Surf Haven case study 

General information 

Al Wilson owns and runs a retail and wholesale surf shop, Surf Haven (ABN 84 111 122 223), in a sea side town. The business is situated on a prominent corner of the town at 1 View Street, Bell's Inlet. Its custom is mainly from young surf board, sailing and boogie board riders. 

The shop has a nautical atmosphere and is very well organised. Products consist of surfboards, sailboards and boogie boards. Surf Haven also sells second-hand surfboards on commission. Surf Haven also supplies many of the surf shops around the coast. 

The business charges GST on all inventory sales and surfing lessons and pays GST on inventory purchases and most business expenses. 

A summer to remember wave (n.d.) <https://bit.ly/2vi3Vyu> 

Employees 

Surf Haven employs two casual assistants, Brian Jardine, works as a surfing instructor with Al and Carl Holland who works in the shop selling stock, and taking bookings for surf lessons. Al pays both Brian and Carl $30 each per hour. Each employee works between 10 to 15 hours per week, depending on the season and demand. 

At the end of August, Surf Haven owed 4 hours pay to both Brian and Carl. 

Note: Do not use the payroll section of XERO; record wages expense as a cash payment. 

Goods and Services Tax (GST) 

Surf Haven is registered for GST and charges GST of 10 % on all sales and lessons revenue and pays GST on all business expenses, except wages, bank charges and interest. Non-current asset acquisitions are also taxed at 10%. 

Merchandise inventory 

The following is a list of closing inventory and the suppliers as at 31 August 2021. 

Please note:

• Each of the above items of inventory is quoted excluding GST. Surf Haven uses the perpetual inventory system and F.I.F.O. (First-In-First-Out) to record the movement of inventory.

• The required inventory is purchased on credit under the terms of payment required by the suppliers. Al has a good relationship with each of his suppliers. Once he places an order, the suppliers will deliver them free of charge the same day. 

Lessons 

Surf Haven also provides surfing lessons charging customers $90 per lesson (excluding GST). All lessons are paid for at the time of the lesson and are recorded separately to the sale of inventory. 

Supplier information 

Suppliers account balances as at 31 August 2021. 

Each of the above account balances represents deliveries of inventory received on 27 August 2021. All purchases are on terms net 30 days. 

Surf Haven case study