GST 10% = $250
Total owing = $2,750
Is it 20% of the
sale amount? = $500
or…
Is it 20% of the
total owing? = $550
In VCE Accounting,
there is NO GST on
deposits
Cost of sale = 50 @ $30 = $1,500
4 Dec An order is received from Hilton’s Hotels for 50 uniforms (Order
No. 17):
• Selling price = $50 per unit (plus GST)
• Cost price = $30 per unit (plus GST)
20 Dec A deposit of 20% of the selling price is left by Hilton’s Hotels
(Receipt 86)

6. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
19.6 PREPAID REVENUE
FOR DEPOSITS
Cash [A]
31/12 Prepaid revenue 500
Cash Receipts Journal
Date Details
Receipt
No.
Bank
Debtors
Control
Cost of
Sales
Sales Sundries GST
20 Dec Prepaid revenue 86 500 500
Prepaid Revenue [L]
31/12 Cash 500
Cash Receipts Journal
Date Details
Receipt
No.
Bank
Debtors
Control
Cost of
Sales
Sales Sundries GST
20 Dec Prepaid revenue 86 500 500
Cash Receipts Journal
Date Details
Receipt
No.
Bank
Debtors
Control
Cost of
Sales
Sales Sundries GST
20 Dec Prepaid revenue 86 500 500
Cash Receipts Journal
Date Details
Receipt
No.
Bank
Debtors
Control
Cost of
Sales
Sales Sundries GST
20 Dec Prepaid revenue 86 500 500
Cash Receipts Journal
Date Details
Receipt
No.
Bank
Debtors
Control
Cost of
Sales
Sales Sundries GST
20 Dec Prepaid revenue 86 500 500
Cash Receipts Journal
Date Details
Receipt
No.
Bank
Debtors
Control
Cost of
Sales
Sales Sundries GST
20 Dec Prepaid revenue 86 500 500
Cash [A]
31/12 Prepaid revenue 500
Cash Receipts Journal
Date Details
Receipt
No.
Bank
Debtors
Control
Cost of
Sales
Sales Sundries GST
20 Dec Prepaid revenue 86 500 500
Prepaid Revenue [L]
31/12 Cash 500

7. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
4 Dec An order is received from Hilton’s Hotels for 50 uniforms (Order
No. 17):
• Selling price = $50 per unit (plus GST)
• Cost price = $30 per unit (plus GST)
20 Dec A deposit of 20% of the selling price is left by Hilton’s Hotels
(Receipt 86)
19.6 PREPAID REVENUE
FOR DEPOSITS
Choice Clothing Hilton’s Hotels
$2,500 + GST
50 x Revenue
earned
4 Dec An order is received from Hilton’s Hotels for 50 uniforms (Order
No. 17):
• Selling price = $50 per unit (plus GST)
• Cost price = $30 per unit (plus GST)
20 Dec A deposit of 20% of the selling price is left by Hilton’s Hotels
(Receipt 86)
31 Jan All 50 uniforms are delivered to Hilton’s Hotels and the
customer is invoiced (Invoice CC39)

8. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
19.6 PREPAID REVENUE
FOR DEPOSITS
Prepaid Revenue [L]
31/12 Sales 500 31/12 Cash 500
Sales [R]
31/12 Prepaid revenue 500
General Journal
Date Details
General Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Jan Prepaid revenue 500
Sales 500
General Journal
Date Details
General Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Jan Prepaid revenue 500
Sales 500
Prepaid Revenue [L]
31/12 Sales 500 31/12 Cash 500
General Journal
Date Details
General Ledger Subsidiary Ledger
Debit Credit Debit Credit
31 Jan Prepaid revenue 500
Sales 500
Sales [R]
31/12 Prepaid revenue 500
Prepaid Revenue [L]
31/12 Sales 500 31/12 Cash 500
500 500

9. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
19.6 PREPAID REVENUE
FOR DEPOSITS
Sales [R]
31/12 Prepaid revenue 500
Sale
$2,500
GST
$250
Owing
$2,750
Deposit
$500
Owing
$2,250+ =  =
Sales Journal
Date Debtor
Invoice
No.
Cost of Sales Sales GST
Debtors
Control
31 Jan Hilton’s Hotels CC39 1500 2000 250 2250
Sales Journal
Date Debtor
Invoice
No.
Cost of Sales Sales GST
Debtors
Control
31 Jan Hilton’s Hotels CC39 1500 2000 250 2250
Sales Journal
Date Debtor
Invoice
No.
Cost of Sales Sales GST
Debtors
Control
31 Jan Hilton’s Hotels CC39 1500 2000 250 2250
Sales Journal
Date Debtor
Invoice
No.
Cost of Sales Sales GST
Debtors
Control
31 Jan Hilton’s Hotels CC39 1500 2000 250 2250
Sales Journal
Date Debtor
Invoice
No.
Cost of Sales Sales GST
Debtors
Control
31 Jan Hilton’s Hotels CC39 1500 2000 250 2250
Sales [R]
31/12 Prepaid revenue 500
Sales Journal
Date Debtor
Invoice
No.
Cost of Sales Sales GST
Debtors
Control
31 Jan Hilton’s Hotels CC39 1500 2000 250 2250
Sales [R]
31/12 Prepaid revenue 500
Sales Journal
Date Debtor
Invoice
No.
Cost of Sales Sales GST
Debtors
Control
31 Jan Hilton’s Hotels CC39 1500 2000 250 2250
Sales Journal
Date Debtor
Invoice
No.
Cost of Sales Sales GST
Debtors
Control
31 Jan Hilton’s Hotels CC39 1500 2000 250 2250
Sales [R]
31/12 Prepaid revenue 500
31/1 Debtors control 2000
GST Clearing [L]
31/1 Debtors control 250
Debtors Control [A]
31/1 Sales/GST clearing 2250 31/1 Debtors control 250
Sales Journal
Date Debtor
Invoice
No.
Cost of Sales Sales GST
Debtors
Control
31 Jan Hilton’s Hotels CC39 1500 2000 250 2250
GST Clearing [L]
31/1 Debtors control 250
Sales Journal
Date Debtor
Invoice
No.
Cost of Sales Sales GST
Debtors
Control
31 Jan Hilton’s Hotels CC39 1500 2000 250 2250
Debtors Control [A]
31/1 Sales/GST clearing 2250 31/1 Debtors control 250
Cost of Sales [E]
31/1 Stock control 1500
Sales Journal
Date Debtor
Invoice
No.
Cost of Sales Sales GST
Debtors
Control
31 Jan Hilton’s Hotels CC39 1500 2000 250 2250
Stock Control [A]
31/1 Stock control 1500 31/1 Cost of sales 1500
Cost of Sales [E]
31/1 Stock control 1500
Stock Control [A]
31/1 Stock control 1500 31/1 Cost of sales 1500

10. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
TASK
In-class Homework
Ex19.5 X
Ex19.6 X
Ex19.7 X