You have been hired to handle the accounting function for a new company and the owners don$$t know where to begin. They have hired you to manage the business.This is what you learn about the company:The company will be a corporation with $5$ shareholders initially. The Board has authorized $500,000$ shares of stock with a par value of $$2.$ The original investors will each buy $20,000$ shares at $$8$ per share.

The Company, which is a wholesaler, will sell crossbody water bottle holders and water bottles. The company will have a perpetual inventory system the first year. COGS is determined using the FIFO method. Company records all purchases at Net.

INSTRUCTIONS:

For the two months April through May, you will handle the accounting process from beginning to end. In addition to journalizing the required transactions, you will create transactions of your own for operating expenses$-5$ minimum$)$ and you will keep up with all monthly customer payments and vendor payments and all other monthly transactions. Please pay all vendors within the discount time period.

Setup Instructions

Special Journals are required for this project.

The following are required:

Cash receipts journal

Cash disbursements journal

Purchase Journal

Sales Journal

General Ledger

Accounts receivable subsidiary ledger

Accounts payable subsidiary ledger

Inventory records for water bottles & crossbody water bottle holders

Customer Instructions $($AR$)$:

You must create $4$ customers. These customers will be retailers.

Set up the customers in the AR Subsidiary accounts.

Each customer should have their own account with credit limit$,$ sales terms and shipping terms before beginning your

transaction posting. You determine the credit limit and shipping terms. There must be a minimum of one customer that has FOB Destination Point as the shipping terms.

Sales Terms: Customers are offered a $3\%$ discount if they within $10$ days of sale.

You should assume $3$ customers will always take advantage of the offered

discount. One will never take the discount.

Each of the $4$ customers are sold products in the month of April.

Inventory Instructions:

Water bottles will be sold for a price range of $$7$ to $$16.$ You determine the sales price on each sale. Crossbody holder will be sold for $$18-$$$25$ each. You decide the sales price for each sale.

The company uses Perpetual $$ FIFO to calculate COGS.

Vendor Instructions $($AP$)$ You must create $5$ vendors to purchase water bottles and the cross body holders.

Office Depot is not one of the $5$ vendors.

Set up the vendors with all discount and freight$-$in$/$shipping terms before beginning your transaction posting.

$$ THREE of the vendors use FOB shipping point method and two vendors offer FOB destination.

$$ THREE vendors offer a discount of $2/10,$ net $30$

$$ One vendor offers $3/15,$ net $30$

$$ One vendor offers no discount

Don$$t forget to keep up with payments in$-$order to get the offered discount.

Purchases for April were made from all $5$ vendors.

Payroll Instructions:

In addition to you, the company will hire three sales employees. Everyone will be

paid semi$-$monthly on the first and the $16$th of the month. The semimonthly amount

for total payroll is $$5,000.$ The first payroll date is April $16$th

Assume a $20\%$ federal rate and a $5\mathrm{.}75\%$ Virginia state rate. Social security is $6\mathrm{.}2\%$ and Medicare is $1\mathrm{.}45\%.$ No unemployment taxes will be calculated. All employees are under the $2023$ FICA OASDI $($Social Security$)$ threshold.

Remit all taxes to the correct authorities three days after payday. The payroll information is normally shown in a payroll register but I am not requiring it for this project. Just calculate taxes on the total salaries each pay period.