Cover pageIntroIntroductionQueta Johnson is about to open a new .docx

Cover page
IntroIntroductionQueta Johnson is about to open a new business
– Chocolate Nirvana. It will be a small chocolate specialties
store. She plans on selling a limited number of hand-made
molded candies, some of which are holiday specific and others
that are of a more generic nature, as well as carrying a line of
top-end candy bars. The majority of her sales will come from
walk-in customers which will all be on a cash only basis. She
anticipates working full-time at the store and needing the help
of four part-time employees. She uses a perpetual FIFO (First-
in, First-Out) method to account for her inventory. So, every
time you record a sale of merchandise you must also figure out
the cost of the goods (determined from recording it in the
merchandise inventory sheets and applying FIFO).The purpose
of this practice set is to allow you the chance to see how each of
the separate components we have worked on this semester fit
together. As you complete the set, you may find it necessary to
look back at what we learned in various chapters to help
remember exactly what to do. Instructions1. Be sure to
complete each form before moving on to the next form.2. Read
the form and decide which journal to put it in.3. First -
journalize the form into ONE of the journals. If it can go into
one of the special journals, that is where you first put it. Only
if you cannot (the transaction does not work for any of them)
would you record it in the general journal. It would never go in
two journals but it does have to go in one - you cannot record it
anywhere else until you have journalized it. CASH PAYMENTS
JOURNAL - Use this if you are told to write a check. It must
go in the Cash credit column, which means that it must also go
to the check book and write out a check. Why did we pay it?
On account would go in the Accounts Payable debit column,
you would need the name of the business off to the left, and it
would need to be recorded in the Accounts Payable subidiary.
Some other reason? Would need to go in the Other column and

you would need the name of an account from the chart of
accounts. If we have an asset relating to what we are paying for
we should use that. If not then we can use the expense or other
appropriate account. If we pay for more than one thing with the
single check we will need 2 lines to record it so that we can
properly show the details. CASH RECEIPTS JOURNAL - Use
this one if you receive money FOR ANY REASON. The total
amount of cash received must go in the Cash debit column and
into the check book as a deposit. Why did you get the money?
If you received it for a summary of cash sales, you must credit
Sales - Store Sales and Sales Tax Payable. These numbers come
from the bottom of the cash sales form. Then we must also take
the things we sold into the merchandsie inventory sheets and
record them as sales and determine what our COST in the goods
sold would be. This is based on what we learned in chapter 7.
If we received it for any other reason it needs to go in the Other
column and we need the name of an account on the
left.PURCHASES JOURNAL - Used if you buy something on
account (or receive a service that you will be paying for a bit
later). Because everything in this journal will include a credit
to Accounts Payable you will need the name of the business off
to the left and have to take it to the Accounts Payable
Subsidiary. Then, what did you buy? Merchandise? Then also
put it in the Merchandise Inventory column and have to take it
to the Inventory sheets and show the purchase. Something else?
Then over on the right, put the amount in and then find an
account from the chart of account that matches what you have
gotten. SALES JOURNAL - This business does not use a sales
journalGENERAL JOURNAL - Only if you cannot record it in
one of these four journals would you record it in the general
journal. Which means you should not record anything here that
affects Cash. We study payroll in chapter 11. We will also use
the general journal for our adjusting and closing entries.Payroll
– record the payroll as instructed - 1) into their employee
earnings records, 2) then transfer the information into the
payroll register and 3) after totaling the payroll register use

that information to prepare a general journal entry and then
from what we learned in chapter 11 also prepare the entry to
record payroll tax expense. Specific data for each individual
regarding their pay rate, status and number of allowances can be
found on their earnings record sheets. Actual hours worked are
given on the form. Federal Income Tax withholding amounts
are found on the chart near the front of the booklet. First
detemine their gross wages, then based on their claimed marital
status go to the appropriate chart (married or single - in the
front of the book) and find the intersection of their gross wages
and how many allowances they are claiming. This is the dollar
amount to take for their income tax withholding. Prepare the
journal entries based off what we were taught in the textbook.
4. After journalizing all forms, total up every column from all
four special journals and write down your total on the journal
page. Compare your totals with the check figures. Do they
match? If they do not, determine how far off they are. Try to
determine where the error would come from.5. Once you have
your totals correct, begin posting into the general ledger. You
must post all 5 journals (includes the general journal!!!) From
the special journals, if you have the name of an account in the
column heading, you will post ONLY the total from that column
into the general ledger as either a debit (DR) or a credit (CR)
based on what is shown in the column heading. For the "Other"
columns you must post each amount individually. This comes
from chapter 5. Notice in chapter 5 how your post reference
numbers should look. From the general journal you need to post
every account you have used.6. As you post in the general
ledger, keep running balances. Remember if you have a debit
balance and a debit transaction they are added and stay a debit.
If you have a credit balance and a credit transaction they are
added and stay a credit. If you have one as a debit and the other
as a credit they are subtracted and the balance goes to the
higher side. Remember the rules for normal balances! Do not
worry about an account's balance too much until you have
posted all transactions - at that time all accounts should have

