studentnumberendswitha5 to Bob that with LOC of $25,000, Bod is able to borrow any amount up to $25,000 at any time whenever he needs the money, the interest will be charged upon the usage of the loan and will be paid through the bank account automatically at the beginning of the following month after the usage. The company launched on April 1, 2021. Bob had accumulated savings and his life partner, who is still working full time, offered to match his contribution to the firm in the form of a loan with an interest rate of 0.5% per month payable on the New Year day of the following year. Bob contributed his savings in exchange for 50 of the shares (first 50 shares were issued) and Bob's partner matched with the same amount of cash. Bob deposited his contribution and his partner's matching into a new corporate bank account Bob had set up with AMD Bank Canada. The bank account, a standard commercial chequing account that gave cheques returned with monthly statements for a monthly fee, can have overdrafts at a fixed cost per day the account is in red. Bob interest was to help good people by fixing and repairing things in their houses, not keeping tabs on his accounts; therefore, he hired you to be his accountant. You have explained your fee and Bob has agreed to retain you. You have prepared a document with the terms of engagement and payment on it. You, the accountant, informed Bob that if his company would use part of his house to conduct business (storage of equipment and material and communications with clients); the company can pay rent to Bob for its use. The rent shall be reasonable for the Canada Revenue Agency. In his first day of providing services under the company's name realized his company needed some sort of third-party liability insurance just in case a repair went rouge and caused damage. He contacted an old acquaintance of him that works for an insurance company and asked for advice. His friend suggested a product that was just for his needs, it was not expensive, so Bob signed off on a promotional 4-month contract and with an option to renew for another 2 years. His friend also pointed out that Bob could only do repairs that are not regulated under a specific trade in the province. In essence, he can do small jobs that cannot produce structural damage to properties. This province. In essence, he can do small jobs that cannot produce structural damage to properties. This advice was in line with the scope delineated by the lawyers for Bob's company. Fixing things in homes do not need any large equipment, but an industrial quality drill with accessories and a welding gun would simplify his work and decided to buy them. He estimates all the equipment will last 3 years and will have no residual value at all. As soon as operations started, Bob purchased some office supplies that would allow him to keep a paper trail of each service provided. A small inventory of supplies typically used to do small repairs was needed and he bought some during the operations. In a couple of occasions Bob faced a tricky electrical issue, so to be on the safe side he would call his good friend Tracy who is a certified electrician to ask for advice. Bob pays Tracey a flat fee per 2 call; however, if the call involves a video call or extends beyond 15 minutes it is double the fee. Homeowners are extremely pleased with this approach and thank Bob for being proactive in involving experts. Most of Bob's customers are too busy to perform the small repairs needed and have little to no knowledge of how to clean or properly maintain the mechanisms in the house. Bob saw a great opportunity here and decided to buy in bulk the most common items needed in a house such as: oil with application device to maintain windows, door hinges and simple mechanisms. The terms of sale were 50% cash on delivery and the other 50% in 60 days. Any unpaid balance would be accumulated in account payable. He did a very good job at sourcing those products, allowing him to have a large gross margin and still be competitive matching the prices of local stores. Seeing how well his activity was going and how happy he was with his new enterprise, Bob decided to make his presence more noticeable by printing flyers to be left in stores and colorful posters to be placed in the announcement section of the condo buildings where many of his customers reside. Under the company name, Bob signed a prepaid phone plan to take advantage of the promotional rate. His use was intensive because some of the customers would call him to ask for advice on how to attempt the fix by themselves. All payments made by the company Bob fix-it-all were done through cheque to make sure all business-related expenses were accounted for. At the end of the month, you the accountant would calculate the amount for income tax and send an email to Bob with the amount. All income tax accrued in the current month need to be paid before the due date on 15th of the following month. Bob knew all his customers and was comfortable in collecting his service fees in cash, cheque or bank etransfers at the end of the service or within a month. Every two weeks he would prepare a summary note of services rendered, merchandising delivered, and cash collected from the customers. Some customers were so pleased with his job that paid him in advance. One gentleman considered the bank charged too much for transactions, so he made a lump sum payment to Bob on account for future services. Bob received it and at the end of each service he would show the customer how much is the balance left given the services consumed so far. The customer was happy. After the first 4 months of successful operations, Bob gained sizable new customers, however, most of the new customers live far away, in order to conduct business effectively, Bob decided to buy a used van on August 1, 2021 and used it solely for business purpose. Bob paid the van with $2,000 cash (from company bank account) and the rest was borrowed and paid from the line of credit. Bob estimates that the used van would last for 50 months and will have no residual value at the end. Bob decided to declare dividends for an amount reasonable that would not drain the remaining cash from the company. Bob declared $20 per share dividend each month for the past four months (April, 3 May, June and July) and intend to declared $3X (where X is the last digit of your student ID, for example, if last digit of your student ID is 7, then $37) per share dividends for August 2021. Dividends declared in the current month are paid with a withdraw from the bank account in the following month. Additional information: 1. There are no additional capital invested into the company from April 2021 to the end of August, 2021 (no additional shares being exchanged nor additional matching). 