Sophies Flowers is a flower shop in Salisbury started in May 1, 2017 by Sophie Davis. She has saved over $40,000 to invest in the business. She has met with her lawyer and her Certified Public Accountant (CPA) and t hey have determined that the business should be organized as a corporation. The CPA has helped Miss Davis set up her accounting system. He provided Miss Sophie a chart of accounts.(please help!!!)

The student must use the accounts as they are listed in the chart of accounts.

1xxxx	Current Asset
15xxx	Property, Plant and Equipment
17xxx	Accumulated Depreciation
2xxxx	Current Liabilities
27xxx	Long - term Liabilities
39xxx	Stockholders Equity
4xxxx	Revenue
5xxxx	Cost of Goods Sold
60xxx	Operating Expenses

(PART ONE)

Record the May 2017 transactions in the general journal (last section of this Practice Set) using the following events. A n explanation is required for each journal and adjusting journal entry. Skip a line between each entry and number the entries to match the number of transactions. In the general journal record the transaction number, the date, and the journal entry and a n explanation . Create a T - Account for each account in the Chart of Accounts and record the transactions and end with an ending balance. You will need the ending balance in the cash account for the bank reconciliation.

Transactions

	Date	Deposit No. / Check No.	Description
1	May 1, 2017		Sophie Davis met with her lawyer and CPA for advice on starting the business. They decided that Miss Davis would organize the business as a corporation. The lawyer told Miss Davis to register the company name Sophies Flowers wi th Wicomico County. In addition, Miss Davis will get an employer identification number (EIN) from the Internal Revenue Service and get a sales tax permit from the state of Maryland. The lawyer agreed to prepare the Articles of Incorporation to be filed wit h the Secretary of State of Maryland. The CPA has agreed to help Miss Davis set up her accounting system.
2	May 1, 2017	Deposit #1	Miss Davis opened a business checking account with Bank of America by depositing $40,000. The corporation issued her a stoc k certificate for 4,000 shares of common stock with no par value.
3.	May 1, 2017	Check # 101	Miss Davis signed a one - year rental agreement with Schumaker Realtors for warehouse space. She paid $6,000 for rent for the months of May 1, 2017 July 31, 201 7.
4.	May 2, 2017	Check $102	Arranged for a general business liability insurance policy and paid $2,250 for Farmers Insurance. This insurance premium is for 18 months coverage.
5.	May 2, 2017		Purchased a new computer that costs $2, 4 00 from Sams Computer Inc. for use in the business. Miss Davis signed a six - month, 15%, installment note payable for the cost of the computer. The computer has an estimated useful life of 4 years and the residual value is $100. This will be recorded as Computer, and de preciated accordingly.
6.	May 3, 2017	Deposit #2	Signed a note payable to borrow $20,000 from Bank of America. Interest is 5% annually and the note is to be repaid with interest in six months.
7.	May 4, 2017	Check #103	Paid $600 for shipping supplies
8.	May 4, 2017	Check #104	Paid $1,200 for wrapping supplies
9.	May 8 , 2017	Check #105	Paid $9,000 for website development. The estimated service life of this asset is 5 years. The residual value is zero. These items will be recorded as Website Development and

depreciated accordingly. Registered the website with GoDaddy.com, an internet doma in registrar, and agreed to prepay 6 months of charges ($50 per month). The domain registrar will send a bill.
10.	May 8, 2017	Check #106	Arranged for MovePro Movers to make the delivery and setup for the computer and paid the delivery $100. This charge should be added to the cost of the computer purchased and depreciated on the same basis as the computer.
11.	May 9, 2017	Check #107	Purchased $480 office supplies for cash from Staples.
12.	May 10, 2017		Purchased $ 8 ,800 of flowers on account. The ven dor extended credit terms of 3/15, n/30.
13.	May 10, 2017		Purchased $ 3 , 2 00 containers on account. There were no credit terms or prompt payment.
14.	May 11, 2017	Check #108	Miss Davis received invoice and paid the $500 charge from her lawyer.
15.	May 12, 2017		Sophies Flowers is now open for business. Customers will go online and select the flowers they wish to purchase. The payment will be made using the customers credit card. Sophies Flowers will treat credit card sales as cash sales.
16.	M ay 12, 2017	Deposit #3	Sold merchandise that cost $1, 8 00 for $3,500. Sales tax will be $210. The cost of the flowers is $1, 3 00 and the cost of the containers is $500. The merchandise will be shipped FOB destination.
17.	May 1 5 , 2017	Check #109	Paid $180 to deliver merchandise.
18.	May 16, 2017		Purchased additional flowers on account for $5,000. Credit terms were 3/15, n/30.
19.	May 17, 2017	Deposit #4	Recorded internet sales for the first 6 days. Sales totaled $6,200. Sales tax is $3 7 2. The cost of the merchandise sold was $4,600, including $3,800 cost of flowers and $800 cost of containers . Delivery expense totaled $445.
20.	May 18, 2017	Check #110	Received and paid the invoice from the internet domain registrar.
21.	May 19, 2017	C heck #111	Received invoice and paid $450 charge from her CPA. This charge will be considered Legal Expense.
22.	May 20, 2017		Miss Davis participated at a floral exhibition held at the Wicomico Youth & Civic Center. She felt this was a good way to advertise her new business. The Wicomico Youth & Civic Center charged her $350. She will pay the bill later. She considers this charg e an advertising and promotion expense.
23.	May 23, 2017	Check #112	Miss Davis paid the Wicomico Youth & Civic Center.
24.	May 24, 2017	Check # 113	Paid the containers purchased on May 10, 2017.
25.	May 26, 2017	Deposit #5	Internet sales totaled $7, 800. Sales tax is $468. The cost of the merchandise sold was $6,100, including flowers $5,400 and containers $700. Delivery expense totaled $720.

