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 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