2. On mid-August 2021, after reading the news, Bob realized that the manufacturer of the faucet he has been using in his clients' bathrooms has recalled a large batch of products that were deemed to be defective. A defective or leaking faucet will not only waste water causing water bill to increase, it can also result in serious damages (possible floor and ceiling damages) which can result in expensive repairs especially in condos. Bob made 17-bathroom repairs using that faucet, if the product he actually used was part of the batch recalled he is seriously thinking of removing the faucet applied in those 17 bathrooms and replace it with a new product; however, he does not remember exactly which bathrooms he applied the faucet. He is unsure on what to do and consulted The 6 Law who indicated he will be liable for damaged cause by the use of failed material. However, the liability will be conditional to the actual damage emerging in the client's bathrooms. In terms of setting up the accounting system you (the accountant) together with Bob (your client) decided on the following records in April 2021: Chart of Accounts General Journal Sales Journal Disbursements Journal Note to students: Some invoices, payments and taxes will require you to use a part of your student number. For example: the owner contributes to the company 300 times the last digit of your student number in a piece of equipment or has sales of $1,X00. If your student number is 123894567, the owner's contribution is $2,100 ($300 times 7 = $2,100) and the sales is $1,700 where the last digit of your student number replaces the X in $1,X00, students with 0 as the last digit must use 3 as the last digit for all transactions. Required: Prepare the accounting records for Bob fix it all Note: this task is based on the analysis of very extensive narrative and detailed project documents. The next pages have all the documents that Bob processed and are kept in a shoebox (use 2 decimal places, if needed round up the figures to the next cent). Students with the last digit being 0 (zero), must use 3 as if it were the last digit for all transactions in this part of the term project. STEP 1: Prepare the Financial Statements by doing the following: 1. Check and use the Chart of Accounts provided (do not create new accounts). 2. Prepare the bank and cash reconciliation for August 31st 2021. 3. Prepare the General Journal for the month of August (all journal entries including AJE). Prepare Closing Entries for the month of August to continue with business in the month of September as the next period. 4. Post all transactions to the T-accounts and prepare a trial balance. Show a detailed balance of each of these accounts for the month of August operations (end of Month), 5. Prepare the Financial Statements in good form for the month of August including contingency disclosures that are exclusive of the transactions of this case (do not include general notes). Prepare an Income Statement, a Statement of Owners Equity (Retained Earnings), and a Statement of Financial Position (Balance Sheet). Cash flow statement is not required. 6. Each General Journal entry should satisfy all formalities (date, explanation, accounts, etc.). Chart of Accounts Assets Expenses Accounts Receivables Accountant Fee Expense Accumulated Depreciation-Tools Bank Service Expense Accumulated Depreciation - Van Bank Overdraft Fees Cash Cost of Goods Sold Equipment - Tools Depreciation Expense - Tools Van Depreciation Expense - Van Inventory Electrician Fee Expense Organizational Costs Income Tax Expense Prepaid Insurance Insurance Expense Prepaid Office Supplies Office Supplies Expense Prepaid Promotion and Publicity Phone Expense Prepaid Phone Service Promotion and Publicity Expense Prepaid Rent Rent Expense Supplies Supplies Expense Liabilities Interest Expenses Accountant Fee Payable Revenue Accounts Payable Revenue Advances from Customers Shareholders' Equity Dividends Payable Share Capital Loan Payable Retained Earnings Income Tax Payable Dividends Interest Payable Electrician Fee Payable Other (Temp): Line of Credit Loan Income Summary Financial Statements: Bob fix-it-all Service Ltd. Bob fix-it-all Service Ltd. Income Statement For the month July 2021 Revenue Services 3,300.00 Expenses Cost of goods sold Accountant Fee Expense Bank Service Expense Electrician Fee Expense Interest Expense Insurance Expense Phone Expense Promotion and Publicity Expense Depreciation expense - Tools Office supplies expense Rent Expense Supplies Expense Income before income taxes Income Tax Expense Net Income 325.00 150.00 52.00 80.00 25.00 25.00 45.00 67.00 180.00 70.00 100.00 133.00 2,048.00 225.00 1,823.00 Bob fix-it-all Service Ltd. Statement of Retained Earnings July 31st 2021 Retained Earnings, July 1st 2021 plus: Net Income less: Dividends Retained Earnings, July 31st 2021 1655.32 1823.00 (1000.00 2,478.32 Bob fix-it-all Service Ltd. Statement of Financial Position July 31st 2021 ASSETS Current Assets Cash Accounts Receivables Inventory Prepaid Office Supplies Prepaid Insurance Prepaid Promotion and Publicity Prepaid Rent Prepaid Phone Service Supplies Capital Assets Organizational Costs Equipment - Tools less: Accumulated Depreciation - Tools 4480.32 1,280.00 0.00 45.00 0.00 0.00 0.00 365.00 55.00 4,000.00 6,480.00 (720.00 15,985.32 Current Liabilities Dividends Payable Accounts Payable Advances from Customers Interest Payable Electrician Fee Payable Accountant Fee Payable Income Tax Payable Long-term Liabilities Loan Payable Shareholder's Equity Share Capital Retained Earnings 1,000.00 352.00 680.00 100.00 550.00 600.00 225.00 5,000.00 5,000.00 2,478.32 15,985.32 Bank AMD Canada Statement of Account 2594 Dimple Crescent Account 3061-001-33478 Toronto