Accounting Information System a. Brief overview As part of his going green initiative in previous years, Mr. Marks moved away from a manual accounting system to electronic records. The books of the business are currently maintained in Microsoft Excel, and the following accounting records are included: General Journal General Ledger Accounts Receivable Subsidiary Ledger Accounts Payable Subsidiary Ledger Trial Balance Adjusted Trial Balance Multi-Step Income Statement Owners Equity Statement Classified Balance Sheet

Mr. Marks has provided you with the November 30, 20xx Trial Balance and the prior year financial statements. These items are included in the electronic workbook. The books of the Company are closed once a year on December 31.

Note: DO NOT under any circumstances make any changes to information provided within the Financial - Prior Year and the Trial Balance - 11 30 xx tabs in the Principles of Accounting Simulation - Student's Answer - Excel File workbook.

b. Policies and Procedures for Significant Business Activities Offroads accounting policies and procedures are detailed below and should be followed when recording transactions.

General Transactions are recorded on a daily basis. Posting to the general ledger is performed on a daily basis. Merchandise Inventory Offroad uses the perpetual inventory method. Cost of goods sold is estimated at 65% of sales or services provided.

Sales and Services Sales of merchandise are made, and routine services are performed, for cash and on credit. The Company offers terms of 2/10, n/30 for all credit sales and service transactions.

Purchases Offroad does not have contracts with its suppliers, thus the terms of merchandise purchases are determined by the various suppliers at the time of the purchase.

Depreciation The Company depreciates all applicable fixed assets using the Straight-Line Depreciation Method. As of December 31, 20xx, the Companys management has estimated the useful lives and the salvage values of fixed assets to be as follows:

Asset Useful Life Salvage Value Building 50 years $10,000 Office Equipment 6 years 5,500 Office Furniture 10 years 4,500 Trucks 8 years 6,000

c. Chart of Accounts Below are all the general ledger accounts used by Offroad. In order to accurately enter the accounting transactions for the Company, you will need to familiarize yourself with the accounts shown below.

Assets Liabilities Cash Notes Payable Accounts Receivable Accounts Payable Allowance For Doubtful Accounts Unearned Revenue Merchandise Inventory Mortgage Payable - Current Portion Merchandise Inventory - Accessories & Parts Federal Income Tax Withholding Payable Office Supplies FICA Taxes Payable Prepaid Insurance State Unemployment Tax Payable Prepaid Advertisement Federal Unemployment Tax Payable Land Interest Payable Building Salaries Payable Accumulated Depreciation - Building Utilities Payable Office Equipment Mortgage Payable - Long-Term Portion Accumulated Depreciation - Office Equipment Office Furniture Accumulated Depreciation - Office Furniture Owner's Equity Trucks A. Marks, Capital Accumulated Depreciation - Truck A. Marks, Drawing Revenue Expenses Sales Revenue Cost of Goods Sold Service Revenue Office Salaries Expense Sales Returns & Allowances Store Salaries Expense Sales Discounts Payroll Tax Expense Interest Expense Office Supplies Expense Repair & Maintenance Expense Insurance Expense Delivery Expense Utilities Expense Advertisement Expense Bad Debt Expense Depreciation Expense - Trucks Depreciation Expense - Building Depreciation Expense - Office Equipment Depreciation Expense - Office Furniture

Notes relating to expense classification: The building is divided into a store and an office. Utilities Expense, Insurance Expense, and Depreciation - Building Expense relates to both the store and the office and should be allocated as follows:

i. 40% is attributable to the operation of the store. ii. 60% is attributable to the operation of the office.

Transactions for December 20xx

December 01

Borrowed $50,000.00 from North Bank by signing a 6%, 12 month note. Interest payments are due on January 01 and July 01 throughout the life of the note.

December 01

Issued Check No. 5855 for $3,840.00 to Rainey Dae Insurance Company for a one-year insurance policy on the building, effective January 01 next year.

December 01

Issued Check No. 5857 for $1,600.00 to Sterling Supply Company in exchange for office supplies.

December 01

Distributed the net salaries amount for the bi-weekly period ending 11/30/xx, which was accrued in

November, to employees via direct deposits.

Note: This entry should include a credit to the Cash account.

December 02

Issued Check No. 5858 for $4,500.00 to Xtreme Sports Magazine to run a two page advertisement for six months, effective January 01 next year.

December 02

Issued Check No. 5859 for $1,727.18 to Portland Lending Bank for monthly mortgage payment: Interest Payable for $ 643.85 and Mortgage Payable for $1,083.33.

December 03

Sold two XTRM - X23F ATVs to a cash customer for $6,500.00 each.

December 03

Billed customer A. Reece $565.24, for service work performed on his XTRM - X23F ATV. The costs of parts and accessories totaled $367.41 (Invoice No. SA20123).

December 04

Received a check for $6,370.00 from customer C. Diaz as payment on her account, less discount (Invoice No. SI18453).

December 04

Purchased ATV parts and accessories from supplier Dust Quest ATV Supply Company on account for $1,365.25 (Invoice No. SP11653). Freight costs amounted to $24.50, with terms FOB destination.

December 07

Issued Check No. 5860 for $1,765.26 to purchase office equipment from P.N. Sill

Equipment Company.

December 07

Issued Check No. 5861 for $27,300.00 to Winding Trail ATVs as payment on their account, less discount, on a November 27 purchase of merchandise inventory (Invoice No. IP5676). The terms of the purchase were 2/15, n/60.

December 08

Sold on account three XTRM - X23F ATVs to customer S. Paulson for $6,500.00 each, terms 2/15, n/60 (Invoice No. S12861). The goods were shipped FOB destination point via carrier US Shipping Company. The transportation costs will be paid later upon receipt of the invoice.

