In the summer of 2017, Reigh Webster and her friend Ella Hill were relaxing in a local watering hole complaining about their boring monotonous jobs. Reigh told Ella that she has been saving her money and is looking for a lucrative opportunity to invest in and get out of the day-to-day grind at the office. Ella indicated she had been doing the same. An executive walked up to the table and indicated he had overheard Reigh and Ellas conversation and he may have the key to the lucrative investment they were looking for. He introduced himself as Walter Kim and asked if he could join Reigh and Ella. While they were enjoying another tasty beverage, Walter explained to Reigh and Ella about a product that was developed in Europe that was going to change the home and office security industry.

The product he was referring to was a door Wi-Fi camera that delivers a crystalclear live stream of the entire door. It has a wide-angle lens and 2-way audio which allows the owner to talk with their visitors directly via their smartphone or tablet anytime and anywhere. The products name is DoorSpy. It will provide an instant alert with a 10 second video clip when the unit detects motion. DoorSpy comes with a free 30-day trial of cloud service. With this, the owner can review, customize, share, or save the daily footage.

Walter indicated he works for Europe Developments Ltd. (EDL), the company in London that developed this product. EDL is looking for a couple of individuals who would be willing to work as installers of the DoorSpy product for EDL in Canada. EDL would look after selling the product directly to the customer, and the installers would install the product for the customer and charge the customer separately from buying the product from EDL. Walter has indicated that if the market for DoorSpy takes off in Canada, then EDL would explore the opportunity for Reigh and Ella to become an exclusive distributor for DoorSpy in which they would buy the product from EDL and sell and install the product to the customer. Walter left the two with his card and asked them to give him a call if they were interested.

A week later Reigh and Ella handed in their resignations at their places of work and decided to start and incorporate a new company called RE Installations Ltd. (REI). They signed a contract with EDL to be the exclusive Canadian installers of the DoorSpy product for EDL.

During the last two months of 2017, Reigh and Ella completed all the necessary paperwork for them to form and incorporate their company. They have a bank account set up in the company name as well as company credit cards. EDL will ship the DoorSpy products to REI on a weekly basis, so the product is available for installation when the time comes. This is not considered to be inventory for REI as the company is not buying the inventory from EDL just installing it.

It is now January 1st, 2018, and Reigh and Ella are now ready to officially start operations for REI. You should ignore sales tax effects on all transactions.

Provide journal entries for the events happening below.

2) On January 2nd, Reigh and Ella each invested $18,000 (total of $36,000) of their personal savings in REI, in exchange for 36,000 of the companys Class A common shares.

3) On January 2nd, REI entered into an agreement to rent office space and separate warehouse space to store the product. The contract required REI to pay quarterly rent of $7,200 for the office and $4,000 for the warehouse, to be paid in advance, on each January 2nd, April 1st, July 1st, and October 1st, 2017. In order to simplify the records, you should consider one full month of use for January. (Hint - You will need to remember to journalize the transactions of the cash payments on the dates noted above as this will not be noted again)

4) On January 3rd, Reigh and Ella borrowed $10,000 from a family friend just until they get going with their new business. They signed a non-interest bearing note and have up to 5 years to pay it back.

5) On January 6th, REI decided to rent office equipment instead of purchasing. The company entered into an agreement to rent office equipment up to June 30 for $2,500 per month. The company paid the full $15,000 on January 6th and the office equipment was delivered the same day. In order to simplify the records, you should consider one full month of use for January.

6) On January 6th, REI paid $8,400 cash for a two-year insurance policy (which will expire on December 31st, 2019), for its warehouse and office contents. In order to simplify your calculations, assume that REI consumes one full month worth of insurance in January.

7) On January 6th, REI receives 500 DoorSpy units from EDL.

8) On January 9th, REI purchased, on account, $1,100 worth of office supplies (pens, paper, envelopes etc.).

9) On January 9th, REI received confirmation from EDL of 30 DoorSpy installations at a nearby apartment complex. These installations were completed on January 11th, and REI billed the manager of the building for $55 per unit and received cash for all 30 installations. The manager told REI he thought the video security camera would be ideal for all his 305 units and indicated that if the DoorSpy increases the tenants sense of safety, he would purchase 275 more DoorSpy units.

