ACCOUNTING SOCIETY Part One Requirements Record the July 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 the transaction. After you complete the journal entries and have recorded them in the practice set, enter your answers into Blackboard using the following format. Write Dr (for Debit), the account number comes next followed by the dollar amount using the sign and entering cents into each number even if it is zero. For the credit follow the same format as for the debit For the credit follow the same format as above. Make sure that you write the account number and DO NOT use commas or periods, next enter the dollar amount using dollar signs, commas, periods and cents in ALL answers. Dr 10000 $4,000.00 Cr 33000 $4,000.00 Next, you will record the adjusting journal entries for part 2. Thirdly, you will create all the T-Accounts in the Chart of Accounts in an Excel spreadsheet. You will need to turn in the spreadsheet for the T. Accounts along with the practice set with all the journal entries, adjusting entries, written in the practice set. This spreadsheet should be stapled to the back cover of the practice set when it is time to turn it in. Transactions Date Description 1. 7/02 Deposit No. / Check No. Fran Franco met with her lawyer and CPA for advice on starting the business. They decided that Fran would organize the business as a corporation. The lawyer told Fran to register the company name Fran's Fruit Baskets with the County of El Paso. In addition, Fran 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 Fran set up her accounting system. Deposit #1 Ms. Franco opened a business checking account at Wells Fargo Bank by depositing $45,000. The corporation issued her a stock certificate for 4,500 shares of common stock with a $10 par value. Ck #1001 Ms. Franco signed a one-year rental agreement with Reynolds Realtors for warehouse space. She was required to pay $9,000 for rent for the months of July 1 - December 31. 7/02 3. 7/03 4 Page ACCOUNTING 16. 7/14 17. 7/16 18. 7/22 Ck #1008 19. 7/23 OCTETY Sold Fruit Baskets to UTEP for $4,000. The cost of the fruit is $2,500; the cost of the baskets are $250. UTEP does not have to pay sales tax on this purchase and they paid on account. Purchased additional inventory-fruit on account for $5,500. Received and paid the $850 invoice for supplies (cleaning supplies, towels, plastic wrap purchased on 7/14). Ms. Franco donated a fruit basket for a fund raiser for the Child Crisis Center. She felt that this was a good way to advertise her new business. Her business was listed as a sponsor and a large ad was put in the fund raiser program. Cost of the fruit was $600 and the baskets were $25. Ms. Franco considers this an advertising expense. Received payment in full from UTEP. The payment was deposited in the bank. 20. 7/23 Deposit #4 21. 7/23 Ck #1009 22. 7/23 23. 7/23 Deposit #5 24. 7/23 Ck #1011 25. 7/25 Deposit #6 Ms. Franco paid her credit card bill for the month. The total was $675. This was for gas and other miscellaneous items purchased for the delivery of the fruit baskets. Paid for the baskets purchased from Ben's Basket Store on 7/08. Online and retail sales totaled $9,500 plus sales taxes of $760. The cost of the merchandise sold was $3,850 (fruit $3,500; baskets $350). The money was deposited in the bank. Paid the balance due to Izzy's Fruit Warehouse for the fruit. There are two invoices on 7/8/16 and 7/16/16. Collected and deposited $3,240 of payments on account from retail credit customers of which $240 was sales tax. COGS was $3,000 of which $2,700 was for fruit and $300 was for baskets. $2000 Received but did not pay the electric bill for the month, $250. Paid the first monthly installment on the computer equipment. The payment amount is $472.50. Of this amount, $22.50 is for interest and $450 is for principal. Make the check payable to Office Mart. Recorded online sales made for the last week of the month. Total sales were $4,500. The cost of the merchandise sold was $3,095 (fruit $2,815; baskets $280). Sales tax was $360. Paid all sales tax owed for July to the Comptroller of Public Accounts. Declared and paid a cash dividend of $50 to Fran Franco. 26. 7/28 27. 7/31 Ck #1012 28. 7/31 Deposit #7 29. 7/31 Ck #1013 30. 7/31 ck #1014 JULIETY Part Two Requirements Record Adjusting Entries: Record the following month end adjusting entries for the month of July. Write the adjusting journal entries in the practice set after the journal entries. a. $15 of supplies remained on hand. b. $1,500 of wages for the part-time help from El Paso Temp Services for July should be accrued. Do not worry about payroll taxes; Temp Services Inc. will handle these. c. Make the necessary adjusting entries for one month's depreciation (the van, the refrigerator and the computer equipment using Straight Line Depreciation). Make it one journal entry by debiting Depreciation Expense and crediting all the other Accumulated Depreciation accounts. d. One month of the prepaid insurance has expired. e. Accrue one month of interest expense on the note for the Wells Fargo Bank note. f. One month of the prepaid rent has expired. g. $25 of prepaid advertising remains on hand h. The payment and interest on the computer was done in transaction #127. Part Three Requirements Make a spreadsheet in Excel for each T-account in the Chart of Accounts. As you write each journal and adjusting journal entry make sure that you enter it into the T-Account. After all entries have been made calculate the ending balance in each account. Once all balances are prepared then enter the balances of each account into Blackboard by first entering Dr or Cr then the dollar amount. See the following example. You do NOT need to write the transaction or account number. Dr $1,000.00 or Cr $1,000.00 if no balance write Dr $0.00 or Cr $0.00 Part Four Requirements 1. Correct Errors: Correct any errors that you made on the journal entries and T-Accounts in Part I, II and III. Both the debits and the credits should equal each other. 2. Bank Reconciliation: Using the cash balance per books (see the amount on Part Ill of the T- Accounts for the cash account) and the bank statement ending balance, prepare a bank reconciliation. This should be prepared using Excel and must contain the proper heading as well as the reconciliation information. Note: Assume that any errors are made by the bank. 3. Record Bank Reconciliation Adjustments: After you have prepared the bank reconciliation you must make any adjustments to your cash account by recording the journal entry on the Excel spreadsheet with the bank reconciliation and then entering it in the general journal of the practice set so that the general ledger cash account agrees with the bank reconciliation. 7| Page SOCIETY Bank Statement Wells Fargo Bank Page 1 PO Box 12345 El Paso, Texas 79998-2345 Fran's Fruit Basket 123 Main Avenue El Paso, Texas 79945 WELLS FARGO BANK STATEMENT Fran's Fruit Basket Balance, beginning Deposits and other credits Checks and other debits Balance on statement date 07/01 July July 07/31 SO $85,900.00 77,260 $55,252.50 $30,647.5022007.50 Deposits Added 7/2 Deposit 1 $45,000 7/5 Deposit 2 $18,000 7/20 Deposit 3 $ 8,640 7/23 Deposit 4 $ 4,000 7/28 Deposit 5 $10,260 Wells Fargo Bank Statement-Checks Paid and other Debts 1001 $ 9,000.00 1007 $2,000.00 1002 $ 3,600.00 1008 $ 650.00 1003 $13,000.00 1012 $ 472.50 1004 $25,000.00 1005 $ 1,200.00 DM $ 30.00 Check Printing Fee 1006 $ 300.00 sume that any errors were made by the bank. 9 | Page ACCOUNTING SOCIETY Debit Credit Date Account No. Account Name 21 Page