their "normal" balance.7 After posting all numbers from the
journals into the general ledger, go to the Unadjusted Trial
Balance in the back of the booklet. Write down each account,
in order, from the general ledger that has a balance (you will
have many accounts that do not yet have balances) and write in
the balance amount - debit or credit - and add up your balances.
Check your totals (this is a Trial BALANCE so your two
balances should be the same) and compare to the check figures.
8. Use your chart of accounts page to begin work on your
worksheet. List all accounts, in order, except you do not need
to list Notes Payable - current, Income Summary, or
Miscellaneous Expense. 9. For the accounts on your
unadjusted trial balance, fill in their balances on to the
worksheet in the Unadjusted Trial Balance columns. Leave all
other accounts blank for these columns.10. Journalize your
adjusting entries in the general journal. You are given the
information here, but you will need to also use the chart of
accounts, sometimes you will need to look back at the form
where we originally got the information we recorded for this
charge, or you may need to look up on the forms, the ledger, or
the trial balance a cost amount.Prepare month end adjusting
entries based on the following data for OCTOBER:a) Record
accrued interest on the long term note for 3 days - $13.56b)
Depreciation - calculate depreciation for JUST the month of
October based on the following information: Store Equipment
- 5 year life, $3000 salvage value, use straight line depreciation
Office Equipment - 5 year life, $200 salvage value, use straight
line depreciation c) Record entry for expired insuranced)
Currently there are $45 worth of office supplies on hande)
Currently there are $90 worth of store supplies on handf)
Record entry for amount of advertising expired for the period
just endedg) Record wages earned, but unpaid, on Oct 31 of
$11011. Post your adjusting entries into the general ledger and
get new running balances. Remember from chapter 3 what date
we use and how we show this in the ledger.12. Also, add your
adjusting entries on to the worksheet in the Adjustments

column. You will total your adjusting entries here.13. You can
now complete the worksheet. Your Adjusted Trial Balance
columns should match your general ledger balances. What
accounts need to get extended into the Income Statement
columns (based on the Adjusted Trial Balance numbers) and
which ones need to go into the Balance Sheet columns? Look at
chapter 4 if you can't remember. Also, check chapter 4 to
remind yourself how to show the totals on the bottom of the last
page of the worksheet.14. You are now ready to prepare your
financial statements. Be sure to use chapter 6 examples as
references. 15. Your Accounts Payable Vendor balance
(Schedule of Accounts Payable) is from chapter 5. Simply list
each vendor that you owe money to (Accounts Payable) and
total them (example in chapter 5). You do not have to list any
business that does not have a balance at the end of the
month.16. Income Statement - use a multiple step format.
What all do you show, and in what columns (chapter 6) to get to
gross profit? Where do you show Interest Expense? The
company decided not to separate their operating expenses into
selling and administrative but rather to list them all under
Operating Expenses unless they are considered to be Other
Expenses.17. Statement of Owner's Equity - were we in
business last month? Does that affect how we show anything on
this statement?18. Balance Sheet - be sure to use the classified
format as described and illustrated in chapter 6. They show
their Note Payable as a noncurrent liability rather than splitting
it between current and noncurrent.19. You are now ready to
prepare your closing entries. These need to be journalized in
the general journal. Use chapter 4 as a reference. If you
prepared your worksheet correctly this is a great help in
preparing the closing entries. Remember, though, we may have
some accounts now that we did not have back in chapter 4 that
still need to be closed because of the type of account they are.
We close revenues and expenses - where are they found on the
balance sheet? What amount should we have for the third
entry? What are we trying to close in the 4th entry?20. After

