Question

Create a mock merchandising company and demonstrate your knowledge of accrual basis accounting and the double-entry accounting system by creating a minimum of 10 original transactions spanning a period of 3 months (Jan. 1 – Mar. 31) and completing the requirements below. Assume your mock company is a new company that begins operations on Jan. 1st. Beginning with a new company will be easier than an existing company as you will not have any beginning balances to deal with. The transactions should include examples of accruals and deferrals and at least one of each of the following: financing a new business (e.g. issuing stock or borrowing), obtaining assets, incurring liabilities, earning revenue, and incurring expenses.

Required (All 12 steps must be performed using EXCEL)

1) Write a list of at least 10 original transactions spanning a fiscal quarter (e.g. Jan.1 – March 31) and following the guidelines above. The first transaction should be a financing transaction (issue stock or borrow).

2) Journalize each transaction.

3) Post the journal entries to accounts and compute the ending balance (March 31) in each account.

4) Prepare a trial balance from ending account balances.

5) Write a list of at least 5 adjusting entries for the quarter-ended March 31 related to transactions prepared in step 1. Note that adjusting entries do not have an effect on the cash account.

6) Journalize the adjusting entries. Note that adjusting entries do not affect the cash account.

Answer 1

2020 Transactions Jan Started business with cash $7000 and issued common stock, Det. Jan 12 12 Janit 3 Feb 15 Paid $1100 rent in cash Paid annual Insurence $960 in cash Purchase equipment $3600 for cash Feb. 5 Purchared Supplies $300 on account. Feb'15 Receird Cesh 7820 tonn Selling mechoslise Feb 16 Sold mechandise item of $ 6lov, payment will be received in April 2020, 2 Feb. 211 Receind Cash $6100 for sale dated Feb.16 Paid $ 1.70 to accounts payable for supplies Mar. 28 Paid evayes to staff to staff $9200 in cash Paid $200 olivickad in cash Mar. 23 2 Man 31

#1 Paga Na Cash Jan 7000 Common Stock foro Der I Jon Rent Expense 1100 100 ash Pez: 1 Jan Insurane Expense 960 Cash 960 Det I Jan Equipment 3600 Cash 3000 pez. Supplies 300 Accounts payable Cash 7800 Service Revenue 15 LEE 7800 Account Receivable 6100 Service Revenen 6100 21. De Cash 2700 Acounts Receivable 2700 Monch 23. Det Account Payable 170 Cash 170 March 28 Dec Wages Expense 9200 . 4200 Dividend Expense cash 200 200 30 March

Page Na #24#3 Cash Common Stork Service Rev. A/C Receivable 7000 Rent 7800 Insurane 2700 Equipment Al Payable Wages Dividend 72to Hoo 960 3600 170 4200 200 Balance Common stock Cash zood km Balo Insurance Cash 960 Bal. 1960 Rent LLOC Bate (1700 Equipment 3600 Cash Bal. Broo Supplies 300 All Payable Beli Boo

Service Revenn Cash Alc Receivable 7800 6100 Cash Bal. 1390o Ale Payable I Supplies 300 Balo 1120 Alc Receivable Serviu Revenue 6100 seanc fenten cash Bate 13400 2700 Cash 4200 Bat. 14200 Dividend Cash 200 Balo [200

On adjusted Trial Balance Cash Common stock Insurance Expense Rent Texpense Equipment Ale Payable Supplies All Receivable Sewice Revenue Wages Expense Dividend 121030 2100 Debit Credit 1270 Food 960 1100 3600 130 300 3400 13900 4200 200 -

1Page N3 as on on March 31. Adjustments to be made Insurance is prepaid for 9 months Ad On march 31 nouch 31, supplier in hand were $90 Change depreciation 460 on equipment Wages is clue for month of march $450 Rent for the month of march $500 is not paid

3/ 210 Prepaid Insurane 200720 Insurance Expenne S302720 Supplies Expense 210 Seypelies Depreciation Imperosa 60 Acc. Dep. on Equipment ro 457 wazu zapente Wages payable 450 Rent Expense 550 Rent Payable : 550 2. Det NH 31. Man