ON M3J 1P7 Chequing Account Statement Date Branch 3061 August 31, 2021 Bob fix-it-all 9709 Keele St. - Unit 14 Maple ON Date Description Debits Credits Balance August 1 Opening Balance 4480.32 August 1 CHEQUE #30 (1) August 1 CHEQUE #29 (2) August 1 Transfer from Line of Credit (6) August 1 CHEQUE #33 (6) August 1 CHEQUE #31 (5) August 1 CHEQUE #32 (4) August 1 Withdrawal 1,000.00 August 1 CHEQUE #35 (3) August 3 CHEQUE #34 276.00 August 12 CHEQUE #36 165.00 August 14 CHEQUE #28 225.00 August 17 FEE BANK OVERDRAFT August 2 to 16 (10) August 31 DEPOSITS (7) August 31 CHEQUE #37 650.00 August 31 DEPOSITS (7a) August 31 MONTHLY SERVICE CHARGE (11) TOTALS Notes: (1) The amount must be equal to 600 times the last digit of your student number (rent) (2) The amount must be equal to 720 times the last digit of your student number (insurance) (3) The amount must be equal to 50% of 530 times the last digit of your student number (inventory) (4) The amount must be equal to 100 times the last digit of your student number (promotion) (5) The amount must be equal to 70 times the last digit of your student number (publicity) (6) The amount must be equal to S(2.000+X.000) where X is the last digit of vour student number (6) $X,000 were borrowed from Line of Credit, X is the last digit of your student number (7) The deposit equal to 3700 times the last digit of your student number is revenue collected in cash for services provided in August plus 600 times the last digit of your student number of the revenue collected in cash for the sale of inventory in August plus 500 times the last digit of your student number for prepaid revenues (money collected but services not provided yet) that is received in August (7a) The amount equal to 70% of accounts receivables that were outstanding on July 31", 2021 (10) The amount must be equal to 76 times the last digit of your student number (bank overdraft fee) (11) The amount must be equal to 15 times the last digit of your student number (bank fee) 10 Bob Thoron representing Bob fix-it-all Ltd. Agrees to pay Bob Thoron (the individual owner of the property where commercial activities are developed by Bob fix-it-all) the sum of (1) for the months of August, September, October, and November. This document acts as a receipt to both parties that the service has been agreed and paid in advance. Bob Thoron Paid with Cheque #80 (1) The amount must be equal to 600 times the last digit of your student number (rent) The Risklt Insurance Group 120 North Town Centre Blvd. Markam, ON W6G 105 Ask For: Tony Tavalla INVOICE ACCT: Date: 98074 Bob fix-it-all August 1st, 2021 TERM POLICY expires on July 31th, 2023 89245-15 EFFECTIVE August 1st, 2021 PREMIUM (2) Coverage: All perils third party liability Limit of Liability $2,000,000 YOUR PREMIUM IS DUE AND PAYABLE ON EFFECTIVE DATE OF POLICY Coverage is cancelled if not paid within 30 days Paid with Cheque #29 CANADIAN TIRE Gaia with Cheque #1 105 Lakeshore drie Toronto, ON M3S T2T Toronto, ON M3S 127 phone 016-878-9632 fax: 426-878-9633 (2) The amount must be equal to 720 times the last digit of your student number (insurance) Invoice Invoice Date Terms CT 1978 April 1, 2021 Due upon delivery of equipment Quantity Amount Description 20V Cordless Dni and Impact Driver Combo kit. 13 Ah 1 4000 Cut Welder kit including brass torch handle, cutting attachments and acetylene cylinder 1 2.480 Previous Balance $0 Payments and Adjustments $0 Overdue Balance New Total Charge Amount Due $0 $6480 $6,480 terms: Payable in cash or cheque upon delivery No return accepted without prior written authorization All claims must be made within 5 days following receipt of Goods INVOICE FACTURE 12 13 STAPLES Office Supplies Paper and Pads Pens, correctors, markers Binders Labels and plastic tags Stapler, Puncher Scissors Total Paid with Cheque #36 $165.00 easy Store 2015 HW7 & Weston 1-877-360-8500 Learn more August 12, 2021 18:36:05 Value of supplies wailable at August 31: 885,00 Hunting Gear Bulky Depot Where cheap and good hunting gear is available Bill To: Bob fix-it-all 1010 Invoice # Invoice Date August 1, 2021 Amount Quantity 20 30 40 Description Crud Cutter Cleaner/Degreaser Lubricating Gun Oil WD-40 Specialist Dirt and Dust Resistant Dry Lube PTFE Spray Balance Due (3) Payment conditions: 50% on delivery, the rest within 60 days of time of delivery Please make cheque payable to: Hunting Gear Bulky Depot 4009 Keele St - Unit 11 Inventory paid (50%) Spronto ON M3J 1P3 with Cheque #35 Value of inventory of goods available for sale August 31 (3a) at: (3) The amount must be equal to 530 times the last digit of your student number (inventory) (3a) The amount must be equal to 63 times the last digit of your student number (inventory) 15 INSTAPRINT Bill To: Bob fix-it-all Invoice # Invoice Date TOR0230 August 1, 2021 Invoice # Invoice Date TOR0230 August 1, 2021 Quantity Description Amount 50 Flyers Balance Due Payment conditions: 10% when ordering, the rest at time of delivery Please make cheque payable to: Paid with Cheque #82 InstaPrint 48 Burgess Ave. Scarborough, ON M7Z 1W9 Delivery: the flyers will be ready to pick up on August 1, 2021. Number of blyers distributed during August; 15 flyers (4) The amount must be equal to 100 times the last digit of your student number (promotion) 16 INSTAPRINT Bill To: Bob fix-it-all Invoice # invoice Date TOR0231 August 1, 2021 Quantity Description Amount 10 Colorful posters Balance Due (5) Payment conditions: 10% when ordering, the rest at time of delivery Please make cheque payable to InstaPrint 48 Burgess Ave. Scarborough, ON M7Z 1W9 Delivery: the posters will be ready to pick up on August 1, 2021 Paid with Cheque #81 CANADIAN TIRE Cold with Cheque #84 3 were distributed in August 105 lakeshore dry Toronto, ON MSS 127 phone 416-878-9532 fax: 416-878-9633 Invoice # Invoice Date Terms CT 6978 August 3, 2021 Due upon delivery of equipment Quanti 1 Description Ant-Siphon Toilet Tank Balcock 10-n Toilet Tank Lever 8.in Push Nut Assortment 10-pk Handle, 1-pk Durabond 90 Repair Compound Amount $ 99 $ 38 $ 21 $ 16 $102 (5) The amount must be equal to 70 times the last digit of your student number (publicity) Previous Balance $0 Paynents and Adjustments $0 Overdue New Balance Charges $0 $276 Total Amount Due $276 