CCOUNTING OCTETY 5. 9/03/19 Purchased a new computer system that cost 54,500 from Office Mart for use in the business. Ms. Morales signed a 6 month note 12 % installment note payable for the cost of the system. The computer system has an estimated useful life of 5 years and the residual (salvage) value is $300. This will be recorded as Computer Equipment, and depreciated using the Straight-Line Depreciation method accordingly, Only record the transaction at this time. Depreciation will be recorded as an adjusting entry. Signed a note payable to borrow $10,000 from Wells Fargo Bank 6 9/05/19 Deposit #2 Interest is 12 % annually and the note is to be repaid with interest in twelve months. Interest will be an adjusting journal entry at the end of the month. Paid $12,000 for furniture and fxtures. The estimated service life of these assets is 7 years. The residual (savage) value is $200. These items will be recorded as Furniture and Fixtures and depreciated accordingly. Depreciation will be an adjusting entry at the end of the month. 9/05/19 7 Ck #1003 Arranged for Sun City Motors to make the delivery and installation of the computer system and paid the invoice of $600. This charge should be added to the cost of the computer equipment purchased and depreciated on the same basis as the computer equipment 9/06/19 8. Ck #1004 Paid $700 for business cards, flyers, and posters. This will bes recorded as prepaid advertising Purchased $10,000 of inventory-BN boots from Betty's Boots on account. The vendor extended credit terms of 2/15, n/30. Purchased $11,000 of inventory-BLK boots from Sassy Shoes on account. The vendor extended credit terms are 2/15 n/30. Ms. Morales received and paid the $900 charge from her lawyer. Ck #1005 9 9/06/19 10. 9/08/19 11. 9/08/19 12. 9/13/19 13. 9/14/19 Ck #1006 AHH Boots 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. Ms. Morales will allow major customers to charge their purchases on account Purchased $500 of office supplies on account Purchased shipping supplies of $500 for cash. Sold boots to Carly's Crazy Shoes for $8,600 and the sales tax collected is $710. The cost of the brown boots are $2,250 and the cost of the black boots are $2,400. They bought it on account and 14. 9/14/19 15. 9/14/19 16. 9/14/19 Ck #1007 we will bill them. 5IPage ACCOUNTING Y 17. 9/16/19 Purchased additional brown boots on account for $3,500 from Betty's Boots. Credit terms are 2/15, n/30. 18. 9/20/19 Deposit #3 Recorded internet sales for the first five days of operation. Sales totaled $10,000. The sales tax collected totaled $825. The $10,825 was deposited in the bank. The cost of merchandise sold was $3,900 (brown boots cost $3,500; black boots cost $400). Received and paid the $500 invoice for supplies purchased on 9/14/19. Ms. Morales donated two pairs of boots to ChildFund a national children's charity for a fundraiser. 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 brown boots were $250 and the black boots were $200. Ms. Morales considers this an advertising expense. Received payment in full from Carly's Crazy Shoes. The payment was deposited in the bank. 19. 9/22/19 Ck #1008 20. 9/23/19 21. 9/23/19 Deposit #4 22. 9/23/19 Ck #1009 Ms. Morales paid her credit card bill for the month. The total was $520 which was for incidentals for the office. Paid for the boots purchased from Sassy Shoes on 9/08/19. 23. 9/23/19 24. 9/23/19 Ck #1010 Deposit #5 Internet and retail sales totaled $12,000 and sales taxes of $990 was collected. The cost of the merchandise sold was $5,700 (Brown boots $4,500; black boots $1,200). The money was deposited in the bank. 25. 9/23/19 Ck #1011 Paid the balance due to Betty's Boots. There are two invoices; one on 9/8/19 and the other on 9/16/19. Sales of $5,000 was deposited from online customers and $413 of 26. 9/25/19 Deposit #6 sales tax was collected. The cost of the merchandise was $500 for brown boots and $2,000 for black boots. Received but did not pay the electric bill for the month, $265. Paid the first monthly installment on the computer equipment. The payment amount is $420. Of this amount, $45 is for interest and $375 is for principal. Make the check payable to Offfice Mart. 27. 9/28/19 28. 9/30/19 Ck #1012 Recorded internet sales for the last week of the month. Sales of 29. 