HTM Corporation, Instructions for Manual Accounting Practice Set Due date for hand-in: September 27, 2019 You have been provided with: 1. The objective of this assignment. 2. A description of HTM Corp.'s business. 3. A May 31, 2019 trial balance of HTM Corp., including its code of accounts. These are the accounts that must be used in recording transactions and preparing adjusting entries. No additional accounts need to be added. You are not likely to need all the accounts that have been provided. This is also the worksheet you should use to organize your data. 4. Information about June 2019 sales transactions. 5. Information about invoices received from suppliers. All these transactions will affect Accounts Payable. 6. A listing of all the cash received by HTM Corp. during June 2019. 7. A listing of all cash payments made in June 2019, and the reason for each cash disbursement. 8. Additional information about the May 31, 2019 trial balance. 9. Instructions for completing the manual version of this practice set. 10. A Declaration Cover Sheet for the assignment. 1. The objective of this assignment: Students who understand the accounting model and the accounting process have better results in their accounting courses. By understanding these aspects, more and more of what is covered in class makes sense and students don't have to revert to trying to memorize how to account for transactions and adjusting entries. The goal of this assignment is to increase your understanding of how all the parts fit together and why adjustments are needed - all within a realistic context. 2. Description of HTM Corp.'s business: HTM Corporation was incorporated under the Nova Scotia Companies Act in late 2017 by Hil Moore, a local Nova Scotian business person. Hil Moore is the single largest shareholder (owning a little more than 75%) of this private company, the other shares being held by friends of the family. The company sells major appliances-stoves, refrigerators and dishwashers-to local contractors who construct single family dwellings and rental units for others. All purchases of appliances and sales to contractors are carried out on account.HTM also operates a small retail store out of the company-owned building where it sells a variety of smaller kitchen related items. Some of this business is cash-based, although most customers use Visa or MasterCard credit cards. During the current fiscal year (2019) HTM rented out some of its excess floor space that Hil Moore hopes to use when the company expands in the future, but for now is pleased with the extra revenue this generates. Hil Moore and the other shareholders supplied HTM Corp. with almost $300,000 of equity capital, but this was not enough to purchase the struggling business that HTM purchased as a base for HTM operations. Beta Mortgage Ltd. agreed to finance almost $370,000 of the initial acquisition as a mortgage on the land and building. HTM operations began in early January 2018 and the company prepared audited financial statements for its year ended December 31, 2018 at the request of Beta Mortgage Ltd. No financial statements have been prepared yet in 2019, and no adjusting entries have been made. Now, Hil Moore wants to prepare GAAP financial statements for the six months ended June 30, 2019 3. May 31, 2019 Trial Balance The May 31 trial balance and account numbers are provided on the attached worksheet. Note the relationship between the account numbers and the type of account: #1000 to 1999 are asset accounts #2000 to 2999 are liability accounts #3000 to 3999 are shareholders' equity accounts #4000 to 4999 are revenues #5000 to 5999 are expenses 4. June sales transactions Date In- voice # Stoves Units sold Refriger Dish- ators washers June Customer Name Other - kitchen supplies and utensils 5 10 0 10 3 4 3 154 Beta Builders 9 155 Eastend Estates 12 156 Coral Construction 16 157 Eastend Estates 19 158 Ace Contracting 22 159 Han Housing June sales Note: Selling price per unit Note: Cost per unit 4 2. 