Part Four Instructions In this part of the practice set, the student will prepare a Bank Reconciliation for the month of Start by using the ending balance in your cash account for the cash for your books and the ending balance on the bank statement for the bank balance. Requirements 1. Correct Errors: Correct any errors that you made on the journal entries. Both the debits and the credits must equal each other. 2. Bank Reconciliation: Using the cash balance per books and the bank statement, prepare a bank reconciliation. 3. Record Bank Reconciliation Adjustments: After you have prepared the bank reconciliation you must make any adjusting journal entries to your cash account by entering them in the general journal of the practice set so that the general ledger cash account agrees with the bank reconciliation 4. Assume that any errors are made by the bank. 5. After preparing the bank reconciliation answer the questions in Blackboard and then staple the bank reconciliation to the back cover. Part Five Instructions Prepare an Adjusted Trial Balance, then an Income Statement, Statement of Stockholders' Equity and a Balance Sheet and staple them to the front cover of the practice set in the correct order as listed here. These statements should be done in Word or Excel. Transactions Date 1/02/20 2. 1/02/20 Deposit No. Description Check No. Samantha Sneed met with her lawyer and CPA for advice on starting the business. They decided that Ms. Sneed would organize the business as a corporation. The lawyer told Ms. Sneed to register the company name, Sweaty Bands, Inc., with the County of El Paso. In addition, Ms. Sneed will get an employer identification number (EIN) from the Internal Revenue Service and get a sales tax permit from the state of Texas. The lawyer agreed to prepare the Articles of Incorporation to be filed with the Secretary of State of Texas. The CPA has agreed to help Ms. Sneed set up her accounting system. Deposit #1 Ms. Sneed opened a business checking account at Wells Fargo Bank by depositing the personal check she gave her company for $25,000. The corporation issued her a stock certificate for 50,000 shares of common stock. Ck #1001 Ms. Sneed signed a one-year rental agreement with Rusty Realtors for shop space. She was required to pay $3,200 for rent for the months of January 1, 2020 - April 30, 2020. Ck #1002 Arranged for a general business liability insurance policy and paid $1,800 to State Penn Insurance. This premium is for six months of coverage. Purchased store equipment for a cost of $10,000 from Office and Store Supply for use in the business. Ms. Sneed signed a one year, 6% note payable for the cost of the office and store equipment. The store and office equipment have an estimated useful life of 4 years 3. 1/03/20 4. 1/03/20 5. 1/03/20 5 Page and the residual (salvage) value is $2,000. This will be recorded as Store and Office Equipment. Signed a note payable to borrow $7,000 from Wells Fargo Bank. Interest is 6% annually and the note is to be repaid with interest in 1/05/20 Deposit #2 six months. 7. 1/05/20 ck N1003 Purchased furniture and fixtures for $13,000 from Furniture Warehouse. The estimated service life of this asset is 5 years. The residual (salvage value) is $1,000. This will be recorded as Furniture and Fixtures. 8. 1/06/20 Ck #1004 Purchased Computer Equipment for $900 to be used in the store. The computer equipment has a useful life of 3 years. 9. 1/06/20 Ck #1005 Purchased $300 in office supplies. 10. 1/08/20 Purchased $11,000 of Inventory-Orange Headbands from Hailey's Headbands on account. 11. 1/08/20 Purchased $5,000 Inventory-Blue Headbands from Hailey's Headbands on account. 12. 1/13/20 Ck #1006 Ms. Sneed received and paid the $350 charge from her lawyer. 13. 1/13/20 Sweaty Bands is now open for business. Sales will be both retail and wholesale. Retail customers will purchase online and at the shop and will be charged an 8.25% sales tax. Ms. Sneed will allow major customers to charge their purchases on account and then pay later. 14. 1/13/20 Sold headbands to UTEP for their homecoming banquet on account for $8,000. The cost of the orange headbands is $2,500. The cost of the blue headbands is $1,500. UTEP does not have to pay sales tax on the purchase. 15. 1/14/20 Purchased $200 of store supplies on account. This is to be recorded as store supplies. 16. 1/14/20 Purchased additional orange headbands from Hailey's Headbands on account, for $5,500. 17. 1/15/20 Recorded sales on account for the first five days of operation. Sales on account totaled $5,500 and the sales tax totaled $453.75. The cost of merchandise sold was $2750.00. (Orange headbands were $1,500 and Blue headbands were $1,250.) 18. 1/20/20 Ck #1007 Received and paid the $200 invoice for store supplies. 