Question

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.

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.

CHART OF ACCOUNTS:

Cash			105
Petty Cash			107
Accounts Receivable			110
Supplies on Hand			130
Prepaid Insurance			140
Computer Equipment			220
Accoumulated Depreciation - Computer Equipment			221
Cell Phone			230
Accoumulated Depreciation - Cell Phone			231
Vehicles			240
Accumulated Depreciation - Vehicles			241
Accounts Payable			310
Customer Deposits (Unearned Revenue)			320
SUTA Payable			330
FICA Payable			332
FUTA Payable			334
Federal Income Tax Payable			336
State Income Tax Payable			338
Current Maturities of Long-Term Debt			375
Notes Payable (long-term)			410
Interest Payable			420
Salaries Payable			425
Common Stock ($2 par value)			520
Additional Paid-in Capital on Common Stock			521
Retained Earnings			550
Dividends			560
Engagement Fees			605
Monthly Accounting Services Revenue			610
Hourly Accounting Services Revenue			620
Tax Services Revenue			612
Sales Discounts			614
Advertising & Promotion Expense			725
Depreciation Expense			727
Rent Expense			730
Insurance Expense			735
Supplies Expense			740
Meals & Entertainment			745
Taxes & Licenses			767
Telephone Expense			770
Utilities Expense			775
Fuel Expense			780
Interest Expense			820
Payroll Tax Expense			825
Salaries Expense			830
Income Summary			900

Answer 1

	Journal Entries
Date	Account Title and Explanation	Debit	Credit
1-Aug	No entry
1-Sep	Cash	$10,000
	To Common Stock		$10,000
	Rent Expense	$500
	To Cash		$500
2-Sep	Office Equipment	$3,150
	To Accounts Payable		$3,150
3-Sep	No Entry
	As only order was placed
	Titile to goods passed to buyer at des
	tination point only
4-Sep	Vehicle	$55,000
	To Bank Loan		$55,000
5-Sep	Supplies on hand	$600
	To Accounts Payable		$600
6-Sep	Auto Insurance	$1,200
	To Cash		$1,200
10-Sep	cash	$2,000
	To Service Fees		$2,000
12-Sep	Petty Cash	$500
	To cash		$500
	Personal A/C	$75
	To Petty Cash		$75
14-Sep	Accounts Payable	$600
	To cash		$600
15-Sep	No Entry
16-Sep	Supplies on hand	$250
	To cash		$250
20-Sep	cash	$2,000
	To Service Fees		$2,000
22-Sep	Fuel Exp	$50
	To Accounts Payable		$50
30-Sep	Accounts Receivable	$4,000
	To Service Fees		$4,000
	(#3#4)
	Interest Exp	$206
	To Interest payable		$206
	(55000*5%/12)*27 days /30 days
	Salary Exp	$1,500
	To FICA Taxes Payable		$115
	(1500*7.65%)
	To Federal Income Tax payable		$225
	(1500*15%)
	To State Income Tax (1500*5%)		$75
	To Salary Payable		$1,085
	Payroll Taxes Exp	$160
	To FICA Taxes Payable(1500*7.65%)		$115
	To FUTA payable(1500*1%)		$15
	To SUTA payable(1500*2%)		$30
	Electricity Exp	$100
	Water Exp	$20
	To Account Payable		$120
		$81,986	$81,986
	Ledger Accounts			Net Ledger Balance
Date	Account Titles	Debit	Credit	Debit	Credit
2-Sep	Accounts Payable		$3,150
5-Sep	Accounts Payable		$600
14-Sep	Accounts Payable	$600
22-Sep	Accounts Payable		$50
30-Sep	Accounts Payable		$120		$3,320
30-Sep	Accounts Receivable	$4,000		$4,000
6-Sep	Auto Insurance Policy	$1,200		$1,200
4-Sep	Bank Loan		$55,000		$55,000
1-Sep	Cash	$10,000
1-Sep	Cash		$500
6-Sep	Cash		$1,200
10-Sep	Cash	$2,000
12-Sep	Cash		$500
14-Sep	Cash		$600
16-Sep	Cash		$250
20-Sep	Cash	$2,000		$10,950
1-Sep	Common Stock		$10,000		$10,000
30-Sep	Electricity Exp	$100		$100
30-Sep	Federal Income Tax payable		$225		$225
	(1500*15%)
30-Sep	FICA taxes payable(1500*7.65%)		$115		$115
30-Sep	FICA taxes payable(1500*7.65%)		$115		$115
22-Sep	Fuel Exp	$50		$50
30-Sep	FUTA Payable(1500*1%)		$15		$15
30-Sep	Interest Exp	$206		$206
30-Sep	Interest Payable		$206		$206
2-Sep	Office Equipment	$3,150		$3,150
30-Sep	Pay roll Exp	$160		$160
1-Aug	Personal A/C		$75
12-Aug	Personal A/C	$75			$0
12-Sep	Petty cash	$500
12-Sep	Petty cash		$75	$425
1-Sep	Rent Exp	$500		$500
30-Sep	Salary Exp	$1,500		$1,500
30-Sep	Salary Payable		$1,085		$1,085
10-Sep	Service Fees		$2,000
20-Sep	Service Fees		$2,000
30-Sep	Service Fees		$4,000		$8,000
30-Sep	State Income tax payable(1500*2%)		$30		$30
5-Sep	Supplies on hand	$600
16-Sep	Supplies on hand	$250		$850
30-Sep	SUTA payable (1500*2%)		$30		$30
4-Sep	vehicles	$55,000		$55,000
30-Sep	Water Exp	$20		$20
		$81,911	$81,911	$78,186	$78,186