Introduction Queta Johnson is about to open a new business Chocolate Nirvana. It will be a small chocolate specialties store. She uses a perpetual FIFO (First-in, First-Out) method to account for her inventory. So, every time you record a sale of merchandise you must also figure out the cost of the goods (determined from recording it in the merchandise inventory sheets and applying FIFO - chapter 7). The purpose of this practice set is to allow you the chance to see how each of the separate components we have worked on this semester fit together. As you complete the set, you may find it necessary to look back at what we learned in various chapters to help remember exactly what to do. Instructions 1. Journalize each form into ONE correct journal (review chapter 5) Purchase Journal - you purchased something on account Cash Receipts Journal - you received money for any reason Cash Payments Journal - you issued a check for any reason General journal - when none of the special journals work Remember you must have matching debits and credits in ALL journals 2. As you journalize each form, did you affect a control account? Accounts Payable - also take it into the Accounts Payable Subsidiary Ledger Cash - also take it into the Checkbook (deposit - add it; check - subtract it) Merchandise Inventory - go to the inventory sheets, use FIFO (ch 7), for each Cash Sales form add up the total cost of merchandise sold amounts and record them in the Cash Receipts Journal in the Merch Inv/COMS column Payroll (chapter 11 - especially pages 512-4) Hours worked and rates for Social Security, Medicare, FUTA and SUTA are on the form 1. Go to the individual earnings records and calculate their payroll (cumulative = gross) 2. Transfer information from indivdual earnings records to payroll register 3. Use payroll register to prepare the general journal entry for payroll (similar to page 512) 4. Prepare general journal entry for payroll taxes (like page 514) Specific information on pay rate, marital status and number of allowances located on their individual earnings record sheets Federal income tax withholding amounts are found on the chart in the front of the booklet. Use the right chart - married or single, find the intersection of their gross wages and their allowances. Use that amount for the federal income tax withholding amount. 3. When done journalizing all forms, total all columns from the special journals and write down totals, (see chapter 5) 4. Compare your totals to the check figure totals If your totals don't match, find your errors 5. Post all four journals into the general ledger (review chapters 5 as well as 2 and 4) 6. Prepare an unadjusted trial balance - do your numbers match the check figures? 7. Transfer the unadjusted trial balance amounts to the Worksheet (chapter 4) 8. Prepare the adjusting entries on page 2 of the general journal (chapter 3) based on the following data - for the month of OCTOBER: a) Depreciation - calculate depreciation for JUST the month of October based on the following information: Store Equipment - 5 year life, $1200 salvage value, use straight line depreciation Office Equipment - 5 year life, $100 salvage value, use straight line depreciation b) Record entry for expired insurance c) Currently there are $45 worth of office supplies on hand d) Currently there are $90 worth of store supplies on hand e) Record entry for amount of advertising expired for the period just ended f) Record wages earned, but unpaid, on Oct 31 of $275 g) Record accrued interest of $12. 9. Transfer the adjusting entries on to the worksheet and also post in to the general ledger 10. Complete the worksheet (see chapter 4) 11. Prepare an Accounts Payable Vendor balance (Schedule of Accounts Payable). Simply list each vendor that you owe money to (Accounts Payable) and total them (example in chapter 5). You do not have to list any business that does not have a balance at the end of the month. 12. Prepare a multiple-step Income Statement (example in chapter 6) 13. Prepare a Statement of Owner's Equity (new business) (example in chapter 1, 4 and 6) 14. Prepare a classified Balance Sheet using the report format (example in chapter 6) 15. Journalize the closing entries on page 3 of the general journal (chapter 4) 16. Post the closing entries into the general ledger 17. Prepare a post-closing Trial Balance (chapter 4) Be sure to use your textbook as a reference as you work through this set. All of this information comes from work in our textbook.