19. 1/22/20 Deposit #3 Received cash from sales on account on 1/15/20. 20. 1/22/20 Ck #1008 Paid the two invoices from Hailey's Headbands from 1/08/20. 21. 1/22/20 Ordered blue headbands for $2,900 on account. 22. 1/23/20 Ms. Sneed donated headbands to the Child Crisis fund raiser. She felt that this was a good way to advertise her new business. Her business was listed as a sponsor and a large ad was put in the fund raiser program. Cost of the blue headbands were $750, and the 6 Page 1/23/20 Deposit #4 orange headbands were $100. Ms. Sneed considers this an advertising expense. Received payment in full from UTEP. The payment was deposited the bank. 24. 1/23/20 Ck #1009 25. 1/23/20 26. 1/23/20 Ck #1010 Deposit #5 27. 1 1/23/20 Ck #1011 Deposit #6 Ms. Sneed paid her credit card bill for the month. The total was $375 for deliveries. Purchased and paid for $65 of office supplies Internet and retail sales totaled $10,620 and sales taxes of $876.15 was collected. The cost of the merchandise sold was $5,310 (Blue Headbands $2,655; Orange headbands $2,655). The money was deposited in the bank. Paid the balance due to Hailey's Headbands. There are two invoices; one on 1/14/20 and the other on 1/22/20. Collected sales of $4,300. Sales tax collected was $280.50. All was deposited in the bank. The cost of the merchandise sold was $2,150. (Orange headbands $2,000; Blue headbands $150). Received but did not pay the electric bill for the month, $277.23. Paid the first monthly installment on the office equipment. The payment amount is $883.33. Of this amount, $50.00 is for interest and $833.33 is for principal. Make the check payable to Store & Office Supply. Recorded internet sales for the last week of the month. Sales were 29. 1/28/20 30. 1/30/20 Ck #1012 31. 1/30/20 Deposit #7 32. 1/31/20 Ck #1013 bank. The cost of the merchandise sold was $1,350 (Blue headbands $1,000; Orange headbands $350). Paid all sales tax owed for January to the Comptroller of Public Accounts Declared and paid a cash dividend of $100 to Samantha Sneed. 33. 1/31/20 Ck #1014 Once all the journal entries are recorded in the practice set, record the adjusting journal entries below with the date being January 31, 2020. The following are the adjusting journal entries for the month of January Record Adjusting Entries: Record the following month end adjusting entries for the month of January Write the journal entries in the practice set after the original journal entries and round to the nearest cent. a. 1,550 of wages for the part-time help from Irene's Temp Services for January should be accrued. Do not worry about payroll taxes; Temp Services Inc. will handle these. b. $150 of store supplies remained on hand. c. $43 of office supplies remained on hand. 7 Page Bank Statement Wells Fargo Bank Page 1 PO Box 12345 El Paso, Texas 79902 Sweaty Bands, Inc. 123 Main Avenue El Paso, Texas 79945 WELLS FARGO BANK STATEMENT Sweaty Bands, Inc. $0 Balance, beginning Deposits and other credits Checks and other debits Balance on statement date 01/01/2020 January January 01/31/2020 $57,449.90 $37,163.33 $20,286.57 Deposits Added 1/2/2020 Deposit 1 $25,000.00 1/5/2020 Deposit 2 $7,000.00 1/19/2020 Deposit 3 $5,953.75 1/23/2020 Deposit 4 $8,000.00 1/23/2020 Deposit 5 $11,496.15 Wells Fargo Bank Statement - Checks Paid and other Debits 1001 $3,200.00 1007 $200.00 1002 $1,800.00 1008 $16,000.00 1003 $13,000.00 1012 $883.33 1004 $900.00 NSF $300.00 1005 $300.00 DM $30.00 Check Printing Fee 1006 $530.00 SC $20.00 Charge for NSF Check Assume any errors are made by the bank 10 Page ACCT 2301 Bank Reconciliation Part 4 QUESTION 1 What is the balance that you started with on the bank side for the reconciliation? Include cents always (Ex. $1,000.00)! $20,286.57 QUESTION 2 What is the TOTAL dollar amount of deposits in transit? Include cents always (Ex. $1,000.00) Vio QUESTION 3 What is the TOTAL dollar amount of all of the outstanding checks/withdrawals? Include cents always (Ex. $1,000.00) D D 2 points Save Answer QUESTION 4 What is the dollar amount of bank error? Include cents always (Ex. $1,000.00) QUESTION 5 Did you add or subtract the bank error? Write "Add" or "Subtract" for your answer. QUESTION 6 What is the dollar amount of reconciled balance per bank? Include cents always (Ex. $1,000.00) QUESTION 7 What is the dollar amount for the cash account that you started with on the book side? Include cents always (Ex. $1,000.00) 2 points Save Answer QUESTION 8 What is the TOTAL dollar amount for book charges? Include cents always (Ex. $1,000.00) QUESTION 9 What is the dollar amount of the reconciled balance per books? Include cents always (Ex. $1,000.00) 2 points Save Answer QUESTION 11 Journalize the entry for the NSF check. 2 points Save