Question

The following events occurred in August and September:

8/1       YOU filed a charter with the State of Louisiana to form the YOUR Accounting Corporation. The charter authorizes you to issue 5000 shares of $2 par common stock. The state charged you a $75 fee to file the charter. Since your business is not yet approved, you had to pay this fee using personal funds.

9/1       You received your charter from the State of Louisiana and officially opened your business.   Your first order of business was to become a shareholder of YOUR Accounting Corp. To do this, you purchased 500 shares of common stock by issuing a check to YOUR Accounting Corp for $10,000. You used this money to open a checking account at First Funds Bank.

9/1       You rented an office for YOUR Accounting Corp. The monthly rent is $500, with the first month’s rent due immediately. You issue check #100 to Office Builders for the first month’s rent.

9/2       You then went to the Apple store and purchased a new computer system for your business. Your Mac Pro cost $2700 and your new printer cost $450. You set up a 30-day account with Apple to make this purchase.

9/3       You ordered business cards and stationary from Marketing Media on account. The order totaled $250 and will be shipped FOB Destination. (Record all purchases of supplies in the Supplies on Hand account).

9/4       You decided to purchase a new vehicle for your business. Upon visiting Pro-Auto, you decide on a new SUV at a cost of $55,000. This vehicle will be used 100% for business purposes. You finance the vehicle with Pig E Bank at a rate of 5% for 6 years. Your first monthly payment is due on October 4.

               NOTE: You will need to create a loan amortization schedule to determine the amount of the monthly note and the interest expense for each month. You can use a website such as www.bankrate.com to create the schedule. When recording your journal entries, round all amounts to the nearest dollar.

9/5       You went to the KEM Supply to purchase supplies for your business at a cost of $600. KEM opened a customer charge account for you. The payment terms on your account will be 2/10, net 30. The time period for determining the payment amount begins on the purchase date.

9/6       You purchased a one-year auto insurance policy from InsureMart for $1200. InsureMart will send you a bill for the policy. YOUR Accounting Corporation capitalizes all insurance policies on the date of purchase and records the necessary expense at year-end as an adjusting entry.

9/10    Your first client, Red Fische, came in today needing assistance with filing the appropriate paperwork to start his new seafood restaurant. You issued invoice #1 to Red Fische and he paid you an initial $2,000 Engagement Fee. Red Fische also agreed to contract with you to provide accounting services for $2,500 per month.

9/12    You issue check #101 to YOUR Accounting Corp to establish a $500 Petty Cash Fund. You will use this account to make small cash purchases.

9/12    You reimburse yourself for the filing fees associated with forming your corporation.

9/14 You paid KEM Supply by issuing check #102

9/15    You hire an administrative assistant, Mandi Handi, she will be paid a monthly salary of $1500. You have decided that all pay periods will end on the last day of the month and that checks will be issued on the 5^th of each month.

               NOTE: Assume the following rates when preparing the payroll: federal income tax 15%, state income tax 5%, and FICA 7.65%.

               YOUR Accounting Corp. has state and federal unemployment insurance rates of 1% (FUTA) and 2% (SUTA) on the first $7,700 of wages per employee. The employer FICA rate is 7.65%.

9/16    Marketing Media delivered your business cards and stationary. Check #103 was issued to pay for the supplies.

9/20    You visited a new client, Anita Cooke, to set up a Quickbooks accounting system for her new business, Cooking For You. You gave Anita and invoice #2 for the Engagement Fee and she paid you by issuing a check in the amount of $2,000. Anita also agreed to a monthly fee of $1,500 for you to handle her ongoing accounting needs.

9/22    You purchased $50 of fuel for your new SUV from Get ‘n Go. You charged this to your Get ‘n Go account.

9/30    Mandi sent pro-rated invoices, #3 & #4 , to Red Fische and Cooking For You for Monthly Accounting Services. The payment terms are 1/10, net 30.

9/30    You accrued interest on the Pig E. Bank note. Accrue interest based on the number of days in the month.

9/30    You computed and accrued the payroll for September.

9/30    You received monthly bills for the following:

                              Max Power Company - $100, terms n/30

                              WaterWorks #1 - $20, terms n/30.

Assignment #1: For the Month of September

·       In proper General Journal format, record the transactions for the month; include descriptions of each transaction with your journal entry. Use only the accounts shown in the chart of accounts.

·       Post the journal entries for the month to the general ledger accounts, use appropriate posting references.

·       Prepare a trial balance for the period ending September 30.

o   Using proper format, create your trial balance in Microsoft Excel. Do not use any trial balance templates. Include all accounts from the chart of accounts. Even those with zero balances. Your accounts in the trial balance should be in the exact order shown in the chart of accounts.