December 08

Exchanged an old truck and signed a $14,000.00 6%, 4 month note for a similar new truck. The old truck had an original cost of $32,000.00, accumulated depreciation of $11,000.00, and a fair value of $21,000.00.

December 09

Issued Check No. 5862 for $475.29 to We Fix It Truck Repair Services for repair and maintenance work performed on trucks.

December 09

Received a check for $6500.00, in exchange for the sale of one XTRM - X23F ATV.

December 10

Owner A. Marks withdrew $4,000.00 cash for personal use (Check No. 5864).

December 11

Purchased office furniture from Woodland Furniture, Inc., for $10,000.00 by signing a 6%, 5 month note.

December 11

Sold on account one XTRM - X23F ATV to customer S. Thompson for $6,500.00, terms 2/10, n/30 (Invoice No. S12862). Freight costs amounted to $104.20, with terms FOB shipping point.

December 11

Issued Check No. 5865 for $201.23 to Portland Utilities Co. to pay the November 20xx utilities bill.

December 11

Issued Check No. 5866 for $1,365.25 to Dust Quest ATV Supply Company for ATV parts and accessories purchased on December 04 (Invoice No. SP11653).

December 14

Granted customer S. Paulson credit for one XTRM - X23F ATV returned from the December 08 transaction (Invoice No. S2861).

December 14

The bi-weekly payroll for the period ending December 14 is as follows:

Salaries:

Store Salaries $2,000

Office Salaries 4,080

Total $6,080

Witholdings:

FICA Taxes $547

Federal Income Tax Withholding 1,155

Total $1,702

Net Salaries $4,378

The payroll distribution of the net salaries amount is made to employees via direct deposits.

Note: The entry for the payment made to employees should include a credit to the Cash account.

December 14

The following represents the employers payroll taxes:

Payroll Taxes

FICA Taxes $547

Federal Unemployment Tax 36

State Unemployment Tax 243

Total $826

Payment of Payroll Taxes will be made to the appropriate government authorities next month.

December 15

Issued Check No. 5867 to the appropriate government authorities to pay for the prior months FICA Taxes $1,094.00, Federal Income Tax Withholding $2,310.00, Federal Unemployment Tax $72.00, and State Unemployment Tax $486.00.

December 15

Received a check for $754.54 from customer L. Walker as payment on his account (Invoice No. SA20122).

December 16

Purchased merchandise from supplier Quest ATVs on account for $16,900.00, terms 2/15, n/60 (Invoice No.

IP12003).

December 16

Received a check for $13,000.00 from customer H. Lincoln as payment on her account (Invoice No. SI18452).

December 16

Issued Check No. 5868 for $12,223.12 to Dirty Trail ATVs as payment on their account, less discount, on a November 30 purchase of merchandise inventory (Invoice No. IP2576). The terms of the purchase were 1/20, n/45.

December 17

Issued Check No. 5869 for $181.23 to US Shipping Company for payment of shipping costs incurred on the December 08 sale to customer S. Paulson.

December 18

Returned and was granted credit for two XTRM - X23F ATVs purchased on December 16 from supplier Quest ATVs. The total costs of the merchandise returned amounted to $8,450.00.

December 21

Purchased ATV parts and accessories from supplier ATV Supply Company on account for $2,500.23 (Invoice No. SP11983).

December 21

Received a check from S. Paulson as payment for the balance due from his purchase on December 08, less discount (Invoice No. S2861).

December 21

Received a check from S. Thompson as payment for the net balance due from his purchase on December 11, (Invoice No. S2862).

December 22

Issued check No. 5870 for $279.42 to US Shipping Company for payment of shipping costs incurred on merchandise purchased.

December 23

Issued Check No. 5871 for $1,125.45 to ATV Supply Company as payment for ATV parts and accessories purchased on account on November 23 (Invoice No. SP32653).

December 23

Issued Check No. 5872 for $4,671.99 to purchase a photocopy machine from OfficeThings.com, an eBusiness.

December 28

Received a check for $873.25, for service work performed on a customers XTRM - X23F ATV. The costs of parts and accessories totaled $567.61 (Invoice No. SA20123).

December 28

Sold on account two XTRM - X23F ATVs to customer P. Simon for $6,500.00 each, terms 2/10, n/30 (Invoice No. S12863).

December 28

The bi-weekly payroll for the period ending December 28 is as follows:

Salaries:

Store Salaries $2,000

Office Salaries 4,080

Total $6,080

Witholdings:

FICA Taxes $547

Federal Income Tax Withholding 1,155

Total $1,702

Net Salaries $4,378

The payroll distribution of the net salaries amount is made to employees via direct deposits.

Note: The entry for the payment made to employees should include a credit to the Cash account.

December 28

The following represents the employers payroll taxes:

Payroll Taxes

FICA Taxes $547

Federal Unemployment Tax 36

State Unemployment Tax 243

Total $826

Payment of Payroll taxes will be made to the appropriate government authorities next month.

December 29

Issued Check No. 5873 for $650.00 to purchase additional office supplies from Sterling Supply Company.

December 30

Received a check from customer A. Reece for service work performed on his XTRM - X23F ATVs on December 03 (Invoice No. SA20123).

December 31

Received $19,500.00 from R. Morizio, a long standing customer, as an advance payment for two XTRM - X23F ATVs to be held for him until January 15 next year, when he returns from his European vacation.

December 31

The Company hired Ms. Johanna Lopez as a Sales Clerk. It was agreed that she will be paid $600 per week, and her starting date would be on Monday, January 04 next year.

Instructions With regards to the December 20xx activities for Offroad ATV Company, you are required to complete the following: a. Journalize the December 20xx transactions for the Company in the General Journal. (Note: Omit explanations for journal entries). WILL Give A Lifesaver, Thank You