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John Smith began a web-based computer sales and service company on September 1, 2015 called Smith's Toys Inc. The plan is to prepare monthly adjustments so that financial statements can be done each month. The following information is available for September, 2015 (assume a perpetual inventory system) Smith invested $10,000 cash along with $9,000 of computer equipment into his new business in exchange for 700 shares. The equipment is estimated to have a useful life of 3 years and have no value after that time. 1 Purchased 10 months worth of insurance for $1,100 cash; the insurance is effective immediately. 1 $22,000 of merchandise was purchased from Southgate Inc. on account; terms 1/10,n30. 2 Sold merchandise to Joe Sixpack that cost $3,000 for $3,900; terms 1/15, n30. 2||Sold merchandise to Joe Sixpack that cost $5,500 for $6,200 cash. 4 Bought used office furniture for $1,800 cash. It is estimated that the business will use the furniture for 5 years and then donate it to a charity. 5 Purchased $5,000 of merchandise inventory from Weber Inc.; terms 1/10, n30; FOB shipping point. 6 Received the September 5, 2015 purchase and paid cash of $150 for shipping. 8||Paid for the merchandise purchased from Weber Inc. on September 5, 2015. 10 The customer of September 2, 2015 returned $900 of their purchase due to defects, the returned merchandise will not be returned to inventory. 12 Collected the balance owing regarding the September 2, 2015 sale. 15 Bought $300 of office supplies, paid cash. 28 Paid for the merchandise purchased from Southgate Inc. on September 1, 2015. Additional information available at month end, September 30: Acount of the office supplies showed a balance on September 30 of $80. The merchandise inventory was counted and there was a balance on hand at September 30 of $17,650. The September utility bill arrived from Epcor Utility Company, the $800 balance owing must be paid by October 15, 2015 Please make sure your final answer(s) are accurate to 2 decimal places. Enter an appropriate description when entering the transactions in the journal. Dates must be entered in the format dd/mmm (ie. January 15 would be 15/Jan). For each journal entry, indicate how each account affects the balance sheet (Assets, Liabilities, Equity). Use + for increase and - for decrease. For example, if an account decreases equity, choose '-Equity'. Prepare the journal entries based on the transactions that occurred from September 1 to September 30. Also, record the six adjusting entries for the month ended September 30 based on the additional information and a review of the September transactions Journal entries: Adjusting entries: General Journal Page Gj1 Effect On General Journal Page Gj1 Effect On Date Account/Explanation F Debit Credit Balance Sheet Date Account/Explanation F Debit Credit Balance Shee 1/Sep Cash 10,000 +Assets + - Computer Equipment 9,000 +Assets Share Capital. 19,000 +Equity 11,000 1/Sep Prepaid Insurance, + Cash +Assets -Assets 11,000 John Smith began a web-based computer sales and service company on September 1, 2015 called Smith's Toys Inc. The plan is to prepare monthly adjustments so that financial statements can be done each month. The following information is available for September, 2015 (assume a perpetual inventory system) Smith invested $10,000 cash along with $9,000 of computer equipment into his new business in exchange for 700 shares. The equipment is estimated to have a useful life of 3 years and have no value after that time. 1 Purchased 10 months worth of insurance for $1,100 cash; the insurance is effective immediately. 1 $22,000 of merchandise was purchased from Southgate Inc. on account; terms 1/10,n30. 2 Sold merchandise to Joe Sixpack that cost $3,000 for $3,900; terms 1/15, n30. 2||Sold merchandise to Joe Sixpack that cost $5,500 for $6,200 cash. 4 Bought used office furniture for $1,800 cash. It is estimated that the business will use the furniture for 5 years and then donate it to a charity. 5 Purchased $5,000 of merchandise inventory from Weber Inc.; terms 1/10, n30; FOB shipping point. 6 Received the September 5, 2015 purchase and paid cash of $150 for shipping. 8||Paid for the merchandise purchased from Weber Inc. on September 5, 2015. 10 The customer of September 2, 2015 returned $900 of their purchase due to defects, the returned merchandise will not be returned to inventory. 12 Collected the balance owing regarding the September 2, 2015 sale. 15 Bought $300 of office supplies, paid cash. 28 Paid for the merchandise purchased from Southgate Inc. on September 1, 2015. Additional information available at month end, September 30: Acount of the office supplies showed a balance on September 30 of $80. The merchandise inventory was counted and there was a balance on hand at September 30 of $17,650. The September utility bill arrived from Epcor Utility Company, the $800 balance owing must be paid by October 15, 2015 Please make sure your final answer(s) are accurate to 2 decimal places. Enter an appropriate description when entering the transactions in the journal. Dates must be entered in the format dd/mmm (ie. January 15 would be 15/Jan). For each journal entry, indicate how each account affects the balance sheet (Assets, Liabilities, Equity). Use + for increase and - for decrease. For example, if an account decreases equity, choose '-Equity'. Prepare the journal entries based on the transactions that occurred from September 1 to September 30. Also, record the six adjusting entries for the month ended September 30 based on the additional information and a review of the September transactions Journal entries: Adjusting entries: General Journal Page Gj1 Effect On General Journal Page Gj1 Effect On Date Account/Explanation F Debit Credit Balance Sheet Date Account/Explanation F Debit Credit Balance Shee 1/Sep Cash 10,000 +Assets + - Computer Equipment 9,000 +Assets Share Capital. 19,000 +Equity 11,000 1/Sep Prepaid Insurance, + Cash +Assets -Assets 11,000