terms: Payable in cash or cheque upon delivery No return accepted without prior written authorization All claims must be made within 5 days following receipt of Goods INVOICEFACTURE Al finskading the leftoner for prominee) were ased in Ayurt eroept for 1 Dunabied left at the end of Aspert Syplies) 17 CAR SALE INVOICE Auto Dealer Name: Auto Dealer Street Address: 1083 Keele St. City, State: Toronto, ON ZIP Code:M3M 2N2 Phone: 416-567-2365 Invoice #: 555-3656 Date: August 1, 2021 Client / Customer BOB FIX-IT-ALL Street Address: 9709 Keele St. Unit 14 City, State: Toronto, ON Description Quantity $ / Unit Amount ($) Used Van 1 (6) Paid with Cheque # 33 SUBTOTAL (6) Payment is due immediately TOTAL (6) Thank you for your business! (6) The amount must be equal to $(2,000+X,000) where X is the last digit of your student number (van) (6a) $X,000 were borrowed from Line of Credit (with interest rate of 1% per month), X is the last digit of your student number 19 Tracy Sparks Tracy Sparks Your cottage electrician specialist Note: during August there were 3 short phone calls and one long and complex video call. Previous Balance $550 Payments and Adjustments $0 Balance $550 New Charges $100 Total Amount Due $650 Paid with Cheque #37 Bob fix-it-all Invoice/Payment Summary August 31, 2021 Invoice Date Customer Amount Deposit Amount Balance # Date Paid Due 1 August Amdjadi 2 August Matteo 3 August Castelli 4 August Flora 5 August | Garvey 6 August Herman 7 August Marjam 8 August | Dr. Kwan 9 August Lucy 10 August Xie Summary first half of the month Subtotal Aug 16th 11 August Zeliko 12 August | Mcintosh 13 August Qian 14 August Chu 15 August | Lorne 16 August Masterlitz 17 August Hira 18 August Bar 19 August Miguel 20 August | Ho 21 August Kanner 22 August Stanley 23 August Perri Summary second half of the month Subtotal Aug 31st Totals (7) (7) The amount must be equal to 5600 times the last digit of your student number and the amount breaks down as follows: 3700 times the last digit of your student number is revenue collected in cash for services provided in August 800 times the last digit of your student number is revenue still not collected but services have been provided in August 600 times the last digit of your student number is revenue collected in cash for the sale of inventory in August 500 times the last digit of your student number is for prepaid revenues (money collected but services not provided yet) received in August (7a) In August, Bob collected 70% of accounts receivables that were outstanding on July 31, 2021 (7b) In August, Bob provided services to 80% of prepaid revenues that were outstanding on July 31, 2021 21 Bob Thoron has agreed to retain YOU as the accountant for his firm. Given the services agreed to be provided, the fee of $1,800 for Bob, The purpose of this e-mail is to inform you that I have calculated your income tax liability for the operations of the month of August to be (8). Please prepare the cheque and due date of payment is September 15, 2021. Please note that July's income tax payment cheque (CHQ# 28) was mailed and received by CRA on August 11, 2021. The Accountant (8) The amount must be equal to 285 times the last digit of your student number (income tax) 22 BelTel your communication partner your communication partner Account Summary for Bob Fix-it-All August 31, 2021 Pre-paid Account $500 deposit received on April 1, 2021 boiboo TODO Current charges (for August usage) - per details below (9) Total Amount deducted from Pre-paid account (9) Current Charges (for August usage) Total Charges (9) (9) The amount must be equal to 20 times the last digit of your student number (total of August usage) 23 Sample General Journal (assuming the last digit of your student number is 1) Date Dr Cr 31 July 3,300.00 Order Account Type of Account 144 Revenue Services Revenue Cost of goods sold Expense Accountant Fee Expense Expense Bank Service expense Expense Electrician Expense Expense Interest Expense Expense Insurance Expense Expense Phone Expense Expense Promotion and Publicity Expense Expense Depreciation expense Tools Expense Office supplies expense Expense Rent Expense Expense Supplies Expense Expense Income Tax Expense Expense Income Summary Temp Explanation: closing of temporary accounts to determine Net Income for the month of July 2021 45 Dividends OE Dividends Payable Liability Explanation: declare dividends of $20 per share Month of August 2021 order Account Type of Account 1 Prepaid Rent Asset 1 Cash Asset Explanation: rent for the months of August, September, 325 150 52 80 25 25 45 67 180 70 100 133 225 1823.00 31 July 1000 1000 Date Dr Cr 1 Aug 600.00 600.00 Date Dr Cr 1 Aug 600.00 600.00 Explanation: declare dividends of $20 per share Month of August 2021 order Account Type of Account 1 Prepaid Rent Asset 1 Cash Asset Explanation: rent for the months of August, September, October and November is paid on August 1" with cheque #30. AJE needed 2 Prepaid Insurance Asset 2 Cash Asset Explanation: insurance for 2 years was paid on August 18* with Cheque #29. AJE needed 1 Aug 720.00 720.00 24 Disbursements Journal 35 Disbursement mode Amount CHEQUE 30 (1) CHEQUE 29 (2) CHEQUE (3) CHEQUE 32 CHEQUE 31 (5) CHEQUE 33 (6) Withdrawal $1,000 CHEQUE 34 $276 CHEQUE 36 $165 CHEQUE $225 Bank debit (10) CHEQUE $650 Bank debit (11) Reason Rent (4 months) Insurance (2 years) Inventory Promotion Publicity Van July's Dividends Supplies (durabond) Office supplies July's Income tax Bank Overdraft Fee Electrician services Bank fee 28 37 (1) The amount must be equal to 600 times the last digit of your student number (rent) (2) The amount must be equal to 720 times the last digit of your student number (insurance) (3) The amount must be equal to 50% of 530 times the last digit of your student number (inventory) (4) The amount must be equal to 100 times the last digit of your student number (promotion) (5) The amount must be equal to 70 times the last digit of your student number (publicity) (6) The amount must be equal to $(2,000+X,000) where X is the last digit of your student number (van) (10) The amount must be equal to 76 times the last digit of your student number (bank overdraft fee) (11) The amount must be equal to 15 times the last digit of your student number (bank