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Prepare a chart of accounts as required and journalize the following transactions and post to the general ledger. (note: general ledger here can be expressed as a T account)
1) On March 1st Fancy Pants sold 1,000 common shares for $12,000 start the business.
2) On March 2nd Fancy Pants took out a $3,000 loan from “TD Bank”. Fancy Pants agreed to repay the loan in one year plus 8% interest.
3) On March 3rd Fancy Pants purchased some computer equipment to help run the business for $4,500 cash.
4) March 4th Fancy Pants purchased a six month insurance policy for $1,200 cash.
5) March 6th Fancy Pants purchased $6,500 worth of Suits and Tuxedos from Big Lots Wholesaler on credit with payment due in 30 days.
6) March 10th Fancy Pants makes a cash sale to “Luxury Restaurants” for $8,800. Fancy Pants had paid $2000 for the suits they sold.
7) On March 15th Fancy Pants makes a credit sale to another client for $3,300. The suits for this sale had cost fancy pants $1,000. Payment is also due in 30 days.
8) On March 19th Fancy Pants received $9,000 advance payment for a new style of tuxedos to be worn by waiters at “HighEnd Restaurants”. Fancy Pants required the advance as part of the sale to ensure they secure enough inventory of the new style.
9) March 23rd Fancy Payments makes an early payment in the amount of $6,000 to Big Lots Wholesaler.
10) March 26th Fancy Pants paid weekly employee salaries of $1,800.
11) March 29th Fancy Pants receives $3,000 for the sale made on March 15th.
12.) March 30th fancy Pants paid its utility bill of $2,200 for the month of March.
It is now March 31st and management at Fancy Pants has decided to make March 31st their yearend. While only one month of transactions have been recorded, as Fancy Pants accountant, you must now perform the required adjusting entries for the year end and prepare the financial statements.
1) Review through the above transaction and prepare any required adjusting entries for March 31.
Some additional information includes:
· Equipment is expected to last 5 years.
· A work week is 5 days. Between March 26 and March 31employees have worked for three days
2) Prepare the statement of retianed earnings
1.) prepare an income statement
3.) prepare the closing entries
|Common Stock||10,000.00||[1,000 Shares * $ 10]|
|(Being Stock issued and started the business)|
|TD Bank Loan||3,000.00|
|(Being Loan taken from TD Bank)|
|(Being Computer Equipment Purchased)|
|04-Mar||Prepaid Insurance Policy||1,200.00|
|(Being Insurance Policy Purchased)|
|06-Mar||Inventory (Suits and Tuxedos)||6,500.00|
|Accounts Payable (Big Lots)||6,500.00|
|(Being Inventory Purchased on Credit from Big Lots due in 30 days)|
|(Being Inventory sold to Luxury Restaurant)|
|Cost of Goods Sold||2,000.00|
|Inventory (Suits and Tuxedos)||2,000.00|
|(Being Inventory adjusted)|
|(Being Inventory sold on credit)|
|Cost of Goods Sold||1,000.00|
|Inventory (Suits and Tuxedos)||1,000.00|
|(Being Inventory adjusted)|
|(Being amount received in advance to supply tuxedos)|
|(Being amount paid in advance to Big Lots wholesaler)|
|(Being Salaries Paid)|
|(Being Cash collected from debtors)|
|(Being Utility bill Paid)|
Adjustment Entries as of March 31:-
|31-Mar||Depreciation for Equipment:-|
|Depreciation - Equipment||75.00||[($ 4,500 /5 years)*(1/12 months)]|
|Accumulated Depreciation - Equipment||75.00||[($ 4,500 /5 years)*(1/12 months)]|
|31-Mar||Adjustment for Insurance:-|
|Insurance Expense||200.00||[$ 1,200/6]|
|31-Mar||Interest Accrued on TD Bank Loan:-|
|Interest Expense||20.00||[$ 3,000 * 8% *(1/12months)]|
|31-Mar||Salary Payable Recorded:-|
|Employee Salaries||1,080.00||[$ 1,800 * (3/5)]|
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