journalizing the closing entries, you then need to post them into
the general ledger. Do we put something in the item
column?21. After posting the closing entries, you will then
prepare the post-closing trial balance. Which accounts should
still be open?Be sure to use your textbook as a reference as you
work through this set. All of this information comes from work
in our textbook.Before turning in your completed practice set -
Please be sure to put your name on it
chart of acctsChocolate NirvanaChart of
AccountsASSETSREVENUE100Cash410Sales - Store
Sales112Office Supplies113Store Supplies114Prepaid
InsuranceCOST OF GOODS SOLD115Prepaid
Advertising510Cost of Merchandise Sold120Merchandise
Inventory150Office Equipment151Accumulated Depreciation -
Office EquipOPERATING EXPENSES160Store
Equipment610Advertising Expense161Accumulated
Depreciation - Store Equip615Depreciation Exp - Store
Eq620Wages Expense625Store Supplies
ExpenseLIABILITIES650Rent Expense210Accounts
Payable660Depreciation Exp - Office Eq211Interest
Payable665Insurance Expense213Sales Tax Payable 670Payroll
Tax Expense214Employee's Federal Income Tax
Payable675Office Supplies Expense215Social Security Tax
Payable680Telephone Expense216Medicare Tax
Payable685Utilities Expense217FUTA Tax
Payable690Miscellaneous Expense218SUTA Tax
Payable219Wages Payable250Notes Payable - Non
CurrentOTHER EXPENSE810Interest ExpenseOWNERS'
EQUITY310Queta Johnson, Capital311Queta Johnson,
Drawing312Income Summary
Fed Inc Tax Withholding AmtsSingle PersonsIf the wages
areAnd the number of withholding allowances claimed isBut
lessAt leastthan012345The amount of income tax to be withheld
is020000000020040015128400400700302217115270012003831
24171391200180046393325191118002500584742312416250032
00655851403022These are the Federal Income Tax Withholding

DOLLAR amounts to use for our practice setMarried PersonsIf
the wages areAnd the number of withholding allowances
claimed isBut lessAt leastthan012345The amount of income tax
to be withheld
is040000000040070095200070010001712753010001400403427
191451400180052463725191118002500615241342420These are
the Federal Income Tax Withholding DOLLAR amounts to use
for our practice setThe numbers used in these charts do not
reflect actual IRS numbers
Check FiguresCheck Figures – Chocolate NirvanaPurchase
Journal Accounts
Payable 49,147.80 Merchandise
Inventory 48,117.80
Other 1,030.00Cash Receipts Journal
Other 30,000.00 Merchandise Inventory /
COGS 45,709.56 Sales – Store
Sales 93,539.25 Sales Tax
Payable 6,547.76 Cash 130,087.01Cash
Payments Journal Other 37,008.73
Accounts Payable 34,312.30
Cash 71,321.03After posting your journals here are
some selected balances:
Cash 58,765.98 Merchandise
Inventory 2,408.24 Accounts
Payable 14,835.50After computing payroll total net pay
for all employees 4,910.75End of month activities:
Work Sheet: Trial
Balance 150,042.91
Adjustments 1,528.56 Adjusted Trial
Balance 150,466.47 Income
Statement (very bottom) 93,539.25
Balance Sheet (very bottom ) 91,209.22 Income
Statement:
Sales 93,539.25 Gross
Profit 47,829.69 Total Operating
Expenses 13,370.40 Net

Income 34,282.00 Statement of Owner’s
Equity: Queta Johnson, October 31, 2016
36,782.00 Balance Sheet: Total
Current Assets 62,509.22 Total
Property, Plant, &
Equipment 20,900.00 Total
Assets 62,360.24 Total Current
Liabilities 28,002.22 Total Non-
Current Liabilities 18,625.00 Total
Liabilities 46,627.22 Total
Liabilities plus Owner’s Equity 83,409.22 Post-
Closing Trial Balance: Debits and
credit 83,709.22
purchase journalPURCHASES JOURNALPage 1DATE
2016ACCOUNT CREDITEDPOST REFAccounts Payable
CR.Merchandise Inventory DR.ACCOUNT DR.POST
REFAmount112233445566778899101011111212131314141515
cash receipts journalCASH RECEIPTS JOURNALPage 1DATE
2016INV NOACCOUNT CREDITEDPOST REFOther
CRMerch Inventory CR. COGS DR.Sales - Store
Sales CR.Sales Tax Pay CR.Cash
DR112233445566778899- 0101011111212131314141515
cash payments journalCASH PAYMENTS JOURNALPage
1DATE 2016Check No.ACCOUNT DEBITEDPOST
REFOther Accounts DR.Accounts Payable DR.Cash
CR.1122334455667788991111121213131414161617171818191
92020
General JournalGENERAL JOURNALPage 1DATE
2016DESCRIPTIONPOST REF.
DEBITCREDIT1122334455667788991010111112121313141415
15161617171818131314142121222223232424252526262727282
829293030313132323333GENERAL JOURNALPage 2DATE
2016DESCRIPTIONPOST. REF. DebitCredit1Adjusting
Entries12233445566778899101011111212131314141515161617
17181819192020212122222323242425252626272728282929303
0313132323333GENERAL JOURNALPage 3DATE