fee) studentnumberendswitha5 to Bob that with LOC of $25,000, Bod is able to borrow any amount up to $25,000 at any time whenever he needs the money, the interest will be charged upon the usage of the loan and will be paid through the bank account automatically at the beginning of the following month after the usage. The company launched on April 1, 2021. Bob had accumulated savings and his life partner, who is still working full time, offered to match his contribution to the firm in the form of a loan with an interest rate of 0.5% per month payable on the New Year day of the following year. Bob contributed his savings in exchange for 50 of the shares (first 50 shares were issued) and Bob's partner matched with the same amount of cash. Bob deposited his contribution and his partner's matching into a new corporate bank account Bob had set up with AMD Bank Canada. The bank account, a standard commercial chequing account that gave cheques returned with monthly statements for a monthly fee, can have overdrafts at a fixed cost per day the account is in red. Bob interest was to help good people by fixing and repairing things in their houses, not keeping tabs on his accounts; therefore, he hired you to be his accountant. You have explained your fee and Bob has agreed to retain you. You have prepared a document with the terms of engagement and payment on it. You, the accountant, informed Bob that if his company would use part of his house to conduct business (storage of equipment and material and communications with clients); the company can pay rent to Bob for its use. The rent shall be reasonable for the Canada Revenue Agency. In his first day of providing services under the company's name realized his company needed some sort of third-party liability insurance just in case a repair went rouge and caused damage. He contacted an old acquaintance of him that works for an insurance company and asked for advice. His friend suggested a product that was just for his needs, it was not expensive, so Bob signed off on a promotional 4-month contract and with an option to renew for another 2 years. His friend also pointed out that Bob could only do repairs that are not regulated under a specific trade in the province. In essence, he can do small jobs that cannot produce structural damage to properties. This province. In essence, he can do small jobs that cannot produce structural damage to properties. This advice was in line with the scope delineated by the lawyers for Bob's company. Fixing things in homes do not need any large equipment, but an industrial quality drill with accessories and a welding gun would simplify his work and decided to buy them. He estimates all the equipment will last 3 years and will have no residual value at all. As soon as operations started, Bob purchased some office supplies that would allow him to keep a paper trail of each service provided. A small inventory of supplies typically used to do small repairs was needed and he bought some during the operations. In a couple of occasions Bob faced a tricky electrical issue, so to be on the safe side he would call his good friend Tracy who is a certified electrician to ask for advice. Bob pays Tracey a flat fee per 2 call; however, if the call involves a video call or extends beyond 15 minutes it is double the fee. Homeowners are extremely pleased with this approach and thank Bob for being proactive in involving experts. Most of Bob's customers are too busy to perform the small repairs needed and have little to no knowledge of how to clean or properly maintain the mechanisms in the house. Bob saw a great opportunity here and decided to buy in bulk the most common items needed in a house such as: oil with application device to maintain windows, door hinges and simple mechanisms. The terms of sale were 50% cash on delivery and the other 50% in 60 days. Any unpaid balance would be accumulated in account payable. He did a very good job at sourcing those products, allowing him to have a large gross margin and still be competitive matching the prices of local stores. Seeing how well his activity was going and how happy he was with his new enterprise, Bob decided to make his presence more noticeable by printing flyers to be left in stores and colorful posters to be placed in the announcement section of the condo buildings where many of his customers reside. Under the company name, Bob signed a prepaid phone plan to take advantage of the promotional rate. His use was intensive because some of the customers would call him to ask for advice on how to attempt the fix by themselves. All payments made by the company Bob fix-it-all were done through cheque to make sure all business-related expenses were accounted for. At the end of the month, you the accountant would calculate the amount for income tax and send an email to Bob with the amount. All income tax accrued in the current month need to be paid before the due date on 15th of the following month. Bob knew all his customers and was comfortable in collecting his service fees in cash, cheque or bank etransfers at the end of the service or within a month. Every two weeks he would prepare a summary note of services rendered, merchandising delivered, and cash collected from the customers. Some customers were so pleased with his job that paid him in advance. One gentleman considered the bank charged too much for transactions, so he made a lump sum payment to Bob on account for future services. Bob received it and at the end of each service he would show the customer how much is the balance left given the services consumed so far. The customer was happy. After the first 4 months of successful operations, Bob gained sizable new customers, however, most of the new customers live far away, in order to conduct business effectively, Bob decided to buy a used van on August 1, 2021 and used it solely for business purpose. Bob paid the van with $2,000 cash (from company bank account) and the rest was borrowed and paid from the line of credit. Bob estimates that the used van would last for 50 months and will have no residual value at the end. Bob decided to declare dividends for an amount reasonable that would not drain the remaining cash from the company. Bob declared $20 per share dividend each month for the past four months (April, 3 May, June and July) and intend to declared $3X (where X is the last digit of your student ID, for example, if last digit of your student ID is 7, then $37) per share dividends for August 2021. Dividends declared in the current month are paid with a withdraw from the bank account in the following month. Additional information: 1. There are no additional capital invested into the company from April 2021 to the end of August, 2021 (no additional shares being exchanged nor additional matching). 