- Current Assets 10000 11000 12000 12100 13100 13200 18000 18100 18200 15100 17100 Cash Accounts Receivable 21200 23100 23 1 (201.75 KiB) Viewed 9 times
Current Assets 10000 11000 12000 12100 13100 13200 18000 18100 18200 15100 17100 Cash Accounts Receivable 21200 23100 23200 23300 23400 Inventory-Guitars. Inventory - Violins Supplies (string, pics, resin) Long-Term Assets 15000 17000 Shipping Supplies Prepaid Rent 27000 27100 Prepaid Insurance Prepaid Advertising Computer Equipment Accumulated Depreciation -Computer Equipment Delivery Van Accumulated Current Liabilities 20000 Accounts Payable 21100 Depreciation-Delivery Van Note Payable - Wells Fargo Bank Note Payable - Office Mart Wages Payable Interest Payable Sales Tax Payable Utilities Payable Long-Term Liabilities Mortgage Payable Notes Payable Stockholders' Equity 39003 39005 39007 Revenue 40000 Expenses 50000 60100 60150 60200 60300 60350 60400 60500 60550 60600 60650 60700 60750 Common Stock Retained Earnings Dividends paid Sales Cost of Goods Sold Legal Expense Supplies Expense Shipping Supplies Expense Insurance Expense Wages Expense Credit Card Expense Advertising and Promotion. Expense Utility Expense Rent Expense Depreciation Expense Interest Expense Bank Service Fee 3 Page Part One, Two and Three Instructions Record the January 2018 transactions in the general journal (last section of this practice set) using the following events. Skip a line between each entry and number the entries to match the number of transactions. In the general journal record the transaction number, the date, and the account numbers. After all journal entries are entered into the practice set, enter the adjusting journal entries. Next, create a T-Account for each account that is used in the Chart of Accounts and record transactions and end with an ending balance. All ending balances should be on the normal balance side even if the account has a zero balance. If there is a number that is uneven round to the nearest cent. You will need the ending balance in the cash account for the bank reconciliation. All instructions for Blackboard start on page 6. Transactions 1. 1/02/18 2. 3. Date 5. 1/02/18 1/03/18 4. 1/03/18 1/03/18 Deposit No. / Check No. Deposit #1 Ck #1001 Ck #1002 Description Ivan Smith met with his lawyer and CPA for advice on starting the business. They decided that Mr. Smith would organize the business as a corporation. The lawyer told Mr. Smith to register the company name, Ivan's Instrument Center, with the County of El Paso. In addition, Mr. Smith will get an employer identification number (EIN) from the Internal Revenue Service and get a sales tax permit from the state of Texas. The lawyer agreed to prepare the Articles of Incorporation to be filed with the Secretary of State of Texas. The CPA has agreed to help Mr. Smith set up his accounting system. Mr. Smith opened a business checking account at Wells Fargo Bank by depositing $30,000. The corporation issued him a stock certificate for 2,000 shares of common stock with no par value. Mr. Smith signed a one-year rental agreement with Reynolds Realtors for warehouse space. He was required to pay $3,400 for rent for the months of January 1, 2018 December 31, 2018. Arranged for a general business liability insurance policy and paid $3,600 to State Penn Insurance. This premium is for eighteen months coverage. Purchased a new computer system that cost $3,000 from Office Mart for use in the business. Mr. Smith signed a six-month, 12% installment note payable for the cost of the system. The computer system has an estimated useful life of 3 years and the residual 4| Page
