Mock Exam 5 — Question 1
Pinnacle Printing | 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.
Pinnacle Printing | Owner: Sarah Park | Trading / printing supplies and equipment | GST 10% | Perpetual Identified Cost, monthly reporting
Trial Balance Extract at 31 May 2026 (before adjustments)
| Account |
Debit $ |
Credit $ |
| Accounts Receivable |
52,400 |
|
| Allowance for Doubtful Debts |
|
2,600 |
| Inventory |
41,200 |
|
| Equipment |
180,000 |
|
| Accumulated Depreciation – Equipment |
|
67,500 |
| Prepaid Advertising |
8,400 |
|
| Sales |
|
148,000 |
| Cost of Sales |
74,000 |
|
| Wages |
21,600 |
|
Additional info: (1) Equipment depreciated straight-line: cost $180,000, residual $20,000, useful life 8 years. (2) Prepaid Advertising: $8,400 was paid on 1 May for a 4-month campaign commencing 1 May. (3) The Allowance for Doubtful Debts is to be adjusted to 6% of Accounts Receivable. (4) Wages of $1,840 are accrued at 31 May.
Question 1 (14 marks) — Balance-Day Adjustments and Financial Statements
(a)6 marks
Record all necessary adjusting entries in the General Journal at 31 May 2026. Narrations are not required.
Tip: (1) Depreciation: ($180,000 − $20,000) ÷ 8 years ÷ 12 months = $1,667/month. (2) Advertising: $8,400 ÷ 4 months = $2,100 for May. (3) Allowance: Required = 6% × $52,400 = $3,144. Current = $2,600. Increase required = $544. Dr Bad Debts $544, Cr Allowance $544. (4) Wages accrual: Dr Wages $1,840, Cr Accrued Wages $1,840.
(b)4 marks
Prepare the Income Statement for Pinnacle Printing for the month ended 31 May 2026, incorporating all adjustments.
Tip: Sales $148,000 − COS $74,000 = GP $74,000. Less: Wages $23,440 (inc. accrual), Depreciation $1,667, Advertising $2,100, Bad Debts $544 = Net Profit.
(c)4 marks
Prepare the Current Liabilities section of the Balance Sheet as at 31 May 2026. Accounts Payable is $18,700 and the GST Clearing balance is $4,200 Cr.
Tip: Current Liabilities: Accounts Payable, Accrued Wages, GST Clearing.
