Part Three Instructions All T-accounts with the correct balances should be prepared. (There is an example of how to set up the T-Accounts in Excel at the end of the practice set. Make sure all accounts that were used in the Chart of Accounts are included and if they have a zero balance that you place the zero on the normal balance side.) Transactions Date Deposit No. Check No. Description 1 1/02/2020 2. 1/02/2020 Deposit #1 3. 1/03/2020 Ck #1001 4. 1/03/2020 Ck #1002 5. 1/03/2020 Blaise met with his lawyer and CPA for advice on starting the business. The lawyer told Mr. Maverick to register the company name Maverick's Boards with the County of El Paso. In addition, Mr. Maverick will get an employer identification number (EIN) from the Internal Revenue Service and get a sales tax permit from the state of Texas. Mr. Maverick opened a business checking account at Wells Fargo Bank by depositing $70,000. The corporation issued him a stock certificate for 7,000 shares of common stock with no par value. Mr. Maverick signed a one-year rental. He was required to pay $9,000 for rent for the months of January 1, 2020 - June 30, 2020. Arranged for a general business liability insurance policy and paid $4,000 to State Penn Insurance. This premium is for twelve months coverage. Purchased a new computer system that cost $5,200 from Computer Inc. for use in the business. Mr. Maverick signed a 6 month, 10% note payable for the cost of the system. The computer system has an estimated useful life of five years the residual (salvage) value is $400. This will be recorded as Computer Equipment. Depreciation will be an adjusting entry using straight- line depreciation. Signed a note payable to borrow $10,000 from Wells Fargo bank. Interest is 12% annually and the note is to be repaid with interest in twelve months. Interest will be an adjusting entry. Paid $1,100 for shipping supplies. Paid $14,600 for furniture and fixtures. The estimated service life of these assets is 8 years. The residual (salvage) value is $200. These items will be recorded as Furniture and Fixtures and depreciated accordingly. Depreciation will be done in the adjusting journal entries using straight-line depreciation. Arranged for Sun City Movers to make the delivery of the computer system and paid the delivery charge of $750. This charge should be added to the cost of the computer equipment purchased and depreciated on the same 6. 1/05/2020 Deposit #2 7. 1/05/2020 Ck #1003 1/06/2020 Ck #1004 8. 9. 1/06/2020 Ck #1005 10. 1/08/2020 Ck #1006 11. 1/08/2020 12. 1/09/2020 13. 1/13/2020 Ck #1007 14. 1/14/2020 15. 1/14/2020 Deposit #3 16. 1/16/2020 Ck #1008 17. 1/16/2020 18. 1/20/2020 Deposit #4 SOCIETY basis as the computer equipment. The depreciation will be calculated in the adjusting Journal entries. Purchased $450 of office supplies for cash from Office Supplies Co. Purchased $8,000 of merchandise Inventory (surfboards) on account. The vendor did not extend credit terms Purchased $6,000 of merchandise inventory (wakeboards) on account. There were no credit terms for prompt payment. Mr. Maverick received and paid the $940 charge from lawyer. Maverick's Boards is now open for business. Sold merchandise for $7,200 cash. Sales Tax was $594. The cost of the Surfboards is $3,000; the cost of the Wakeboards is $1,100. Part of this sale must be delivered to the customer. The merchandise will be shipped FOB destination. Paid $250 to ship the merchandise. Purchased additional surfboards on account for $4,500. Credit terms were 2/15, n/30 Recorded cash sales that totaled $8,300. Sales tax is $685. The cost of merchandise sold was $4,500 (surfboards were $2,500; wakeboards were $2,000) Mr. Maverick joined the El Paso Chamber of Commerce. He paid the registration fee of $200. Mr. Maverick participated in a surfboard exhibition held at the convention center. He felt this was a good way to publicize his new business. Convention Center charged Mr. Maverick $800. He will pay the bill later. He considers this an advertising and promotion expense. Mr. Maverick paid the Convention Center rental. Paid for the wakeboards purchased on 1/09/2020 Mr. Maverick recorded cash sales totaling $9,000. Sales tax is $743. The cost of the merchandise sold was $4,500 (surfboards $3,000; wakeboards $1,500). Paid the balance due for the surfboards. There are two invoices. American Express sent bill for $235 for gasoline. This was automatically deducted from Blaise's checking account as a debit memo. Received but did not pay the utility bill for the month, $445. Paid the first monthly installment on the computer equipment. The payment amount is $910. Of this amount. $43.33 is for interest and 5866.67 is for principal 19. 1/22/2020 Ck #1009 20. 1/23/2020 21. 1/23/2020 22. 1/26/2020 Ck #1010 23. 1/26/2020 Ck #1011 24. 1/27/2020 Deposit #5 25. 1/27/2020 Ck #1012 26. 1/30/2020 27. 1/30/2020 28. 1/30/2020 Ck #1013