Assume you recently started up a new company called Slusher Gusher that rents machines for making frozen drinks like smoothies, frozen juices, tea slush, and iced cappuccinos. For $100, your business will deliver a machine, provide supplies (straws, paper cups), set up the machine, and pick up the machine the next morning. Drink mix and other supplies are sold by other businesses in your city. Being a one-person operation, you are responsible for everything from purchasing to marketing to operations to accounting. You've decided that you'll just write notes about what happens during the month and then do the accounting at the end of the month. You figure this will be more efficient. Plus, by waiting until the end of the month to do the accounting, you'll be less likely to make a mistake because by that time you'll better understand the accounting cycle. Your notes said the following about your first month of operations:

Oct. 2 ..... Incorporated Slusher Gusher (Slusher Gusher Inc.) and contributed $10,000 for shares in the company.

Oct. 12 ..... Paid cash to buy three frozen drink machines on eBay at a total cost of $1,500. What a deal!

Oct. 13 ..... Paid cash to buy $70 of supplies. Walmart was packed.

Oct. 16 ..... Received $500 cash for this past week's rentals. I'm rich!

Oct. 17 ..... Determined that $45 of supplies had been used up. Hmm, looks like I'll need some more.

Oct. 20 ..... Bought $100 of supplies on account. I can't believe the party store gave me credit like that.

Oct. 23 ..... Feeling tired after a busy week (six rentals this time). Received $400 cash and expect to receive $200 more sometime this week.

Oct. 25 ..... Received $100 cash from one of the customers who hadn't paid up yet. Called the other customer to remind him I'm waiting.

Oct. 26 ..... Ran an advertisement in the local paper today. Paid $25 cash.

Oct. 27 ..... Received $150 cash for a two-machine All Saints' Day party to be held on November 1. It's a good thing I got this money because no other bookings are in sight for the rest of the month.

Required:

Create a spreadsheet in which to record the effects of the October transactions and calculate end-of-month totals. Using the spreadsheet, prepare a trial balance that checks whether debits = credits. Because you want to be sure that you do this right, you e-mail your friend Owen for advice. Here's his reply:

From: Owentheaccountant@yahoo.com

To: Helpme@hotmail.com

Cc:

Subject: Excel-Help

Wow, you're a CEO already? I always thought you were a mover and a shaker! So you want my advice on how to set up your spreadsheet? My advice is read the last e-mail I sent. The main thing that's new here is you'll need to include some columns for revenue and expenses under the shareholders' equity heading. Here's a screenshot of how your worksheet might look just before you enter the October transactions. Notice that because shareholders' equity is decreased by expenses, the debit side is used to record expenses.

To prepare the trial balance, create three columns. In the first, enter the account names (one per row). In the second column, link in each debit balance by entering = in a cell and then clicking on the debit total from the T-account. Repeat this with all the accounts. Then do the same with the credit balances. At the bottom of the trial balance, use the SUM function to compute total debits and credits. Don't forget to save the file using a name that uniquely identifies you (as my true hero).

Transcribed Image Text:

S3-7 - Microsoft Excel Page Layout Home Insert Formulas Data Review View X N Z AA A AC AD A AF Sharebolders' Equity CDIFGIIJIL M I0 P 1 Slusher Guther Liabilities Assets Accounts Flecelvable Accounts Sepplies Equipmest Unearsed Supplies Advertising Flental Revenee Contributed De-o Do C De-oven DreC DC- DC DC- DrenO Do-C Dr-C- Cash Payable Espense levee Capital Espense Oeter Transaetiens Oet 2 8 Ost. 16 9 Oct. 17 10 Oet 20 11 Det 12 Oet. 25 13 Oe 26 14 Oct. 27 16 Oetober 3 Balance 17 H4HOctober Transactions Ready