26.	May 29, 2017	Check #114	Paid the balance due for the flowers. There are two invoices.
27.	May 31, 2017		Credit card company sent bill for $150. This was automatically deducted from Sophies Flowers checking accounting as a debit memo.
28.	May 31, 2017		Received but did not pay the utility bill for the month of $310.
2 9 .	May 31, 2017	Check #115	Paid t he first monthly installment on computer. The amount included $30 for interest and $400 for principal.
30 .	May 31, 2017	Deposit #6	Recorded internet sales for in the last week of the month. Sales totaled $5,200. Sales tax is $312. The cost of the merchandise sold was $3, 9 00, including $2, 9 00 cost of flowers and $ 1 , 0 00 cost of containers . Delivery expense totaled $445.
3 1 .	May 31, 2017	Check #116	Declared and paid a cash dividend of $400 to Miss Davis.

Once all journal entries are recorded in th e Practice Set, record the adjusting journal entries for the month of May as below. Write the journal entries in the Practice Set after the original journal entries. Here round all answers to the nearest cent if necessary.

a. $45 of office supplies remained on hand.

b. $80 of shipping supplies remained on hand.

c. $25 of wrapping supplies remained on hand.

d. $900 of wages for the part - time help from Jennys Helping Hands Inc. for May should be accrued. Do not worry about payroll tax. Jennys Helping Hands Inc. wil l handle these.

e. Make the necessary adjusting entries for one months depreciation for the Website Devel opment using straight line depreciation.

f. Make the necessary adjusting entries for one months depreciation for the Computer using straight line depreci ation.

g. One month of the prepaid insurance has expired.

h. One month of the prepaid rent has expired.

i. Record the inter es t for the loan from Bank of America for one month.

j. One month of the prepaid domain charges have been used.

Make sure to prepare the journal entries, the adjusting entries, and the entry explanation s for all entries in the Practice Set. All T - Accounts with the correct balances should be prepared. Make sure all accounts in the Chart of Accounts are included.

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(PART TWO)

In this part, the student will prepare a Bank Reconciliation for the month of May using Excel. Use the ending balance in your cash account for the cash for your book.

Requirements:

1. Correct Errors. Correct any errors that you made on th e 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. This should be prepared using Excel and must contained the proper headin g as well as the reconciliation. An example of the Bank reconciliation is located at the back of the Practice Set.

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 general ledger cash agrees with the bank reconciliation.

4. Turn in your bank reconciliation work along with any adjusting entries for credit for Part 2.

Bank of America

Bank statement

Sophies Flowers

Beginning Balance May 1, 2017 $0

Deposits and other credits May 2017 $77,385

Checks and other debits May 2017 $38,205

Balance on statement date May 31, 20 17 $39,180

Deposits added:

May 1, 2017	Deposit # 1	$40,000
May 3, 2017	Deposit # 2	$20,000
May 12, 2017	Deposit # 3	$3,710
May 17, 2017	Deposit # 4	$6,127
May 26, 2017	Deposit # 5	$7,548

Checks paid and other debts:

May 1, 2017	Check #101	$6,000		May 18, 2018	Check #110	$300
May 2, 2017	Check #102	$2,250	May 19, 2017	Check #111	$500
May 4, 2017	Check #103	$600	May 23,2017	Check #112	$350
May 4, 2017	Check #104	$1,200	May 24, 2017	Check #113	$3,200
May 8, 2017	Check #105	$9,000	May 29, 2017	Check #114	$13,650
May 9, 2017	Check #107	$480	May 31, 2017	Credit card fee	$150
May 11, 2017	Check #108	$500	May 31, 2017	Check printing fee	$25

Assume any errors are made by the bank.

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PART 3 INSTRUCTIONS:

1. Based on the current account balances, prepare Trial Balances.

2. Prepare Income Statement for the month ended May 31, 2017.

3. Prepare Balance Sheet as of May 31, 2017.

4. Print out your work and turn in for credit.