Mock Exam 1 — Question 1
Bellbird Hardware | Complete on paper
✎ Work on paper. No notes. No phone. Set a 120-minute timer (VCAA allows 15 minutes reading time beforehand). Do not open model answers until every question is complete.
Bellbird Hardware | Owner: Sophie Nguyen | Trading / hardware products | GST 10% | Perpetual FIFO, 100% mark-up, customer terms 2/10 n/30
Tax Invoice #3318 – 5 May 2026
Bellbird Hardware → Riverside Renovations. 8 x cordless drill sets @ $110.00 excl. GST each. GST: $88.00. Total: $968.00. Credit sale, terms 2/10 n/30.
EFT Receipt #219 – 13 May 2026
Received from Riverside Renovations. Amount: $948.64. Full settlement of Tax Invoice #3318 within the discount period.
Additional Information – 31 May 2026
1. Prepaid insurance: $3,960 incl. GST was paid on 1 March 2026 for a 12-month policy commencing 1 March 2026. 2. Wages accrual: 31 May falls on a Sunday. Wages are $320 per day based on a 5-day week. The last wage payment covered to Thursday 28 May. Friday 29 and Saturday 30 May wages remain unpaid. 3. Inventory: A physical stocktake on 31 May revealed inventory on hand of $41,200. The Inventory account balance before any adjustment was $42,800.
Question 1 (14 marks) — Source Documents and Balance-Day Adjustments
(a)4 marks
Prepare the General Journal entry to record Document 1 (Tax Invoice #3318). A narration is required.
Tip: Credit sale: 3 accounts affected. AR Dr $968 (GST-inclusive – that is what the debtor owes). Sales Cr $880 (excl. GST – revenue excludes GST). GST Clearing Cr $88.
(b)4 marks
Prepare the General Journal entry to record Document 2 (EFT Receipt #219). A narration is required.
Tip: Payment within 10 days so 2% discount applies. Discount = 2% × $880 (excl. GST) = $17.60. GST on discount = $1.76. Total deduction = $19.36. Cash = $968 − $19.36 = $948.64. Four accounts: Bank Dr, Discount Expense Dr, GST Clearing Dr, AR Cr.
(c)3 marks
Prepare the General Journal entries for all three balance-day adjustments described in the Additional Information. Narrations are not required.
Tip: (1) Insurance: $3,960 ÷ 11 = $360 GST, $3,600 excl. GST ÷ 12 months = $300/month. March, April, May = 3 months used = $900. Dr Insurance Expense $900, Cr Prepaid Insurance $900. (2) Wages: 2 days × $320 = $640. Dr Wages $640, Cr Accrued Wages Payable $640. (3) Inventory: $42,800 − $41,200 = $1,600 loss. Dr Inventory Loss $1,600, Cr Inventory $1,600.
(d)3 marks
With reference to the accrual basis of accounting, explain why it is necessary to record the wages accrual at 31 May.
Tip: State the accrual basis (expenses when incurred, not when paid). Apply it to the wages specifically (earned on 29-30 May). State the impact if not recorded (wages understated, net profit overstated for May).