6 3 4 2 6 3 1 2 2 3 $2,985 $570 $285 $640 $320 $540 $270 Additional information: (0) The stoves, refrigerators and dishwashers are accounted for under a perpetual inventory system. The kitchen supplies and utensils are accounted for under a periodic inventory system. () HST of 13% is charged on all sales. All sales of major appliances are on account, while sales of kitchen supplies and utensils are for cash or credit card (Visa and MasterCard) that is treated as cash. Visa and MasterCard levy a 4% fee on all credit card charges in the month following the transactions. The 4% fee is deducted automatically from the company's bank account in the month following the sales transactions. 2 5. Invoices received from suppliers. June 2019: Date Jun. Invoice # Vendor Name Details of invoice Invoice Total $ 9 VEE555 VE Electric Stoves: 3 @ $285 = $ 855 Refrigerators: 10 @ $320 = 3.200 4,055 HST 13% 527 $4,582 15 KH222 Kitchen Helper Stoves: 2 @ $285 = $ 570 Refrigerators: 2 @ $320 = 640 Dishwashers: 8 @ $270 = 2.160 3,370 HST 13% 438 $3,808 19 VEE571 VE Electric Refrigerators: 8 @ $320 = $2,560 HST 13% 333 $2,893 22 OS811 Onpedar Supplies Kitchen utensils HST 13% $1,249 162 $1,411 22 JO130 Scotia Nova Power Electricity, month of May 2019, (includes HST of $83) $ 723 27 K495 $339 Construction Suppliers Association Membership fees: for Association's year June 1/2018 to May 31/2019 (includes HST of $39) 27 2468 Staples $226 Office supplies for June 2019, all used in the month (includes HST of $26) 28 A334 $ 975 Eastwing Heating Repairs to air conditioning system, & Air week of June 15 (includes GST of Conditioning $112) Aliant Telephone service, June 1, 2019 to June 30, 2019 (includes HST of $28) 30 12/01 $ 242 3 6. Cash received - June 2019: $ Received from $ Date June Received for invoices 3 #138 7,698 7,698 Ace Contracting Eastend Estates 8 #131 Part of #149 7,350 7,650 15,000 11 #140 18,624 18,624 Coral Construction Beta Builders 20 Eastend Estates 15 #126 10,940 10,940 Part of #149 #155 1,452 16.114 17,566 Total cash received on account 69,828 1 Cotswold Sales Ltd. (rent for June 2019) No HST on rent 1,218 1,218 30 Cash sales summary for month, including HST of $388. $3,100 of the $3,373 were Visa and MasterCard charges. 3,373 Total cash received 74.419 7. Cash Payments - June 2019 Date Cheque # 2444 June 5 Payee Kitchen Helper In payment of invoice # KH98 $ 6.910 on on on 2445 2446 10,000 VE Electric Onpedar Supplies VEE249 OS624 5 19 28 2447 2449 2450 Pox and Calmer Scotia Nova Power VE Electric 1426 Service to April 30 VEE249 and VEE510 11,464 2,450 960 8.760 40,544 1,743 15 2448 30 30 30 2451 2452 2453 5,000 3,406 2,500 Sub-total: paid on account Receiver General for HST for May (net) Canada Hil Moore June salary Adam Grundy June sales commissions Hil Moore Travel advance for a conference in Toronto, July 5 to 7 CN Trucking Freight-in on inventory purchased, including HST of $117 Company bank June bank charges chequing account Visa & MasterCard (information from bank charges for May statement) 30 2454 1,017 30 66 92 Total cash disbursements, June 2019 54,368 8. Additional information about May 31, 2019 trial balance: a. No adjusting entries have been prepared since the December 31, 2018 fiscal year end. b. Investments: The investment is a $50,000 Bay Province bond. It pays interest at 7% on November 1 each year and matures on November 1, 2022. C. Interest receivable: relates to the investment in the Bay Province bond. d. Prepaid expense: relates to the following insurance policies. Policy Period Covered Total Cost Building Jan.2/18 - Jan. 1/19 $4,736 Equipment Mar 31/18 - Mar 30/19 $3,600 Prepaid $2,368 900 $3,268 e Inventory: The stoves, refrigerators and dish washers are all accounted for on a perpetual inventory basis. Product Cost/unit Quantity Stoves (#100) $285 195 55,575 Refrigerators (#200) $320 99 31,680 Dish washers (#300) $270 87 23.490 The remainder of the inventory is made up of small kitchen utensils and products. These are accounted for on a periodic inventory system. A physical count of these items was carried out on June 30 and inventory with a cost of $12,124 was on hand at the close of business on this date. In addition, cleaning supplies with an estimated cost of $110 were also counted and on hand on June 30. f. Property, plant and equipment: Type Cost Accum'd Acquired Useful life Amort'n Office equipment: Displays, shelving $ 8,795 $ 733 Jan. 2/18 Cash register and Computer 6,300 1,260 Jan. 2/18 5 years Vehicle 40,000 Feb. 28/19 Building 240,250 9,610 Jan. 2/18 Land 147,000 Jan. 2/18 12 years 5 years 25 years The estimated residual value for all depreciable assets is $0. g. Interest payable: relates to the bank loan (see below) h. HST charged on sales/HST paid on purchases: On the 15 of every month, HTM pays the government the net amount owing on these two accounts (or files a claim for reimbursement if the HST paid was more than the HST collected) for the preceding month's sales and purchase transactions. i. Unearned revenue: HTM rents out part of their building that they are not using to Cotswold Sales Ltd. The lease was signed for a six-month rental on May 1, 2019 at which time Cotswold paid the first and the last month's rent in advance. The monthly rent is $1.218. 1. Bank loans: HTM borrowed $20,000 from the Royal Bank of Montreal on August 1. 2018. This loan is repayable on August 1, 2020. The loan bears interest at a rate of 7% and the interest is payable annually each August 1. k. Mortgage payable: The mortgage is secured by HTM's land and building. HTM makes mortgage payments of $8,000 on November 30, February 28, May 31, and August 31 each year. The blended payments include interest at a rate of 8% on the outstanding balance, and the company separates each payment into principal and interest portions. After making the May 31, 2019 payment, the principal balance was reduced to $364,000. 1. Income tax expense: No adjustment is required for income tax expense, as this will be calculated when the December 31, 2019 financial statements are prepared. m. Insurance expense: On February 28, 2019 HTM paid $502 for a six-month insurance policy on the automobile purchased that date; on March 31, 2019, HTM renewed and paid for the one-year policy on the equipment at a cost of $960. n. Property tax expense: HTM paid its annual property taxes of $5,600 on April 1, 2019. o. Accrued expenses: Although invoices were not received by June 30, the following amounts were owing at June 30, 2019: (ignore HST) newspaper advertising for the month of June: $335 electricity consumed during June: $624 gasoline charges for the company automobile: $157 9. Instructions for completing this practice set: First read through the entire assignment to see what is provided and what is required. NOTE: Please round all amounts to the nearest dollar throughout this assianment. A. Recording transactions. (a) Review the June 2019 sales transactions and determine the total invoice amount for each customer. Make one summary entry to record all the sales. Don't forget to include the HST in the entry, as HTM must collect this on all sales on behalf of the government. Also, don't forget to make an entry to record the cost of goods sold for the inventory items accounted for on the perpetual method. You will have to adjust for the inventory items accounted for using a periodic system at the end of the month. (b) Prepare journal entries to record the invoices received from suppliers: one summary entry to record the purchase of inventory and one summary entry to record the remaining invoices. (c) Prepare journal entries to record the cash receipts for the month. One summary entry can be made for cash received on account. (d) Prepare journal entries to record the cash disbursements for the month. One summary entry can be made for the amounts received on account. B. Post transaction entries to the ledger and prepare a trial balance at June 30, 2019. Download the Excel version of the worksheet and use the electronic version to complete this portion of the assignment (a) For each entry in part A. above, post the amounts to the general ledger. As you don't have a general ledger to work with, instead, post the amounts to the appropriate line on the worksheet in the Transaction Entries columns. (b) Total the debit column and the credit column for the Transaction Entries using the Excel features. Ensure they come to the same total. (c) Determine the balance in each account after the transactions are posted by preparing a June 30, 2019 Trial Balance. Ensure that the June 30, 2019 Trial Balance balances. 