Part One, Two and Three Instructions Record the January 2020 transactions in the general journal (last section of this practice set) using the following events. Skip a line between each entry and number the entries to match the number of the transaction. In the general journal record the transaction number, the date, Dr/Cr and the account numbers along with the dollar amounts. After all journal entries are entered into the practice set, enter the adjusting journal entries. Next, create a T-Account for each account that is used in the Chart of Accounts and record the transactions and end with an ending balance. All ending balances should be on the normal balance side even if the account has a zero balance. If there is a number that is uneven round to the nearest cent. You will need the ending balance in the cash account for the bank reconciliation. All instructions for Blackboard start on page 8. Transactions 1. 2. 3. 4. 5. Date 1/02/20 1/02/20 Deposit #1 1/03/20 1/03/20 Deposit No. /Check No. 1/03/20 Ck #1001 Ck #1002 Description 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 1 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. 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. 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. 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 SI Page 6. 7. 8. 1/05/20 Deposit #2 1/05/20 Ck #1003 1/06/20 9. 1/06/20 10. 1/08/20 11. 1/08/20 12. 1/13/20 1/13/20 13, 14. 1/13/20 15. 1/14/20 16. 1/14/20 17. 1/15/20 Ck #1004 Ck #1005 Ck #1006 18. 1/20/20 Ck #1007 19. 1/22/20 Deposit #3 20. 1/22/20 Ck #1008 21. 1/22/20 22. 1/23/20 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 six months. 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 Purchased Computer Equipment for $900 to be used in the store. The computer equipment has a useful life of 3 years. Purchased $300 in office supplies. Purchased $11,000 of Inventory-Orange Headbands from Hailey's Headbands on account. Purchased $5,000 Inventory Blue Headbands from Hailey's Headbands on account. Ms. Sneed received and paid the $350 charge from her lawyer. 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. 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. Purchased $200 of store supplies on account. This is to be recorded as store supplies. Purchased additional orange headbands from Hailey's Headbands on account, for $5,500. 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.) Received and paid the $200 invoice for store supplies. Received cash from sales on account on 1/15/20 Paid the two invoices from Hailey's Headbands from 1/08/20. Ordered blue headbands for $2,900 on account. 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 61 Page FCE 23. 1/23/20 24. 1/23/20 Ck #1009 25. 1/23/20 Ck #1010: 26. 1/23/20 Deposit 115 29. 1/28/20 30. 1/30/20 Deposit #4 27. 1/23/20 28. 1/25/20 Deposit #6 32. 1/31/20 Ck #1011 33. 1/31/20 31. 1/30/20. Deposit #7 Ck #1012 Ck #1013 Pr Ck #1014 orange headbands were $100. Ms. Sneed considers this an advertising expense. Received payment in full from UTEP. The payment was deposited in the bank. 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 $2,570 and sales tax collected was $212.03, all was deposited in the 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. 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. 50 of store supplies remained on hand. c. $43 of office supplies remained on hand. 7| Page 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. 4. If there is no journal entry and you only need to put in a number please enter the amount as the dollar amount or as a number as the example below. $15,000.00 or 15,000 5. When entering the ending balances for the T-Accounts enter the debit or credit first and the amount last. You do not need to enter the account number. See example below. Dr $10,000.00 or Cr $10,000.00 6. If there is no journal entry to be written please write No JE for no journal entry. See below for example. No JE Part Four Instructions TATE MAS ODRASLE In this part of the practice set, the student will prepare a Bank Reconciliation for the month of January. 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. 9|Page Current Assets 10000 11000 12000 12100 13100 13200 18000 18100 18200 27000 27100 15100 17100 15200 17200 21200 Long-Term Assets 15000 17000 23100 23200 23300 23400 Cash Accounts Receivable Inventory-Orange Headbands Inventory - Blue Headbands Office Supplies Store Supplies Prepaid Rent Prepaid Insurance Prepaid Advertising Store & Office Equipment Accumulated Depreciation Current Liabilities 20000 Accounts Payable 21100 -Store & Office Equipment Furniture & Fixtures Accumulated Depreciation Furniture & Fixtures Computer Equipment Accumulated Depreciation Computer Equipment Note Payable-Wells Fargo Bank Note Payable Store & Office Supply Wages Payable Interest Payable Long-Term Liabilities Sales Tax Payable Utility Payable Mortgage Payable Notes Payable Stockholders' Equity 39003 39005 39007 Revenue 40000 Expenses 50000 60100 60150 60200 60300 60350 60-400 60500 60550 60600 60650 60700 60750 Common Stock Retained Earnings Dividends Sales Cost of Goods Sold Legal Expense Store Supplies Expense Office Supplies Expense Insurance Expense Wages Expense Delivery Expense Advertising and Promotion Expense Utility Expense Rent Expense Depreciation Expense Interest Expense Bank Service Fee 4| Page