Answer 1

	Journal Entries
Date	Account title	Debit	Credit
1-Aug	Filing Fees	75
	Personal a/c		75
1-Sep	Cash	10000
	Common stock		10000
	Rent expense	500
	Cash		500
2-Sep	Office Equipment	3150
	Accounts payable		3150
3-Sep	NO ENTRY
	As only order is placed & for goods on FOB destination, title to goods passes to the buyer at detination point only.
4-Sep	Vehicles	55000
	Bank Loan		55000
5-Sep	Supplies on hand	600
	Accounts payable		600
6-Sep	Auto Insurance Policy	1200
	Cash		1200
10-Sep	Cash	2000
	Service fees		2000
12-Sep	Petty cash	500
	Cash		500
	Personal a/c	75
	Petty cash		75
14-Sep	Accounts payable	600
	Cash		600
15-Sep	No Entry
16-Sep	Supplies on hand	250
	Cash		250
20-Sep	Cash	2000
	Service fees		2000
22-Sep	Fuel expenses	50
	Accounts payable		50
30-Sep	Accounts Receivables	4000
	Service fees		4000
	(#3 & #4)
	Interest expense	206
	Interest payable		206
	(55000*5%/12)*27days/30days
	Salary expense	1500
	FICA Taxes payable(1500*7.65%)		115
	Federal Income tax payable(1500*15%)		225
	State Income tax payable(1500*5%)		75
	Salary Payable		1085
	Pay-roll tax expense	160
	FICA Taxes payable(1500*7.65%)		115
	FUTA payable(1500*1%)		15
	SUTA payable(1500*2%)		30
	Electricity expense	100
	Water expense	20
	Accounts payable		120
		81986	81986

	LEDGER ACCOUNTS			Net Ledger Balances
Date	Account Titles	Debit	Credit	Debit	Credit
2-Sep	Accounts payable		3150
5-Sep	Accounts payable		600
14-Sep	Accounts payable	600
22-Sep	Accounts payable		50
30-Sep	Accounts payable		120		3320
30-Sep	Accounts Receivables	4000		4000
6-Sep	Auto Insurance Policy	1200		1200
4-Sep	Bank Loan		55000		55000
1-Sep	Cash	10000
1-Sep	Cash		500
6-Sep	Cash		1200
10-Sep	Cash	2000
12-Sep	Cash		500
14-Sep	Cash		600
16-Sep	Cash		250
20-Sep	Cash	2000		10950
1-Sep	Common stock		10000		10000
30-Sep	Electricity expense	100		100
30-Sep	Federal Income tax payable(1500*15%)		225		225
30-Sep	FICA Taxes payable(1500*7.65%)		115		115
30-Sep	FICA Taxes payable(1500*7.65%)		115		115
1-Aug	Filing Fees	75		75
22-Sep	Fuel expenses	50		50
30-Sep	FUTA payable(1500*1%)		15		15
30-Sep	Interest expense	206		206
30-Sep	Interest payable		206		206
2-Sep	Office Equipment	3150		3150
30-Sep	Pay-roll tax expense	160		160
1-Aug	Personal a/c		75
12-Sep	Personal a/c	75			0
12-Sep	Petty cash	500
12-Sep	Petty cash		75	425
1-Sep	Rent expense	500		500
30-Sep	Salary expense	1500		1500
30-Sep	Salary Payable		1085		1085
10-Sep	Service fees		2000
20-Sep	Service fees		2000
30-Sep	Service fees		4000		8000
30-Sep	State Income tax payable(1500*5%)		75		75
5-Sep	Supplies on hand	600
16-Sep	Supplies on hand	250		850
30-Sep	SUTA payable(1500*2%)		30		30
4-Sep	Vehicles	55000		55000
30-Sep	Water expense	20		20
		81986	81986	78186	78186

Trial Balance as at Sep.30
Cash	10950
Petty cash	425
Accounts Receivables	4000
Supplies on hand	850
Office Equipment	3150
Vehicles	55000
Auto Insurance Policy	1200
Accounts payable		3320
Salary Payable		1085
Federal Income tax payable(1500*15%)		225
FICA Taxes payable(1500*7.65%)		230
State Income tax payable(1500*5%)		75
FUTA payable(1500*1%)		15
SUTA payable(1500*2%)		30
Interest payable		206
Bank Loan		55000
Common stock		10000
Personal a/c		0
Service fees		8000
Salary expense	1500
Filing Fees	75
Fuel expenses	50
Electricity expense	100
Pay-roll tax expense	160
Interest expense	206
Rent expense	500
Water expense	20
Total	78186	78186