2. On mid-August 2021, after reading the news, Bob realized that the manufacturer of the faucet he has been using in his clients' bathrooms has recalled a large batch of products that were deemed to be defective. A defective or leaking faucet will not only waste water causing water bill to increase, it can also result in serious damages (possible floor and ceiling damages) which can result in expensive repairs especially in condos. Bob made 17-bathroom repairs using that faucet, if the product he actually used was part of the batch recalled he is seriously thinking of removing the faucet applied in those 17 bathrooms and replace it with a new product; however, he does not remember exactly which bathrooms he applied the faucet. He is unsure on what to do and consulted The 6 Law who indicated he will be liable for damaged cause by the use of failed material. However, the liability will be conditional to the actual damage emerging in the client's bathrooms. In terms of setting up the accounting system you (the accountant) together with Bob (your client) decided on the following records in April 2021: Chart of Accounts General Journal Sales Journal Disbursements Journal Note to students: Some invoices, payments and taxes will require you to use a part of your student number. For example: the owner contributes to the company 300 times the last digit of your student number in a piece of equipment or has sales of $1,X00. If your student number is 123894567, the owner's contribution is $2,100 ($300 times 7 = $2,100) and the sales is $1,700 where the last digit of your student number replaces the X in $1,X00, students with 0 as the last digit must use 3 as the last digit for all transactions. Required: Prepare the accounting records for Bob fix it all Note: this task is based on the analysis of very extensive narrative and detailed project documents. The next pages have all the documents that Bob processed and are kept in a shoebox (use 2 decimal places, if needed round up the figures to the next cent). Students with the last digit being 0 (zero), must use 3 as if it were the last digit for all transactions in this part of the term project. STEP 1: Prepare the Financial Statements by doing the following: 1. Check and use the Chart of Accounts provided (do not create new accounts). 2. Prepare the bank and cash reconciliation for August 31st 2021. 3. Prepare the General Journal for the month of August (all journal entries including AJE). Prepare Closing Entries for the month of August to continue with business in the month of September as the next period. 4. Post all transactions to the T-accounts and prepare a trial balance. Show a detailed balance of each of these accounts for the month of August operations (end of Month), 5. Prepare the Financial Statements in good form for the month of August including contingency disclosures that are exclusive of the transactions of this case (do not include general notes). Prepare an Income Statement, a Statement of Owners Equity (Retained Earnings), and a Statement of Financial Position (Balance Sheet). Cash flow statement is not required. 6. Each General Journal entry should satisfy all formalities (date, explanation, accounts, etc.). Chart of Accounts Assets Expenses Accounts Receivables Accountant Fee Expense Accumulated Depreciation-Tools Bank Service Expense Accumulated Depreciation - Van Bank Overdraft Fees Cash Cost of Goods Sold Equipment - Tools Depreciation Expense - Tools Van Depreciation Expense - Van Inventory Electrician Fee Expense Organizational Costs Income Tax Expense Prepaid Insurance Insurance Expense Prepaid Office Supplies Office Supplies Expense Prepaid Promotion and Publicity Phone Expense Prepaid Phone Service Promotion and Publicity Expense Prepaid Rent Rent Expense Supplies Supplies Expense Liabilities Interest Expenses Accountant Fee Payable Revenue Accounts Payable Revenue Advances from Customers Shareholders' Equity Dividends Payable Share Capital Loan Payable Retained Earnings Income Tax Payable Dividends Interest Payable Electrician Fee Payable Other (Temp): Line of Credit Loan Income Summary Financial Statements: Bob fix-it-all Service Ltd. Bob fix-it-all Service Ltd. Income Statement For the month July 2021 Revenue Services 3,300.00 Expenses Cost of goods sold Accountant Fee Expense Bank Service Expense Electrician Fee Expense Interest Expense Insurance Expense Phone Expense Promotion and Publicity Expense Depreciation expense - Tools Office supplies expense Rent Expense Supplies Expense Income before income taxes Income Tax Expense Net Income 325.00 150.00 52.00 80.00 25.00 25.00 45.00 67.00 180.00 70.00 100.00 133.00 2,048.00 225.00 1,823.00 Bob fix-it-all Service Ltd. Statement of Retained Earnings July 31st 2021 Retained Earnings, July 1st 2021 plus: Net Income less: Dividends Retained Earnings, July 31st 2021 1655.32 1823.00 (1000.00 2,478.32 Bob fix-it-all Service Ltd. Statement of Financial Position July 31st 2021 ASSETS Current Assets Cash Accounts Receivables Inventory Prepaid Office Supplies Prepaid Insurance Prepaid Promotion and Publicity Prepaid Rent Prepaid Phone Service Supplies Capital Assets Organizational Costs Equipment - Tools less: Accumulated Depreciation - Tools 4480.32 1,280.00 0.00 45.00 0.00 0.00 0.00 365.00 55.00 4,000.00 6,480.00 (720.00 15,985.32 Current Liabilities Dividends Payable Accounts Payable Advances from Customers Interest Payable Electrician Fee Payable Accountant Fee Payable Income Tax Payable Long-term Liabilities Loan Payable Shareholder's Equity Share Capital Retained Earnings 1,000.00 352.00 680.00 100.00 550.00 600.00 225.00 5,000.00 5,000.00 2,478.32 15,985.32 Bank AMD Canada Statement of Account 2594 Dimple Crescent Account 3061-001-33478 Toronto