6. 1/05/18 Deposit #2 7. 1/05/18 Ck #1003 8. 1/06/18 Ck #1004 9. 1/06/18 Ck #1005 10. 1/08/18 11. 1/08/18 12. 1/13/18 13. 1/18/18 14. 1/18/18 15. 1/18/18 16. 1/18/18 17. 1/16/18 18. 1/20/18 19. 1/22/18 20. 1/23/18 Ck #1006 Ck #1007 Deposit # 3. Ck #1008 (salvage) value is $0. This will be recorded as Computer Equipment, and depreciated using the Straight-Line Depreciation method accordingly. Signed a note payable to borrow $8,000 from Wells Fargo Bank. Interest is 7% annually and the note is to be repaid with interest in six months. Purchased a delivery van for $18,000 from Tony's Motors. The estimated service life of this asset is 5 years. The residual (salvage value) is $2,000. This will be recorded as Delivery Van and depreciated using the Straight-Line Depreciation Method. Paid $800 to have Ivan's logo painted on the side of the van. This should be added to the cost of the van and depreciated over the life of the van. Paid $700 for business cards, flyers, and posters. This will be recorded as prepaid advertising. Purchased $10,000 of inventory-guitars from Gary's Guitars on account. The vendor extended credit terms of 2/15, n/30. Purchased $8,000 of inventory-violins from Vic's Violins on account. The vendor extended credit terms are 2/10 n/30. Mr. Smith received and paid the $900 charge from his lawyer. Ivan's Instrument Center is now open for business. Sales will be both retail and wholesale. Retail customers will purchase online and at the shop and will be charged an 8.25% sales tax. Mr. Smith will allow major customers to charge their purchases on account. Purchased $200 of supplies consisting of instrument strings, pics, and resin and purchased them on account. Purchased shipping supplies of $500 for cash. Sold instruments to Sue's Junior Symphony and Ensemble for $7,670 and the sales tax collected is $633. The cost of the guitars is $3,000 and the cost of the violins is $1,600. Sue's Junior Symphony and Ensemble paid on account and Ivan will bill them. Purchased additional guitars on account for $3,500 from Gary's Guitars. Credit terms are 2/15, n/30. Recorded internet sales for the first five days of operation. Sales totaled $7,000. The sales tax collected totaled $450. The $7,450 was deposited in the bank. The cost of merchandise sold was $3,900 (guitars cost $3,500; violins cost $400). Received and paid the $200 invoice for supplies (strings, resin and pics) purchased on 1/18/18. Mr. Smith donated a guitar and a violin to the National Music Society fund raiser. He felt that this was a good way to advertise his 5 Page 21. 1/23/18 22. 1/23/18 23. 1/23/18 24. 1/23/18 25. 1/23/18 26. 1/25/18 27. 1/28/18 28. 1/30/18 29. 1/30/18 30. 1/31/18 Deposit #4 Ck #1009 Ck #1010 Deposit #5 Ck # 1011 Deposit #6 Ck #1012 Deposit #7 Ck #1013 31. 1/31/18 Ck #1018 new business. His business was listed as a sponsor and a large ad was put in the fund raiser program. Cost of the guitar was $250 and the violin was $200. Mr. Smith considers this an advertising expense. Received payment in full from Sue's Junior Symphony and Ensemble. The payment was deposited in the bank. Mr. Smith paid his credit card bill for the month. The total was $480 which was for gas for the delivery van. Paid for the violins purchased from Vic's Violins on 9/08/18. Internet and retail sales totaled $10,000 and sales taxes of $825 was collected. The cost of the merchandise sold was $5,700 (Guitar $4,500; violins $1,200). The money was deposited in the bank. Paid the balance due to Gary's Guitars. There are two invoices; one on 1/8/18 and the other on 1/16/18. Sales of $5,000 was deposited from online customers and $413 of sales tax was collected. The cost of the merchandise was $500 for guitars and $2,000 for violins. Received but did not pay the phone bill for the month, $165. Paid the first monthly installment on the computer equipment. The payment amount is $530. Of this amount, $30 is for interest and $500 is for principal. Make the check payable to Office Mart. Recorded internet sales for the last week of the month. Sales of $4,500 were deposited. The cost of the merchandise sold was $2,250 (guitars $250; violins $2,000). Sales tax collected is $371. Paid all sales tax owed for January to the Comptroller of Public Accounts. Declared and paid a cash dividend of $200 to Ivan Smith. Once all the journal entries are recorded in the practice set, record the nine adjusting journal entries with the date being January 18, 2017. The following are the adjusting journal entries for the month of January. Part 2: Record Adjusting Entries: Record the following month end adjusting entries for the month of January. Write the journal entries in the practice set after the original journal entries and round to the nearest cent. a. $50 of supplies remained on hand. b. $90 of shipping supplies remained on hand. c. $1,000 of wages for the part-time help from Irene's Temp Services for January should be accrued. Do not worry about payroll taxes; Temp Services Inc. will handle these. 6 Page