7 HTM Corporation, Instructions for Manual Accounting Practice Set Due date for hand-in: September 27, 2019 You have been provided with: 1. The objective of this assignment. 2. A description of HTM Corp.'s business. 3. A May 31, 2019 trial balance of HTM Corp., including its code of accounts. These are the accounts that must be used in recording transactions and preparing adjusting entries. No additional accounts need to be added. You are not likely to need all the accounts that have been provided. This is also the worksheet you should use to organize your data. 4. Information about June 2019 sales transactions. 5. Information about invoices received from suppliers. All these transactions will affect Accounts Payable. 6. A listing of all the cash received by HTM Corp. during June 2019. 7. A listing of all cash payments made in June 2019, and the reason for each cash disbursement. 8. Additional information about the May 31, 2019 trial balance. 9. Instructions for completing the manual version of this practice set. 10. A Declaration Cover Sheet for the assignment. 1. The objective of this assignment: Students who understand the accounting model and the accounting process have better results in their accounting courses. By understanding these aspects, more and more of what is covered in class makes sense and students don't have to revert to trying to memorize how to account for transactions and adjusting entries. The goal of this assignment is to increase your understanding of how all the parts fit together and why adjustments are needed - all within a realistic context. 2. Description of HTM Corp.'s business: HTM Corporation was incorporated under the Nova Scotia Companies Act in late 2017 by Hil Moore, a local Nova Scotian business person. Hil Moore is the single largest shareholder (owning a little more than 75%) of this private company, the other shares being held by friends of the family. The company sells major appliances-stoves, refrigerators and dishwashers-to local contractors who construct single family dwellings and rental units for others. All purchases of appliances and sales to contractors are carried out on account.HTM also operates a small retail store out of the company-owned building where it sells a variety of smaller kitchen related items. Some of this business is cash-based, although most customers use Visa or MasterCard credit cards. During the current fiscal year (2019) HTM rented out some of its excess floor space that Hil Moore hopes to use when the company expands in the future, but for now is pleased with the extra revenue this generates. Hil Moore and the other shareholders supplied HTM Corp. with almost $300,000 of equity capital, but this was not enough to purchase the struggling business that HTM purchased as a base for HTM operations. Beta Mortgage Ltd. agreed to finance almost $370,000 of the initial acquisition as a mortgage on the land and building. HTM operations began in early January 2018 and the company prepared audited financial statements for its year ended December 31, 2018 at the request of Beta Mortgage Ltd. No financial statements have been prepared yet in 2019, and no adjusting entries have been made. Now, Hil Moore wants to prepare GAAP financial statements for the six months ended June 30, 2019 3. May 31, 2019 Trial Balance The May 31 trial balance and account numbers are provided on the attached worksheet. Note the relationship between the account numbers and the type of account: #1000 to 1999 are asset accounts #2000 to 2999 are liability accounts #3000 to 3999 are shareholders' equity accounts #4000 to 4999 are revenues #5000 to 5999 are expenses 4. June sales transactions Date In- voice # Stoves Units sold Refriger Dish- ators washers June Customer Name Other - kitchen supplies and utensils 5 10 0 10 3 4 3 154 Beta Builders 9 155 Eastend Estates 12 156 Coral Construction 16 157 Eastend Estates 19 158 Ace Contracting 22 159 Han Housing June sales Note: Selling price per unit Note: Cost per unit 4 2. 