Question
8/1 YOU filed a charter with the State of Louisiana to form the YOUR Accounting Corporation. The charter authorizes you to issue 5000 shares of
8/1 YOU filed a charter with the State of Louisiana to form the YOUR Accounting Corporation. The charter authorizes you to issue 5000 shares of $2 par common stock. The state charged you a $75 fee to file the charter. Since your business is not yet approved, you had to pay this fee using personal funds.
9/1 You received your charter from the State of Louisiana and officially opened your business. Your first order of business was to become a shareholder of YOUR Accounting Corp. To do this, you purchased 500 shares of common stock by issuing a check to YOUR Accounting Corp for $10,000. You used this money to open a checking account at First Funds Bank.
9/1 You rented an office for YOUR Accounting Corp. The monthly rent is $500, with the first months rent due immediately. You issue check #100 to Office Builders for the first months rent.
9/2 You then went to the Apple store and purchased a new computer system for your business. Your Mac Pro cost $2700 and your new printer cost $450. You set up a 30-day account with Apple to make this purchase.
9/3 You ordered business cards and stationary from Marketing Media on account. The order totaled $250 and will be shipped FOB Destination. (Record all purchases of supplies in the Supplies on Hand account).
9/4 You decided to purchase a new vehicle for your business. Upon visiting Pro-Auto, you decide on a new SUV at a cost of $55,000. This vehicle will be used 100% for business purposes. You finance the vehicle with Pig E Bank at a rate of 5% for 6 years. Your first monthly payment is due on October 4.
NOTE: You will need to create a loan amortization schedule to determine the amount of the monthly note and the interest expense for each month. You can use a website such as www.bankrate.com to create the schedule. When recording your journal entries, round all amounts to the nearest dollar.
9/5 You went to the KEM Supply to purchase supplies for your business at a cost of $600. KEM opened a customer charge account for you. The payment terms on your account will be 2/10, net 30. The time period for determining the payment amount begins on the purchase date.
9/6 You purchased a one-year auto insurance policy from InsureMart for $1200. InsureMart will send you a bill for the policy. YOUR Accounting Corporation capitalizes all insurance policies on the date of purchase and records the necessary expense at year-end as an adjusting entry.
9/10 Your first client, Red Fische, came in today needing assistance with filing the appropriate paperwork to start his new seafood restaurant. You issued invoice #1 to Red Fische and he paid you an initial $2,000 Engagement Fee. Red Fische also agreed to contract with you to provide accounting services for $2,500 per month.
9/12 You issue check #101 to YOUR Accounting Corp to establish a $500 Petty Cash Fund. You will use this account to make small cash purchases.
9/12 You reimburse yourself for the filing fees associated with forming your corporation.
9/14 You paid KEM Supply by issuing check #102
9/15 You hire an administrative assistant, Mandi Handi, she will be paid a monthly salary of $1500. You have decided that all pay periods will end on the last day of the month and that checks will be issued on the 5th of each month.
NOTE: Assume the following rates when preparing the payroll: federal income tax 15%, state income tax 5%, and FICA 7.65%.
YOUR Accounting Corp. has state and federal unemployment insurance rates of 1% (FUTA) and 2% (SUTA) on the first $7,700 of wages per employee. The employer FICA rate is 7.65%.
9/16 Marketing Media delivered your business cards and stationary. Check #103 was issued to pay for the supplies.
9/20 You visited a new client, Anita Cooke, to set up a Quickbooks accounting system for her new business, Cooking For You. You gave Anita and invoice #2 for the Engagement Fee and she paid you by issuing a check in the amount of $2,000. Anita also agreed to a monthly fee of $1,500 for you to handle her ongoing accounting needs.
9/22 You purchased $50 of fuel for your new SUV from Get n Go. You charged this to your Get n Go account.
9/30 Mandi sent pro-rated invoices, #3 & #4 , to Red Fische and Cooking For You for Monthly Accounting Services. The payment terms are 1/10, net 30.
9/30 You accrued interest on the Pig E. Bank note. Accrue interest based on the number of days in the month.
9/30 You computed and accrued the payroll for September.
9/30 You received monthly bills for the following:
Max Power Company - $100, terms n/30
WaterWorks #1 - $20, terms n/30.
CHART OF ACCOUNTS
Cash | 105 |
Petty Cash | 107 |
Accounts Receivable | 110 |
Supplies on Hand | 130 |
Prepaid Insurance | 140 |
Computer Equipment | 220 |
Accumulated Depreciation Computer Equipment | 221 |
Cell Phone | 230 |
Accumulated Depreciation Cell Phone | 231 |
Vehicles | 240 |
Accumulated Depreciation - Vehicles | 241 |
|
|
Accounts Payable | 310 |
Customer Deposits (Unearned Revenue) | 320 |
SUTA Payable | 330 |
FICA Payable | 332 |
FUTA Payable | 334 |
Federal Income Tax Payable | 336 |
State Income Tax Payable | 338 |
Current Maturities of Long-Term Debt | 375 |
Notes Payable (long-term) | 410 |
Interest Payable | 420 |
Salaries Payable | 425 |
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|
Common Stock ($2 par value) | 520 |
Additional Paid-in Capital on Common Stock | 521 |
Retained Earnings | 550 |
Dividends | 560 |
|
|
Engagement fees | 605 |
Monthly Accounting Services Revenue | 610 |
Hourly Accounting Services Revenue | 620 |
Tax Services Revenues | 612 |
Sales Discounts | 614 |
|
|
Advertising & Promotion Expense | 725 |
Depreciation Expense | 727 |
Rent Expense | 730 |
Insurance Expense | 735 |
Supplies Expense | 740 |
Meals & Entertainment | 745 |
Taxes and Licenses | 767 |
Telephone Expense | 770 |
Utilities Expense | 775 |
Fuel Expense | 780 |
Interest Expense | 820 |
Payroll Tax Expense | 825 |
Salaries Expense | 830 |
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|
Income Summay | 900 |
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ASSIGNMENT
In proper General Journal format, record the transactions for the month; include descriptions of each transaction with your journal entry. Use only the accounts shown in the chart of accounts.
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