10) On January 13th, REI received another confirmation from EDL that the Federal Government has purchased 200 DoorSpy units to be used on office doors, the cameras have been shipped to Ottawa already, and the government is awaiting installation. Ella booked two return airline tickets to Ottawa departing on January 15th, for a total of $2,675, put on the company VISA card.

11) During January 16th to January 20th, Ella and Reigh installed all 200 locks at the Parliament Buildings and billed the Federal Government for $11,000 ($55 per lock installation).

12) Ella and Reighs hotel bill for the week was $2,585 and total meals were $800. All expenses were paid by the company VISA card.

13) On January 22nd, REI hired an office secretary/office assistant and one person to work in the warehouse and assist with deliveries etc. Both staff members began work first thing on Tuesday morning January 23rd. The secretary/office assistant will earn $75 per day, or $375 per week, and the warehouse staff will earn $70 per day, or $350 per week. Both staff will be paid every second Friday, with the first pay period ending Friday January 26th. For example, pay days will occur on Friday January 26th, February 9th, February 23rd, and every two weeks thereafter (covering 10 working days). (Hint you should use a 2018 calendar in order to track the exact pay periods/days, and staff should be paid every two weeks throughout the entire year). For the purposes of this project, you need not worry about payroll deductions or employer contributions.

14) On January 25th, REI receives another 100 DoorSpy units from EDL.

15) On January 25th, REI received confirmation from EDL that the Saskatoon Public School Division has purchased 400 DoorSpy units. The School Division wants to phase-in the installation of these 400 units over a three-month period. The installation amount of $22,000 was paid to REI on January 27th and would require REI to perform services from the 30th of January until the 30th of April. (Hint - Use the number of days to determine the adjusting entry that will be required at the end of the quarter)

16) On January 26th, REI received a cheque from the Federal Government for $11,000 for the installation services completed in transaction #11.

17) On January 27th, REI purchased with cash, another $400 worth of office supplies (pens, paper, envelopes etc.).

18) On January 27th REI paid cash for the full amount of the office supplies purchased on account on January 9th (transaction #8).

19) On January 31st, REI received and paid, $450, for the telephone bill for the month of January.

20) On January 31st, REI received and paid, $475, for its utility bill for the month of January.

21) On February 3rd, REI receives another 100 DoorSpy units from EDL.

22) From February 6th to the 10th, REI joined EDL at a small business fair in Saskatoon where they displayed its product to promote and sell their DoorSpy to the general public, property owners, and small business owners. Over the course of the five days EDL sold 360 units of which REI will install. Of these installations, 100 of them were paid for up front ($55 each), and the other 260 will be invoiced once the installation is complete.

23) From the period February 10th to 28th, REI installed 300 of the 360 DoorSpy units purchased at the business fair. 100 of these were the installations that were paid for up front, and the other 200 were for installations that have not yet been paid. REI billed the 200 customers on February 28th .

24) On February 28th REI received and paid, $360, for the telephone bill for the month of February.

25) On February 28th REI received and paid, $460, for its utility bill for the month of February.

26) On March 3rd, REI receives another 100 DoorSpy units from EDL.

27) Throughout the month of March REI installed 280 DoorSpy units at $55 each. These were all billed to the customers on the date of installation.

28) By March 10th, the remaining 60 DoorSpy units from the business fair were installed and billed to the customers at $55 per camera.

29) On March 13th, REI collected cash from 220 various customers from the business fair installations that were installed on account in the past few months.

30) On March 28th REI received and paid, $350, for the telephone bill for the month of March.

31) On March 28th REI received and paid, $425, for their utility bill for month of March.

32) On March 29th, REI received the business cards they ordered on account for $225.

33) On March 31st Reigh noted that there was only $350 left of office supplies, so she made a note to herself to order more soon.

34) On March 31st, cash was received for the installation of all 280 DoorSpy units that were installed in March (transaction #27).

35) On March 31st, the company VISA card balance was paid off with cash. (Transactions #10 and #12). 36) REIs corporate tax rate is 20% - all taxes will be accrued and paid in January of 2019. No tax instalments are paid to CRA (Canada Revenue Agency).