ACCTG 101 Lecture Notes - Lecture 14: Call Money, Share Capital, Financial Statement
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8/1 YOU filed a charter withthe State of Louisiana to form the YOUR Accounting Corporation. Thecharter authorizes you to issue 5000 shares of $2 par common stock.The state charged you a $75 fee to file the charter. Since yourbusiness is not yet approved, you had to pay this fee usingpersonal funds.
9/1 You received yourcharter from the State of Louisiana and officially opened yourbusiness. Your first order of business was to become ashareholder of YOUR Accounting Corp. To do this, you purchased 500shares of common stock by issuing a check to YOUR Accounting Corpfor $10,000. You used this money to open a checking account atFirst Funds Bank.
9/1 You rented an office forYOUR Accounting Corp. The monthly rent is $500, with the firstmonthâs rent due immediately. You issue check #100 to OfficeBuilders for the first monthâs rent.
9/2 You then went to theApple store and purchased a new computer system for your business.Your Mac Pro cost $2700 and your new printer cost $450. You set upa 30-day account with Apple to make this purchase.
9/3 You ordered businesscards and stationary from Marketing Media on account. The ordertotaled $250 and will be shipped FOB Destination. (Record allpurchases of supplies in the Supplies on Hand account).
9/4 You decided to purchasea new vehicle for your business. Upon visiting Pro-Auto, you decideon 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 arate of 5% for 6 years. Your first monthly payment is due onOctober 4.
NOTE: You will need to create a loan amortization schedule todetermine the amount of the monthly note and the interest expensefor each month. You can use a website such as www.bankrate.com tocreate the schedule. When recording your journal entries, round allamounts to the nearest dollar.
9/5 You went to the KEMSupply to purchase supplies for your business at a cost of $600.KEM opened a customer charge account for you. The payment terms onyour account will be 2/10, net 30. The time period for determiningthe payment amount begins on the purchase date.
9/6 You purchased a one-yearauto insurance policy from InsureMart for $1200. InsureMart willsend you a bill for the policy. YOUR Accounting Corporationcapitalizes all insurance policies on the date of purchase andrecords the necessary expense at year-end as an adjustingentry.
9/10 Your first client, Red Fische, came intoday needing assistance with filing the appropriate paperwork tostart his new seafood restaurant. You issued invoice #1 to RedFische and he paid you an initial $2,000 Engagement Fee. Red Fischealso agreed to contract with you to provide accounting services for$2,500 per month.
9/12 You issue check #101 to YOUR AccountingCorp to establish a $500 Petty Cash Fund. You will use this accountto make small cash purchases.
9/12 You reimburse yourself for the filingfees 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 havedecided that all pay periods will end on the last day of the monthand that checks will be issued on the 5th of eachmonth.
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 insurancerates of 1% (FUTA) and 2% (SUTA) on the first $7,700 of wages peremployee. The employer FICA rate is 7.65%.
9/16 Marketing Media delivered your businesscards and stationary. Check #103 was issued to pay for thesupplies.
9/20 You visited a new client, Anita Cooke, toset up a Quickbooks accounting system for her new business, CookingFor You. You gave Anita and invoice #2 for the Engagement Fee andshe paid you by issuing a check in the amount of $2,000. Anita alsoagreed to a monthly fee of $1,500 for you to handle her ongoingaccounting needs.
9/22 You purchased $50 of fuel for your newSUV from Get ân Go. You charged this to your Get ân Go account.
9/30 Mandi sent pro-rated invoices, #3  , to Red Fische and Cooking For You for Monthly AccountingServices. The payment terms are 1/10, net 30.
9/30 You accrued interest on the Pig E. Banknote. Accrue interest based on the number of days in the month.
9/30 You computed and accrued the payroll forSeptember.
9/30 You received monthly bills for thefollowing:
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 |
Accumulated Depreciation â ComputerEquipment | 221 |
Cell Phone | 230 |
Accumulated Depreciation â CellPhone | 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 Revenues | 612 |
Sales Discounts | 614 |
Advertising & Promotion Expense | 725 |
Depreciation Expense | 727 |
Rent Expense | 730 |
Insurance Expense | 735 |
Supplies Expense | 740 |
Meals & Entertainment | 745 |
Taxes and Licenses | 767 |
Telephone Expense | 770 |
Utilities Expense | 775 |
Fuel Expense | 780 |
Interest Expense | 820 |
Payroll Tax Expense | 825 |
Salaries Expense | 830 |
Income Summay | 900 |
ASSIGNMENT
In proper General Journal format,record the transactions for the month; include descriptions of eachtransaction with your journal entry. Use only the accounts shown inthe chart of accounts.