6 3 4 2 6 3 1 2 2 3 $2,985 $570 $285 $640 $320 $540 $270 Additional information: (0) The stoves, refrigerators and dishwashers are accounted for under a perpetual inventory system. The kitchen supplies and utensils are accounted for under a periodic inventory system. () HST of 13% is charged on all sales. All sales of major appliances are on account, while sales of kitchen supplies and utensils are for cash or credit card (Visa and MasterCard) that is treated as cash. Visa and MasterCard levy a 4% fee on all credit card charges in the month following the transactions. The 4% fee is deducted automatically from the company's bank account in the month following the sales transactions. 2 5. Invoices received from suppliers. June 2019: Date Jun. Invoice # Vendor Name Details of invoice Invoice Total $ 9 VEE555 VE Electric Stoves: 3 @ $285 = $ 855 Refrigerators: 10 @ $320 = 3.200 4,055 HST 13% 527 $4,582 15 KH222 Kitchen Helper Stoves: 2 @ $285 = $ 570 Refrigerators: 2 @ $320 = 640 Dishwashers: 8 @ $270 = 2.160 3,370 HST 13% 438 $3,808 19 VEE571 VE Electric Refrigerators: 8 @ $320 = $2,560 HST 13% 333 $2,893 22 OS811 Onpedar Supplies Kitchen utensils HST 13% $1,249 162 $1,411 22 JO130 Scotia Nova Power Electricity, month of May 2019, (includes HST of $83) $ 723 27 K495 $339 Construction Suppliers Association Membership fees: for Association's year June 1/2018 to May 31/2019 (includes HST of $39) 27 2468 Staples $226 Office supplies for June 2019, all used in the month (includes HST of $26) 28 A334 $ 975 Eastwing Heating Repairs to air conditioning system, & Air week of June 15 (includes GST of Conditioning $112) Aliant Telephone service, June 1, 2019 to June 30, 2019 (includes HST of $28) 30 12/01 $ 242 3 6. Cash received - June 2019: $ Received from $ Date June Received for invoices 3 #138 7,698 7,698 Ace Contracting Eastend Estates 8 #131 Part of #149 7,350 7,650 15,000 11 #140 18,624 18,624 Coral Construction Beta Builders 20 Eastend Estates 15 #126 10,940 10,940 Part of #149 #155 1,452 16.114 17,566 Total cash received on account 69,828 1 Cotswold Sales Ltd. (rent for June 2019) No HST on rent 1,218 1,218 30 Cash sales summary for month, including HST of $388. $3,100 of the $3,373 were Visa and MasterCard charges. 3,373 Total cash received 74.419 7. Cash Payments - June 2019 Date Cheque # 2444 June 5 Payee Kitchen Helper In payment of invoice # KH98 $ 6.910 on on on 2445 2446 10,000 VE Electric Onpedar Supplies VEE249 OS624 5 19 28 2447 2449 2450 Pox and Calmer Scotia Nova Power VE Electric 1426 Service to April 30 VEE249 and VEE510 11,464 2,450 960 8.760 40,544 1,743 15 2448 30 30 30 2451 2452 2453 5,000 3,406 2,500 Sub-total: paid on account Receiver General for HST for May (net) Canada Hil Moore June salary Adam Grundy June sales commissions Hil Moore Travel advance for a conference in Toronto, July 5 to 7 CN Trucking Freight-in on inventory purchased, including HST of $117 Company bank June bank charges chequing account Visa & MasterCard (information from bank charges for May statement) 30 2454 1,017 30 66 92 Total cash disbursements, June 2019 54,368 8. Additional information about May 31, 2019 trial balance: a. No adjusting entries have been prepared since the December 31, 2018 fiscal year end. b. Investments: The investment is a $50,000 Bay Province bond. It pays interest at 7% on November 1 each year and matures on November 1, 2022. C. Interest receivable: relates to the investment in the Bay Province bond. d. Prepaid expense: relates to the following insurance policies. Policy Period Covered Total Cost Building Jan.2/18 - Jan. 1/19 $4,736 Equipment Mar 31/18 - Mar 30/19 $3,600 Prepaid $2,368 900 $3,268 e Inventory: The stoves, refrigerators and dish washers are all accounted for on a perpetual inventory basis. Product Cost/unit Quantity Stoves (#100) $285 195 55,575 Refrigerators (#200) $320 99 31,680 Dish washers (#300) $270 87 23.490 The remainder of the inventory is made up of small kitchen utensils and products. These are accounted for on a periodic inventory system. A physical count of these items was carried out on June 30 and inventory with a cost of $12,124 was on hand at the close of business on this date. In addition, cleaning supplies with an estimated cost of $110 were also counted and on hand on June 30. f. Property, plant and equipment: Type Cost Accum'd Acquired Useful life Amort'n Office equipment: Displays, shelving $ 8,795 $ 733 Jan. 2/18 Cash register and Computer 6,300 1,260 Jan. 2/18 5 years Vehicle 40,000 Feb. 28/19 Building 240,250 9,610 Jan. 2/18 Land 147,000 Jan. 2/18 12 years 5 years 25 years The estimated residual value for all depreciable assets is $0. g. Interest payable: relates to the bank loan (see below) h. HST charged on sales/HST paid on purchases: On the 15 of every month, HTM pays the government the net amount owing on these two accounts (or files a claim for reimbursement if the HST paid was more than the HST collected) for the preceding month's sales and purchase transactions. i. Unearned revenue: HTM rents out part of their building that they are not using to Cotswold Sales Ltd. The lease was signed for a six-month rental on May 1, 2019 at which time Cotswold paid the first and the last month's rent in advance. The monthly rent is $1.218. 1. Bank loans: HTM borrowed $20,000 from the Royal Bank of Montreal on August 1. 2018. This loan is repayable on August 1, 2020. The loan bears interest at a rate of 7% and the interest is payable annually each August 1. k. Mortgage payable: The mortgage is secured by HTM's land and building. HTM makes mortgage payments of $8,000 on November 30, February 28, May 31, and August 31 each year. The blended payments include interest at a rate of 8% on the outstanding balance, and the company separates each payment into principal and interest portions. After making the May 31, 2019 payment, the principal balance was reduced to $364,000. 1. Income tax expense: No adjustment is required for income tax expense, as this will be calculated when the December 31, 2019 financial statements are prepared. m. Insurance expense: On February 28, 2019 HTM paid $502 for a six-month insurance policy on the automobile purchased that date; on March 31, 2019, HTM renewed and paid for the one-year policy on the equipment at a cost of $960. n. Property tax expense: HTM paid its annual property taxes of $5,600 on April 1, 2019. o. Accrued expenses: Although invoices were not received by June 30, the following amounts were owing at June 30, 2019: (ignore HST) newspaper advertising for the month of June: $335 electricity consumed during June: $624 gasoline charges for the company automobile: $157 9. Instructions for completing this practice set: First read through the entire assignment to see what is provided and what is required. NOTE: Please round all amounts to the nearest dollar throughout this assianment. A. Recording transactions. (a) Review the June 2019 sales transactions and determine the total invoice amount for each customer. Make one summary entry to record all the sales. Don't forget to include the HST in the entry, as HTM must collect this on all sales on behalf of the government. Also, don't forget to make an entry to record the cost of goods sold for the inventory items accounted for on the perpetual method. You will have to adjust for the inventory items accounted for using a periodic system at the end of the month. (b) Prepare journal entries to record the invoices received from suppliers: one summary entry to record the purchase of inventory and one summary entry to record the remaining invoices. (c) Prepare journal entries to record the cash receipts for the month. One summary entry can be made for cash received on account. (d) Prepare journal entries to record the cash disbursements for the month. One summary entry can be made for the amounts received on account. B. Post transaction entries to the ledger and prepare a trial balance at June 30, 2019. Download the Excel version of the worksheet and use the electronic version to complete this portion of the assignment (a) For each entry in part A. above, post the amounts to the general ledger. As you don't have a general ledger to work with, instead, post the amounts to the appropriate line on the worksheet in the Transaction Entries columns. (b) Total the debit column and the credit column for the Transaction Entries using the Excel features. Ensure they come to the same total. (c) Determine the balance in each account after the transactions are posted by preparing a June 30, 2019 Trial Balance. Ensure that the June 30, 2019 Trial Balance balances. 7