specialty slurpee machine business

Background and Facts Adam Lucio is the owner of Sipping Slurpees, a specialty slurpee machine business he started two years ago. Adam sells 2 types of slurpee machines that he purchases from manufacturers. He operates the business himself and employs one person full-time as an assistant. Adam also provides specialty slurpee training services to private clients on how to make deliciously flavoured slurpees. Sipping Slurpees is operated from a rented premise and the business pays rent quarterly in advance. The business has a variety of clients with whom Adam has built up a strong relationship. He offers them terms of 2/10, net/30. The business uses a FIFO perpetual inventory system (First In, First Out). The business is registered for GST. Business Activity Statements (BAS) are submitted quarterly to the Australia Taxation Office on an accrual basis. Currently, the business uses a manual accounting system but plans to test a Xero accounting system later in the year. Accounting Information Sipping Slurpees uses the following specialised and general journals to record business transactions. • Sales Journal – to record all invoices issued for sales of inventory • Purchases Journal – to record all credit purchases • Cash Receipts Journal – to record all cash received • Cash Payments Journal – to record all cash payments • General Journal – to record all other transactions Sipping Slurpees uses a general ledger in the form of a 4-column running balance. An Accounts Receivable and Accounts Payable subsidiary ledger is also used in this format. Financial Statements are prepared at the end of each month, and the accounts are closed off at the end of each month. All necessary pro-formas are included and are to be used to complete the manual practice set for April. The assignment can be completed using the templates provided in Excel.

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