NUMBERS:

Service Revenue Per Hour: $90.50

Sales Revenue Per Unit: $50.25

Cost of Inventory Per Unit: $20.00

Part 1 Create a hypothetical service/merchandising company. You will include the following on the first page of the project (see template). Note that you will come up with your own name, service provided and product to be sold, but you will be assigned prices.

Corporate name of your choice

Service provided and service price (find your assigned cost in Blackboard Groups)

Product sold, sales price, and cost of product (find price and cost in Blackboard Groups)

Brief Description of Mission Statement and Corporations Operations

Part 2 General Journal (LO3-2) Post the following journal entries to the general journal.

Trans.	Date	Description
1	May 1	Sell 50,000 shares of common stock for $50,000 to obtain the funds necessary to start your business.
2	May 1	Borrow $20,000 from the local bank and sign a note promising to repay the full amount of the debt in 5 years.
3	May 1	Issue 1,500 shares of $2 par value preferred stock at $30/share.
4	May 1	Purchase equipment necessary for business operations for $15,000.
5	May 1	Pay one year of rent in advance, $12,000 ($1,000 per month.)
6	May 3	Purchase supplies on account, $800.
7	May 3	Purchase 200 units of inventory with cash.
8	May 6	Provide 40 hours of services to customers for cash (calculate using your hourly service rate).
9	May 10	Sell 100 units of inventory on account. (Perpetual method = 2 entries)
10	May 12	Sell 50 units of inventory to a customer on account with a sales discount of 2/10, n/30.
11	May 15	Purchase an additional 300 units of inventory on account.
12	May 20	The customer who purchased product on May 12th pays the amount due (within discount period).
13	May 23	Receive cash in advance for 20 hours of services to be completed in the future.
14	May 31	Sell 200 units of inventory to a customer who signs a 6-month promissory note at 10% interest for the balance due.
15	May 31	Pay employee salaries, $1,000.
16	May 31	Pay cash dividends to shareholders, $600.

Part 3 General Ledger (LO3-2) Post the information from the journal entries into the general ledger.

Part 4 Trial Balance (LO3-2) Prepare a trial balance from the information in the general ledger.

Part 2 cont. Adjusting journal Entries (LO3-3) Post the following adjusting entries to the general journal

Adj-1	May 31	Record the portion of the Prepaid Rent used in May.
Adj-2	May 31	The company has $300 of supplies left at month end
Adj-3	May 31	Record one month of depreciation on the equipment. The equipment has a useful life of 10 years
Adj-4	May 31	Provide 10 hours of services that were paid in advance on May 23rd.
Adj-5	May 31	Record the receipt of a $300 utilities bill due on June 5th.
Adj-6	May 31	Record accrued interest on the $20,000 5 year note payable. The annual interest rate is 10%.

Part 3 cont. General Ledger - Post the adjusting entries to the General Ledger.

Part 5 Adjusted Trial Balance (LO3-3) Post the ending balances from the General Ledger to the Adjusted Trial Balance. Debits should equal credits if you have done the prior steps correctly.

Part 6 Prepare the end of month Income Statement (LO3-4).

Part 7 Prepare the end of month Retained Earnings Statement (LO3-4).

Part 8 Prepare the end of month Balance Sheet (LO3-4).

Part 1 cont. - Add the following closing entries to the general journal (LO3-4):

Clo-1	May 31	Close out revenues/income
Clo-2	May 31	Close out expenses/losses
Clo-3	May 31	Close out dividends

Part 2 cont. - Post the above closing entries to the general ledger (LO3-4).

Part 9 Prepare a post-closing trial balance (LO3-4).