2016DESCRIPTIONPOST. REF. DebitCredit1Closing
Entries12233445566778899101011111212131314141515161617
17181819192020212122222323242425252626272728282929303
0313132323333
accts pay subACCOUNTS PAYABLE SUBSIDIARY
LEDGERNameAntwerp SupremeAddress337 Prumer Str.,
Antwerp, BelgiumDate 2016ItemPost.
Ref.DebitCreditBalanceNameChocolate DelightsAddress48956
257th Ave NE, Minneapolis, MN 55444Date 2016ItemPost.
Ref.DebitCreditBalanceNameFireplace SuppliesAddress368
Express Place, Westminster, SD 58307Date 2016ItemPost.
Ref.DebitCreditBalanceNameTA & A BellAddress251 381st St,
Westminster, SD 58307Date 2016ItemPost.
Ref.DebitCreditBalanceNameXY EnergyAddress461 2nd St,
Westminster, SD 58307Date 2016ItemPost.
Ref.DebitCreditBalance
Merchandise Inventory subItem IDC - 101Item
DescriptionChristmas PurchasesCost of Merchandise
SoldInventoryUnit Total Unit TotalUnit Total
DateQtyCostCostQtyCostCostQtyCostCostItem IDD - 101Item
DescriptionDark Chocolate PurchasesCost of Merchandise
DateQtyCostCostQtyCostCostQtyCostCostItem IDH - 101Item
DescriptionHalloween PurchasesCost of Merchandise
DateQtyCostCostQtyCostCostQtyCostCostItem IDM - 101Item
DescriptionMilk chocolate PurchasesCost of Merchandise
DateQtyCostCostQtyCostCostQtyCostCostItem IDT - 101Item
DescriptionThanksgiving PurchasesCost of Merchandise
DateQtyCostCostQtyCostCostQtyCostCost
Check bookNo. 10011001DateTo2016ForDollarsCentsBalance
ForwardPay to theDepositOrder of$DepositSub
TotalDollarsCurrent CheckBalance For No.
10021002DateTo2016ForDollarsCentsBalance ForwardPay to

theDepositOrder of$DepositSub TotalDollarsCurrent
CheckBalance ForNo.
CheckBalance ForNo.
CheckBalance ForNo.
CheckBalance ForNo.
CheckBalance ForNo.
CheckBalance ForNo.
1008$1008DateTo2016ForDollarsCentsBalance ForwardPay to
CheckBalance ForNo.
CheckBalance ForNo.
CheckBalance ForNo.
CheckBalance ForNo.
CheckBalance ForNo.
CheckBalance For
General LedgerAccountCashAccount No. 100Date

2016ItemPost. Ref.DebitCreditBalance
Debit CreditAccountOffice SuppliesAccount No. 112Date
Debit CreditAccountStore SuppliesAccount No. 113Date
Debit CreditAccountPrepaid InsuranceAccount No.
114Date 2016ItemPost. Ref.DebitCreditBalance
Debit CreditAccountPrepaid AdvertisingAccount No.
Debit CreditAccountMerchandise InventoryAccount No.
Debit CreditAccountOffice EquipmentAccount No.
Debit CreditAccountAccumulated Depreciation - Office
EquipmentAccount No. 151Date 2016ItemPost.
Ref.DebitCreditBalance Debit
CreditAccountStore EquipmentAccount No. 160Date
Debit CreditAccountAccumulated Depreciation - Store
CreditAccountAccounts PayableAccount No. 210Date
Debit CreditAccountInterest PayableAccount No. 211Date
Debit CreditAccountSales Tax PayableAccount No.
Debit CreditAccountEmployee's Federal Income Tax
PayableAccount No. 214Date 2016ItemPost.
CreditAccountSocial Security Tax PayableAccount No. 215Date
Debit CreditAccountMedicare Tax PayableAccount No.
Debit CreditAccountFUTA Tax PayableAccount No.