ON M3J 1P7 Chequing Account Statement Date Branch 3061 August 31, 2021 Bob fix-it-all 9709 Keele St. - Unit 14 Maple ON Date Description Debits Credits Balance August 1 Opening Balance 4480.32 August 1 CHEQUE #30 (1) August 1 CHEQUE #29 (2) August 1 Transfer from Line of Credit (6) August 1 CHEQUE #33 (6) August 1 CHEQUE #31 (5) August 1 CHEQUE #32 (4) August 1 Withdrawal 1,000.00 August 1 CHEQUE #35 (3) August 3 CHEQUE #34 276.00 August 12 CHEQUE #36 165.00 August 14 CHEQUE #28 225.00 August 17 FEE BANK OVERDRAFT August 2 to 16 (10) August 31 DEPOSITS (7) August 31 CHEQUE #37 650.00 August 31 DEPOSITS (7a) August 31 MONTHLY SERVICE CHARGE (11) TOTALS Notes: (1) The amount must be equal to 600 times the last digit of your student number (rent) (2) The amount must be equal to 720 times the last digit of your student number (insurance) (3) The amount must be equal to 50% of 530 times the last digit of your student number (inventory) (4) The amount must be equal to 100 times the last digit of your student number (promotion) (5) The amount must be equal to 70 times the last digit of your student number (publicity) (6) The amount must be equal to S(2.000+X.000) where X is the last digit of vour student number (6) $X,000 were borrowed from Line of Credit, X is the last digit of your student number (7) The deposit equal to 3700 times the last digit of your student number is revenue collected in cash for services provided in August plus 600 times the last digit of your student number of the revenue collected in cash for the sale of inventory in August plus 500 times the last digit of your student number for prepaid revenues (money collected but services not provided yet) that is received in August (7a) The amount equal to 70% of accounts receivables that were outstanding on July 31", 2021 (10) The amount must be equal to 76 times the last digit of your student number (bank overdraft fee) (11) The amount must be equal to 15 times the last digit of your student number (bank fee) 10 Bob Thoron representing Bob fix-it-all Ltd. Agrees to pay Bob Thoron (the individual owner of the property where commercial activities are developed by Bob fix-it-all) the sum of (1) for the months of August, September, October, and November. This document acts as a receipt to both parties that the service has been agreed and paid in advance. Bob Thoron Paid with Cheque #80 (1) The amount must be equal to 600 times the last digit of your student number (rent) The Risklt Insurance Group 120 North Town Centre Blvd. Markam, ON W6G 105 Ask For: Tony Tavalla INVOICE ACCT: Date: 98074 Bob fix-it-all August 1st, 2021 TERM POLICY expires on July 31th, 2023 89245-15 EFFECTIVE August 1st, 2021 PREMIUM (2) Coverage: All perils third party liability Limit of Liability $2,000,000 YOUR PREMIUM IS DUE AND PAYABLE ON EFFECTIVE DATE OF POLICY Coverage is cancelled if not paid within 30 days Paid with Cheque #29 CANADIAN TIRE Gaia with Cheque #1 105 Lakeshore drie Toronto, ON M3S T2T Toronto, ON M3S 127 phone 016-878-9632 fax: 426-878-9633 (2) The amount must be equal to 720 times the last digit of your student number (insurance) Invoice Invoice Date Terms CT 1978 April 1, 2021 Due upon delivery of equipment Quantity Amount Description 20V Cordless Dni and Impact Driver Combo kit. 13 Ah 1 4000 Cut Welder kit including brass torch handle, cutting attachments and acetylene cylinder 1 2.480 Previous Balance $0 Payments and Adjustments $0 Overdue Balance New Total Charge Amount Due $0 $6480 $6,480 terms: Payable in cash or cheque upon delivery No return accepted without prior written authorization All claims must be made within 5 days following receipt of Goods INVOICE FACTURE 12 13 STAPLES Office Supplies Paper and Pads Pens, correctors, markers Binders Labels and plastic tags Stapler, Puncher Scissors Total Paid with Cheque #36 $165.00 easy Store 2015 HW7 & Weston 1-877-360-8500 Learn more August 12, 2021 18:36:05 Value of supplies wailable at August 31: 885,00 Hunting Gear Bulky Depot Where cheap and good hunting gear is available Bill To: Bob fix-it-all 1010 Invoice # Invoice Date August 1, 2021 Amount Quantity 20 30 40 Description Crud Cutter Cleaner/Degreaser Lubricating Gun Oil WD-40 Specialist Dirt and Dust Resistant Dry Lube PTFE Spray Balance Due (3) Payment conditions: 50% on delivery, the rest within 60 days of time of delivery Please make cheque payable to: Hunting Gear Bulky Depot 4009 Keele St - Unit 11 Inventory paid (50%) Spronto ON M3J 1P3 with Cheque #35 Value of inventory of goods available for sale August 31 (3a) at: (3) The amount must be equal to 530 times the last digit of your student number (inventory) (3a) The amount must be equal to 63 times the last digit of your student number (inventory) 15 INSTAPRINT Bill To: Bob fix-it-all Invoice # Invoice Date TOR0230 August 1, 2021 Invoice # Invoice Date TOR0230 August 1, 2021 Quantity Description Amount 50 Flyers Balance Due Payment conditions: 10% when ordering, the rest at time of delivery Please make cheque payable to: Paid with Cheque #82 InstaPrint 48 Burgess Ave. Scarborough, ON M7Z 1W9 Delivery: the flyers will be ready to pick up on August 1, 2021. Number of blyers distributed during August; 15 flyers (4) The amount must be equal to 100 times the last digit of your student number (promotion) 16 INSTAPRINT Bill To: Bob fix-it-all Invoice # invoice Date TOR0231 August 1, 2021 Quantity Description Amount 10 Colorful posters Balance Due (5) Payment conditions: 10% when ordering, the rest at time of delivery Please make cheque payable to InstaPrint 48 Burgess Ave. Scarborough, ON M7Z 1W9 Delivery: the posters will be ready to pick up on August 1, 2021 Paid with Cheque #81 CANADIAN TIRE Cold with Cheque #84 3 were distributed in August 105 lakeshore dry Toronto, ON MSS 127 phone 416-878-9532 fax: 416-878-9633 Invoice # Invoice Date Terms CT 6978 August 3, 2021 Due upon delivery of equipment Quanti 1 Description Ant-Siphon Toilet Tank Balcock 10-n Toilet Tank Lever 8.in Push Nut Assortment 10-pk Handle, 1-pk Durabond 90 Repair Compound Amount $ 99 $ 38 $ 21 $ 16 $102 (5) The amount must be equal to 70 times the last digit of your student number (publicity) Previous Balance $0 Paynents and Adjustments $0 Overdue New Balance Charges $0 $276 Total Amount Due $276 