First Month of Operations

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First Month of Operations

The following transactions took place during the first month of operations of Mother Molly's Childcare.

On May $1,$ Molly invests $$50,000$ to open Mother Molly's Childcare.

On May $2,$ the company spends $$11,000$ on furniture for use in the childcare facility.

On May $2,$ the company purchases $$1,450$ of supplies from a local office supply store on account.

On May $8,$ the company establishes a petty cash fund containing $$400.$

On May $12,$ the company purchases $$350$ of children's snacks on account. Mother Molly's Childcare treats this as a Miscellaneous Expense.

On May $13,$ the company purchases advertising in a local newspaper for $$505$ cash.

On May $15,$ the company determines that revenue for the first half of the month totaled $$7,350.$ Of this amount, $$4,000$ was paid in cash, while the remainder is owed.

On May $15,$ the company pays its employees. Gross wages for the first half of the month totaled $$3,000.$ Federal income tax withholding totaled $$337,$ state income tax withholding totaled $$130,$ and life insurance premiums withheld totaled $$65.$ In addition, applicable SUTA and FUTA tax rates for employees of Mother Molly's Childcare are $5\mathrm{.}4\%$ and $0\mathrm{.}6\%$ respectively. No single employee has, to date, reached the Social Security tax, FUTA tax, or SUTA tax threshold.

On May $17,$ the company pays $$800$ of the previously owed amount from the May $2$ purchase of supplies.

On May $19,$ the company receives $$1,200$ of the previously$-$owed amount from the revenue recorded on May $15.$

On May $22,$ the company receives $$2,000$ cash from a customer paying for the next two months of childcare services in advance.

On May $23,$ the life insurance premiums withheld on May $15$ are remitted to the insurance company.

On May $24,$ the company replenishes its petty cash fund, from which $$305$ has been spent. The $$305$ total was comprised of $$157$ of supplies, $$83$ of postage, and $$65$ of miscellaneous expense.

On May $25,$ the company receives $$1,325$ of the previously$-$owed amount from the revenue recorded on May $15.$

On May $29,$ the company pays $$1,620$ cash for monthly rent.

On May $30,$ the company pays cash of $$220$ for its telephone bill.

On May $30,$ the company pays cash of $$315$ for its utility $($electric$)$ bill.

On May $30,$ the company pays its employees. Gross wages for the first half of the month totaled $$3,500.$ Federal income tax withholding totaled $$389,$ state income tax withholding totaled $$156,$ and life insurance premiums withheld totaled $$70.$ In addition, applicable SUTA and FUTA tax rates for employees of Mother Molly's Childcare are $5\mathrm{.}4\%$ and $0\mathrm{.}6\%$ respectively. No single employee has, to date, reached the Social Security tax, FUTA tax, or SUTA tax threshold.

On May $31,$ the company determines that revenue for the second half of the month totaled $$9,200.$ Of this amount, $$7,600$ was paid in cash, while the remainder is owed.

On May $31,$ Molly Fabrizio withdraws $$4,000$ cash for personal use.

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Accounting Basics

Chapter $8$: Comprehensive Exercise

To complete the comprehensive problem for the first month of operations, perform the following:

Record journal entries for each of the transactions of Mother Molly's Childcare during its first month of operations.

Post all journal entries to T$-$Accounts for each account used by Mother Molly's Childcare.

Prepare the Unadjusted Trial Balance.

Record adjusting journal entries based on the following information:

a$.$ A physical count of supplies on May $31$ indicates that supplies worth $$625$ remain in the supply cabinet.

b$.$ $$750$ of the unearned revenue received on May $22$ has been earned as of May $31.$

c$.$ As of May $31,$ the company has provided $$850$ of services for which it has not yet billed the client, and which were not previously recorded.

d$.$ As of May $31,$ employees of Mother Molly's Childcare have worked for one day, and ear