Debit CreditAccountSUTA Tax PayableAccount No.
Debit CreditAccountWages PayableAccount No. 219Date
Debit CreditAccountNotes Payable - Non CurrentAccount
No. 250Date 2016ItemPost. Ref.DebitCreditBalance
Debit CreditAccountQueta Johnson, CapitalAccount No.
Debit CreditAccountQueta Johnson, DrawingAccount No.
Debit CreditAccountIncome SummaryAccount No.
Debit CreditAccountSales - Store SalesAccount No.
Debit CreditAccountCost of Goods SoldAccount No.
Debit CreditAccountAdvertising ExpenseAccount No.
Debit CreditAccountDepreciation Expense - Store
CreditAccountWages ExpenseAccount No. 620Date
Debit CreditAccountStore Supplies ExpenseAccount No.
Debit CreditAccountRent ExpenseAccount No. 650Date
Debit CreditAccountDepreciation Expense - Office
CreditAccountInsurance ExpenseAccount No. 665Date
Debit CreditAccountPayroll Tax ExpenseAccount No.
Debit CreditAccountOffice Supplies ExpenseAccount No.

Debit CreditAccountTelephone ExpenseAccount No.
Debit CreditAccountUtilities ExpenseAccount No.
Debit CreditAccountMiscellaneous ExpenseAccount No.
Debit CreditAccountInterest ExpenseAccount No.
Debit Credit
Employee Earnings RecordsEMPLOYEE EARNINGS
RECORDEmployee Name:Sue A. DollSocial Security 501-08-
1111Address:231 Crescent StreetStatus:SingleWestminster, SD
58307Allowances:3Pay Rate per hour:$14.00Hours:140Pay
Period EndingGross EarningsCumulative EarningsFederal
Income TaxSocial Security TaxMedicare TaxTotal
DeductionsNet Pay11EMPLOYEE EARNINGS
RECORDEmployee Name:Angie FaustSocial Security #:501-08-
2222Address:2216 Ave D EastStatus:SingleWestminster, SD
DeductionsNet Pay11EMPLOYEE EARNINGS
RECORDEmployee Name:Marge HoffmanSocial Security
#:501-08-3333Address:152 Columbia
BlvdStatus:MarriedWestminster, SD 58307Allowances:2Pay
Rate per hour:$13.25Hours:90Pay Period EndingGross
EarningsCumulative EarningsFederal Income TaxSocial
Security TaxMedicare TaxTotal DeductionsNet
Pay11EMPLOYEE EARNINGS RECORDEmployee
Name:Thomas KappSocial Security #:501-08-4444Address:3248
Manitoba AveStatus:MarriedWestminster, SD
DeductionsNet Pay11
Payroll RegisterChocolate NirvanaPayroll RegisterGross

EarningsDeductionsAccount DebitedEmployee NameFederal
DeductionsNet PayCheck No.Wages Expense (Gross
Wages)1Sue Doll12Angie Faust23Marge Hoffman34Thomas
Kapp4556TOTALS6778899
Unadjusted Trial BalanceChocolate NirvanaUnadjusted Trial
BalanceDEBITCREDIT
Work SheetChocolate NirvanaWork SheetUnadjusted Trial
BalanceAdjustmentsAdjusted Trial BalanceIncome
StatementBalance SheetAccount
TitleDebitCreditDebitCreditDebitCreditDebitCreditDebitCredit1
12233445566778899101011111212131314141515161617171818
1919202021212222Chocolate NirvanaWork SheetUnadjusted
Trial BalanceAdjustmentsAdjusted Trial BalanceIncome
StatementBalance SheetAccount
TitleDebitCreditDebitCreditDebitCreditDebitCreditDebitCredit1
1223344556677889910101111121213131414151516Net
Income1617171818191920202121
Sch of Acc PayChocolate NirvanaSchedule of Accounts Payable
(Accounts Payable Creditor Balances)ACCOUNT
Income StatementChocolate NirvanaIncome Statement
Stmt of Owners' EquityChocolate NirvanaStatement of Owners'
Equity
Balance SheetChocolate NirvanaBalance SheetAssets
Post Closing TBChocolate NirvanaPost Closing Trial
BalanceACCOUNTDEBITCREDIT

Cover pageIntroIntroductionQueta Johnson is about to open a new .docx

Recommended

Recommended

More Related Content

Similar to Cover pageIntroIntroductionQueta Johnson is about to open a new .docx

Similar to Cover pageIntroIntroductionQueta Johnson is about to open a new .docx (20)

More from vanesaburnand

More from vanesaburnand (20)

Recently uploaded

Recently uploaded (20)

Cover pageIntroIntroductionQueta Johnson is about to open a new .docx