terms: Payable in cash or cheque upon delivery No return accepted without prior written authorization All claims must be made within 5 days following receipt of Goods INVOICEFACTURE Al finskading the leftoner for prominee) were ased in Ayurt eroept for 1 Dunabied left at the end of Aspert Syplies) 17 CAR SALE INVOICE Auto Dealer Name: Auto Dealer Street Address: 1083 Keele St. City, State: Toronto, ON ZIP Code:M3M 2N2 Phone: 416-567-2365 Invoice #: 555-3656 Date: August 1, 2021 Client / Customer BOB FIX-IT-ALL Street Address: 9709 Keele St. Unit 14 City, State: Toronto, ON Description Quantity $ / Unit Amount ($) Used Van 1 (6) Paid with Cheque # 33 SUBTOTAL (6) Payment is due immediately TOTAL (6) Thank you for your business! (6) The amount must be equal to $(2,000+X,000) where X is the last digit of your student number (van) (6a) $X,000 were borrowed from Line of Credit (with interest rate of 1% per month), X is the last digit of your student number 19 Tracy Sparks Tracy Sparks Your cottage electrician specialist Note: during August there were 3 short phone calls and one long and complex video call. Previous Balance $550 Payments and Adjustments $0 Balance $550 New Charges $100 Total Amount Due $650 Paid with Cheque #37 Bob fix-it-all Invoice/Payment Summary August 31, 2021 Invoice Date Customer Amount Deposit Amount Balance # Date Paid Due 1 August Amdjadi 2 August Matteo 3 August Castelli 4 August Flora 5 August | Garvey 6 August Herman 7 August Marjam 8 August | Dr. Kwan 9 August Lucy 10 August Xie Summary first half of the month Subtotal Aug 16th 11 August Zeliko 12 August | Mcintosh 13 August Qian 14 August Chu 15 August | Lorne 16 August Masterlitz 17 August Hira 18 August Bar 19 August Miguel 20 August | Ho 21 August Kanner 22 August Stanley 23 August Perri Summary second half of the month Subtotal Aug 31st Totals (7) (7) The amount must be equal to 5600 times the last digit of your student number and the amount breaks down as follows: 3700 times the last digit of your student number is revenue collected in cash for services provided in August 800 times the last digit of your student number is revenue still not collected but services have been provided in August 600 times the last digit of your student number is revenue collected in cash for the sale of inventory in August 500 times the last digit of your student number is for prepaid revenues (money collected but services not provided yet) received in August (7a) In August, Bob collected 70% of accounts receivables that were outstanding on July 31, 2021 (7b) In August, Bob provided services to 80% of prepaid revenues that were outstanding on July 31, 2021 21 Bob Thoron has agreed to retain YOU as the accountant for his firm. Given the services agreed to be provided, the fee of $1,800 for Bob, The purpose of this e-mail is to inform you that I have calculated your income tax liability for the operations of the month of August to be (8). Please prepare the cheque and due date of payment is September 15, 2021. Please note that July's income tax payment cheque (CHQ# 28) was mailed and received by CRA on August 11, 2021. The Accountant (8) The amount must be equal to 285 times the last digit of your student number (income tax) 22 BelTel your communication partner your communication partner Account Summary for Bob Fix-it-All August 31, 2021 Pre-paid Account $500 deposit received on April 1, 2021 boiboo TODO Current charges (for August usage) - per details below (9) Total Amount deducted from Pre-paid account (9) Current Charges (for August usage) Total Charges (9) (9) The amount must be equal to 20 times the last digit of your student number (total of August usage) 23 Sample General Journal (assuming the last digit of your student number is 1) Date Dr Cr 31 July 3,300.00 Order Account Type of Account 144 Revenue Services Revenue Cost of goods sold Expense Accountant Fee Expense Expense Bank Service expense Expense Electrician Expense Expense Interest Expense Expense Insurance Expense Expense Phone Expense Expense Promotion and Publicity Expense Expense Depreciation expense Tools Expense Office supplies expense Expense Rent Expense Expense Supplies Expense Expense Income Tax Expense Expense Income Summary Temp Explanation: closing of temporary accounts to determine Net Income for the month of July 2021 45 Dividends OE Dividends Payable Liability Explanation: declare dividends of $20 per share Month of August 2021 order Account Type of Account 1 Prepaid Rent Asset 1 Cash Asset Explanation: rent for the months of August, September, 325 150 52 80 25 25 45 67 180 70 100 133 225 1823.00 31 July 1000 1000 Date Dr Cr 1 Aug 600.00 600.00 Date Dr Cr 1 Aug 600.00 600.00 Explanation: declare dividends of $20 per share Month of August 2021 order Account Type of Account 1 Prepaid Rent Asset 1 Cash Asset Explanation: rent for the months of August, September, October and November is paid on August 1" with cheque #30. AJE needed 2 Prepaid Insurance Asset 2 Cash Asset Explanation: insurance for 2 years was paid on August 18* with Cheque #29. AJE needed 1 Aug 720.00 720.00 24 Disbursements Journal 35 Disbursement mode Amount CHEQUE 30 (1) CHEQUE 29 (2) CHEQUE (3) CHEQUE 32 CHEQUE 31 (5) CHEQUE 33 (6) Withdrawal $1,000 CHEQUE 34 $276 CHEQUE 36 $165 CHEQUE $225 Bank debit (10) CHEQUE $650 Bank debit (11) Reason Rent (4 months) Insurance (2 years) Inventory Promotion Publicity Van July's Dividends Supplies (durabond) Office supplies July's Income tax Bank Overdraft Fee Electrician services Bank fee 28 37 (1) The amount must be equal to 600 times the last digit of your student number (rent) (2) The amount must be equal to 720 times the last digit of your student number (insurance) (3) The amount must be equal to 50% of 530 times the last digit of your student number (inventory) (4) The amount must be equal to 100 times the last digit of your student number (promotion) (5) The amount must be equal to 70 times the last digit of your student number (publicity) (6) The amount must be equal to $(2,000+X,000) where X is the last digit of your student number (van) (10) The amount must be equal to 76 times the last digit of your student number (bank overdraft fee) (11) The amount must be equal to 15 times the last digit of your student number (bank fee)