Ivan's Instrument Center 123 Main Avenue El Paso, Texas 79945 WELLS FARGO BANK STATEMENT Ivan's Instrument Center Balance, beginning Deposits and other credits Checks and other debits Balance on statement date 1005 1006 1/2/2018 1/5/2018 Wells Fargo Bank Page 1 PO Box 12345 El Paso, Texas 79902 Deposits Added Deposit 1 Deposit 2 01/01/2018 January January 01/31/2018 $3,600 1008 $18,000 1012 1/20/2018 Deposit 3 $7,450 1/23/2018 Deposit 4 $8,303 1/28/2018 Deposit 5 $10,825 Wells Fargo Bank Statement - Checks Paid and other Debits 1001 $3,400 1007 $500 1002 $200 1003 $530 1004 $800 $700 DM $900 $30,000 $8,000 $30 Check Printing Fee $0 $64,578 $28,660 $35,918 10 | Page
Part Four Instructions In this part of the practice set, the student will prepare a Bank Reconciliation for the month of January. Start by using the ending balance in your cash account for the cash for your books and the ending balance on the bank statement for the bank balance. Requirements 1. Correct Errors: Correct any errors that you made on the journal entries. Both the debits and the credits must equal each other. 2. Bank Reconciliation: Using the cash balance per books and the bank statement, prepare a bank reconciliation. An example of the Bank reconciliation is located at the back of this practice set. 3. Record Bank Reconciliation Adjustments: After you have prepared the bank reconciliation you must make any adjusting journal entries to your cash account by entering them in the general journal of the practice set so that the general ledger cash account agrees with the bank reconciliation. 4. Assume that any errors are made by the bank. 5. After preparing the bank reconciliation answer the questions in Blackboard and then staple the bank reconciliation to the back cover. 8 | Page
QUESTION 1 What is the balance that you started with on the bank side for the reconciliation? Include cents always (Ex. $1,000.00)! $35,918.00 QUESTION 2 What is the TOTAL dollar amount of deposits in transit? Include cents always (Ex. $1,000.00) QUESTION 3 What is the TOTAL dollar amount of all of the outstanding checks/withdrawals? Include cents always (Ex. $1,000.00) QUESTION 4 What is the dollar amount of bank orror? 2 points ✓ Saved 2 points 2 points 2 points Save Answer Save Answer Save Answer
QUESTION 4 What is the dollar amount of bank error? Include cents always (Ex. $1,000.00) QUESTION 5 Did you add or subtract the bank error? Write "Add" or "Subtract" for your answer. QUESTION 6 What is the dollar amount of reconciled balance per bank? Include cents always (Ex. $1,000.00) QUESTION 7 What is the dollar amount that you started with on the book side? Include cents always (Ex. $1,000.00) 2 points 2 points 2 points 2 points Save Answer Save Answer Save Answer Save Answer
QUESTION 8 What is the TOTAL dollar amount for book charges? Include cents always (Ex. $1,000.00) QUESTION 9 What is the dollar amount of reconciled balance per books? Include cents always (Ex. $1,000.00) QUESTION 10 Journalize the entry for the Bank Service Fee with the Dr. Acct. Number $Amount Cr Acct. Number $Amount EXACTLY as is example below with. Ex.) Dr 50000 $10,000.00 Cr 12000 $8,000.00 If two Journal entries are required put them one right after the other. If no journal entries are required, write "No JE". DO NOT spell out "credit" or "debit", DO NOT use periods after "Dr/Cr", and ALWAYS include cents in the dollar amounts. 2 points 2 points 2 points Save Answer Save Answer Save Answer