9/30/19 Deposit #7 $4,500 were deposited. The cost of the merchandise sold was $2,250 (Brown boots $250; Black boots $2,000). Sales tax collected is $371. Paid all sales tax owed for September to the Comptroller of Public 30. 9/30/19 Ck #1013 Accounts. 61Page ACCOUNTING Y 31. 9/30/19 Ck #1014 Declared and paid a cash dividend of $250 to April Morales. Once all journal entries are recorded in the practice set, record the nine adjusting journal entries below in the practice set and use September 30, 2019 as the dates for the transactions. The following are the adjusting journal entries for the month of September. Record Adjusting Entries: Record the following month end adjusting entries for the month of September. Write the journal entries in the practice set after the original journal entries. Here round all answers to the nearest cent. $200 of supplies remained on hand. $50 of shipping supplies remained on hand. $1,200 of wages for the part-time help from Irene's Temp Services for September a. b. c. should be accrued. Do not worry about payroll taxes; Temp Services Inc. will handle these. d. Make the necessary adjusting entries for one month's depreciation for the furniture and fixtures using Straight Line Depreciation. e. Make the necessary adjusting entry for one month's depreciation for the computer equipment using Straight Line Depreciation. f. One month of the prepaid insurance has expired. R One month of the prepaid rent has expired. h. $300 of prepaid advertising remains on hand Record the interest for the loan i. The interest on the computer has been recorded in journal entry #28 j. Make sure you prepare the journal entries and the adjusting entries, and write them in the practice set. All T-accounts with the proper balances should be prepared. There is a template of how to set up the T- Accounts in Excel at the end of the practice set. Make sure to include all accounts even if they have a zero balance and make sure that the zero is on the normal side of the account. Once all the balances are in the T-Accounts and answers have been inputted into Blackboard please staple your T-Account page to the back cover of the practice set. Blackboard Instructions: When entering the journal entries into Blackboard please follow the examples below exactly Enter each transaction on one line. First the debit and then the credit. Do NOT enter any account names only account numbers, Use Dr for Debit and Cr for Credit with no period. Also please put the cents even if it is zero. See example below: 71 Page UKS CCOUNTING SOCTETY Chart of Accounts Current Assets Stockholders' Equity 10000 Cash 39003 Common Stock Accounts Receivable 11000 Retained Earnings 39005 Dividends Inventory-BN Boots " 12000 39007 Inventory-BLK Boots" 12100 Office Supplies Shipping Supplies Prepaid Rent 13100 13200 Revenue 14000 Sales 40000 Prepaid Insurance 14100 14200 Prepaid Advertising Expenses 50000 BN Brown BLK Black Cost of Goods Sold Legal Expense Office Supplies Expense Shipping Supplies Expense 60100 60150 Long-Term Assets 15000 60200 Computer Equipment Accumulated Depreciation Insurance Expenses 60300 Wages Expense Credit Card Expense Advertising and Promotion Expense Utility Expense Rent Expense Depreciation Expense-Computer Equipment Depreciation Expense-Furniture & 60350 17000 60400 -Computer Equipment 60500 Furniture & Fixtures 15100 Accumulated Depreciation-Furniture & 17100 60550 60600 Fixtures 60650 60675 Current Liabilities Fixtures Accounts Payable 20000 Interest Expense Bank Service Fee 60700 Note Payable-Wells Fargo 21100 60750 Bank Note Payable-Office Mart 21200 Wages Payable 23100 Interest Payable 23200 blo2 o Sales Tax Payable 23300 Utilities Payable 23400 Long-Term Liabilities Mortgage Payable Notes Payable 27000 27100 3 | Page CCOUNTING Soatery OCIETY Bank Statement Wells Fargo Bank Page 1 PO Box 12345 El Paso, Texas 12345-2345 ots 123 Main Avenue El Paso, Texas 79945 WELLS FARGO BANK STATEMENT AHH Boots Balance, beginning Deposits and other credits Checks and other debits 09/01/2019 September $83,125 $30,780 $52,345 September 09/30/2019 Balance on statement date Deposits Added Deposit 1 $40,000 Deposit 2 $10,000 9/20/2019 Deposit 3 $10,825 9/23/2019 Deposit 4 9/28/2019 Deposit 5 $12,990 9/2/2019 9/5/2019 $9,310 Wells Fargo Bank Statement- Checks Paid and other Debits $500 $500 $250 $8,100 1007 $7,200 1008 $12,000 1009 $600 $700 DM 1001 1002 1003 1004 $30 Check Printing Fee 1005 $900 1006 Any errors should be assumed to be made by the bank. 10| Page