NOVEMBER TRANSACTIONS Date 8 8 8 11 Transaction You found you have some U.S. Savings Bonds laying around from a grandparent. You decide to cash those in and receive $520, which you deposit in your personal bank account. You open a bank account for your business. You purchases $1,000 of your own business's common stock. Your business purchases paper and other office supplies for $95. (Use Supplies.) You start to gather some equipment to take with you when you begin your business. You have an excellent computer that is old, but works fine. You decides to start using it only for your new business. You estimate that the computer is currently worth $300, and you transfer the computer into the business in exchange for additional common stock. (Use "Computer" as the account type). The company needs more cash to sustain its operations. Your parents lend the company $5,000 cash, in exchange for a two-year, 9% note payable. Interest and the principal are repayable at maturity. Your business pays $1,200 for additional equipment. You order some merchandise from a wholesaler in the amount of $2,000 cash, shipping terms FOB Shipping Point. Freight costs amounted to $40. 15 16 17 18 29 30 30 You have your first sale in the amount of $100, paid on account. These products originally costed you $50. You ship your product to your customer under the terms FOB Destination. Freight Costs amounted to $10 cash. Your CMO develops a website for your business that the company will use for advertising. He/She charges the company $750 for his/her work, payable at the end of December. Your business pays $1,200 for a one-year insurance policy using cash. You make another sale to customers in the amount of $300. These products originally costed you $150. Your sale to your customer is under the terms n/30 and FOB Destination. Freight costs amounted to $30. You receive a $150 invoice for use of your cell phone. You use the cell phone exclusively for your business. The invoice is for services provided in November, and payment is due on December 15. (Use "Accounts Payable"). 30 30 DECEMBER TRANSACTIONS NOTE: Assume your company does not dose its accounting records until the end of the calendar year (12/31). Date Transaction 1 FOR COMPANIES SELLING PRODUCTS ONLY: You purchase more merchandise from a wholesaler for $300 cash. Shipping terms are FOB Destination. Shipping costs amounted to $80. Your company receives a check for the full amount due from the customer for the sale from November 30. 8 9 14 15 16 HINT FOR COMPANIES SELLING PRODUCTS: Is this collection of money within the discount period? Your business receives $1,500, in advance, from customers for services/sales that will be performed during January. You are getting overwhelmed and decide to hire an assistant. You wait until the last day to finally pay the cell phone invoice outstanding at November 30. Issue a check to your CMO for the amount owed for the design of the website. Additional revenue during the month amounts to $4,000. (You have not had time to account for each sale/service individually.) $3,000 in cash has been collected and $1,000 is still outstanding. (This is in addition to the December 9 transaction.) 23 23 28 FOR COMPANIES SELLING PRODUCTS: The cost of the products sold were $1,500. Additional supplies purchased during the month amount to $1,250 cash. Pay a dividend of $700 to the common shareholder (Yourself). You pay your assistant $8/hour for the amount worked in December. She has worked 4 hours per day for 10 days, since the date of hire. 31 Additional information for December is as follows: #1 #2 #3 A count reveals that $120 of your supplies were used. Depreciation is recorded on the equipment purchased in November. The computer has a useful life of 5 years and the equipment purchased on November 17th has a useful life of 10 years. Assume that 2 months' worth of depreciation is required. Interest on the 9% note payable is accrued. (Assume that 1.5 months of interest accrued during November and December.) Round to nearest dollar. One month's worth of insurance has expired. You are unexpectedly telephoned on December 28 to perform your services/sell some of your products on the last day of December. In early January, your company will send an invoice for $450. #4 #5 #6 FOR COMPANIES SELLING PRODUCTS: The products originally costed you $225 and your shipping terms are FOB Destination, terms 2/10, n/30. Freight costs amounted to $50. A cell phone invoice is received for $175. The invoice is for services provided during the month of December and is due on January 15. (Use "Accounts Payable"). Because of the unexpected sale on December 31, you recruit your assistant to help you. Your assistant worked 7 hours at a rate of $10 per hour. You've already processed payroll for December, so your assitant will not actually get paid until next month. #7 Adjusted Trial Balance For the Month Ended December 31 Description Debit ast Cash 3,995 Accounts Receivable 1.550 Inventory 340 Prepaid Insurance 1,100 Supplies 1,263 Computer 300 Accumulated Depreciation - Computer 10 Equipment 900 Accumulated Depreciation - Equipment 15 Accounts Payable 675 Unearned Revenue 1,200 Notes Payable 5.000 Wages Payable 56 Interest Payable 56.00 Common Stock 800 Dividends SOO Sales/Service Revenue 4.400 Cost of Goods Sold 200 Freight-Out 100 Advertising Expense 1,200 Cell Phone Expense 125 Wages Expense 376 Supplies Expense Depreciation Expense 25 Interest Expense 56 Insurance Expense 100 TOTALS 12.212.00 12212.00 Closing General Journal Date Account Title and Explanation Debit Credit 12/31 12/31 12/31 12/31