ACC – Queta Johnson is about to open a new business – Chocolate Nirvana

Introduction

Queta Johnson is about to
open a brand new enterprise – Chocolate Nirvana.
Will probably be a small chocolate specialties retailer. She plans on promoting a restricted variety of
hand-made molded candies, a few of that are vacation particular and others that
are of a extra generic nature, in addition to carrying a line of top-end sweet
bars. The vast majority of her gross sales will
come from walk-in prospects which is able to all be on a money solely foundation. As well as, she may even promote direct to
two native companies, on account, with phrases 1/10,n/30. She anticipates working full-time on the
retailer and needing the assistance of 4 part-time workers. She makes use of
a perpetual FIFO (First-in, First-Out) technique to account for her
stock. So, each
time you document a sale of merchandise, whether or not on account or for money, you
should additionally work out the price of the products whereas recording the sale within the
stock subsidiary.

The
function of this follow set is to permit you the prospect to see how every of
the separate parts we now have labored on this semester match collectively. As you full the set, chances are you’ll discover it
essential to look again at what we discovered in numerous chapters to assist
bear in mind precisely what to do.

Directions

1. Document the transactions for Chocolate
Nirvana discovered on the enclosed varieties in one of many journals supplied:

Money Funds – any time you spend
cash

Money Receipts – any time you obtain
cash

Buy – any time you buy
one thing on account

Gross sales – any time you promote one thing on
account

Basic – solely transactions that do
NOT match into one of many earlier journals

Chocolate
Nirvana makes use of Accounts Receivable, Accounts Payable, and Merchandise Stock
Subsidiary Ledgers in addition to a examine e-book

Keep in mind to submit to the
subsidiary ledgers any time these accounts are used

The
first work you can be doing shall be do decide which journal every kind
belongs in. Every kind will solely go
into one journal. If we are able to submit it
into one of many particular journals, we are going to.
If it doesn’t belong in a particular journal – that’s the solely time we
will use the final journal for our transactions. This shall be pretty uncommon. Take note of the phrases used on the
varieties. If it signifies that we now have
acquired cash – FOR ANY REASON – we are going to document that within the Money Receipts
Journal. If it signifies that we want
to write down out a examine – FOR ANY REASON – it should go into the Money Funds
Journal. If we promote one thing on
account then it might go into the Gross sales Journal. And if we purchase one thing on account or we
obtain a service on account, then it might go into the Purchases
Journal. If it’s a gross sales return, a
buy return, or the payroll entries it should go into the Basic
Journal.

As we
document the data from the varieties into the journals we have to watch the
columns the place we document the data.
If we document one thing within the Money Receipts or the Money Funds
Journals, then we must have an effect on money.
Any quantity we put within the Money debit column from Money Receipts we are going to
additionally put into the examine e-book as a deposit.
Any quantity we put within the Money credit score column from Money Funds we are going to
additionally put into the examine e-book as a examine we write out. If we have an effect on Accounts Receivable, Accounts
Payable, or Merchandise Stock in any of the particular journals OR within the
common journal, we should ALSO take that quantity into that subsidiary
ledger. If we debited it within the
journal we are going to debit it within the subsidiary; if we credited it within the journal
we are going to credit score it within the subsidiary.
If we bought the merchandise stock we are going to present it as a
buy within the stock sheets, if we offered it we are going to present it underneath the
price of products offered part – we are going to decide our price for the sale by making use of
the FIFO guidelines and figuring out our price within the items we offered.

Payroll – document the payroll
as instructed first into their worker earnings data, then switch the
data into the payroll register and after totaling the payroll register
use that data to arrange a common journal entry. Particular knowledge for every particular person
relating to their pay fee, standing and variety of allowances could be discovered on
their earnings document sheets. Particular
charges for use for social safety, medicare, and the unemployment quantities
could be discovered down within the subsequent part.
Put together the journal entries based mostly off what we have been taught within the
textbook. You will have to debit the
wage expense account for complete gross wages and credit score every of the issues we
withheld (as summarized on the payroll register). Nonetheless you should credit score Payroll
Checking Account for the web pay as a result of this enterprise makes use of a separate
checking account for regular checks and payroll checks.

When you find yourself requested to
switch sufficient funds to cowl payroll, you’ll debit the Payroll Checking
account for a similar quantity you credited within the first payroll entry within the
common journal (internet pay) however now it will likely be within the Money Funds Journal. This will provide you with a debit and a credit score and
will end in a zero stability (and nothing recorded within the Wages Payable
account but).

Needless to say after
recording the final journal entry to document the precise payroll you should
additionally put together a journal entry to document the payroll tax expense for the
enterprise. Chocolate Nirvana is
liable for matching the Social Safety and Medicare quantities withheld
from its workers and in addition should pay in for Federal and State
Unemployment. Which means when it
comes time to submit into the ledger you should have two similar quantities within the
Social Safety account and two similar quantities within the Medicare
account. This entry was proven within the
textbook so please observe the format we noticed there. The next charges apply:

Social Safety 6.2%, on the primary $110,000 earned every
12 months by every worker

Medicare 1.45%

FUTA .eight%, on the primary $7,000 earned annually by every worker

SUTA 9%, on the primary $12,000
earned annually by every worker

We’ll NOT truly write
out the person payroll checks

Trace: In case you are requested to write down out a examine to
cowl multiple factor you should take multiple line so that you just
correctly document the have an effect on to every account.

Thus far it’s best to NOT
have something recorded within the Basic Ledger.
Wait till you may have your journals accomplished, TOTALED, and corrected,
earlier than placing something into the final ledger.

2.
After finishing all journals, TOTAL THEM and write the totals beneath the final quantity
within the column, evaluate to the examine figures,
and submit to the final ledger.
For any journal column with the identify of a particular account within the
column heading you’ll submit solely the full from that column into that account
within the common ledger. Journal columns
proven as “Different” within the heading must be posted individually into
the final ledger. As you submit
keep in mind that it’s a must to use the submit reference numbers. Within the ledger you fill within the journal
abbreviation and web page quantity the place you get your knowledge and within the journal you
put the ledger account quantity the place you posted it. Money Receipts is CR; Money Funds is CP;
Purchases is P; Gross sales is S; and Basic Journal is J. Within the journal to point out that you just posted it
right into a subsidiary ledger you set a examine mark.

three. Put together an unadjusted trial stability. After getting your numbers to match the
examine determine switch the data into the primary columns of the
worksheet.

four. Put together month finish adjusting entries based mostly
on the next knowledge:

a) Document accrued curiosity on the long run
notice for three days – $16.77

b) Depreciation – calculate depreciation for
JUST the month of October based mostly on the next data:

Retailer Gear – 5 12 months life, $2000
salvage worth, bought October 10, use straight line depreciation

Workplace Gear – 5 12 months life, $200
salvage worth, bought October 10, use straight line depreciation

c) Document entry for expired insurance coverage

d) At the moment there are $75 value of workplace
provides available

e) At the moment there are $125 value of retailer
provides available

f) Document entry quantity of promoting expired for the
interval simply ended

g) Document wages earned, however unpaid, on Oct 31
of $275

Adjusting
entries must be recorded within the common journal, posted into the final
ledger (bear in mind to point Adjusting Entry within the Merchandise column), and added
to the worksheet.

5. Full the worksheet, schedule of
accounts receivable/payable, Earnings Assertion, Assertion of Homeowners’ Fairness,
and Stability Sheet. Add any accounts
not already discovered on the worksheet as wanted to finish your adjusting
entries.

The
schedule of accounts receivable and schedule of accounts payable are ready
by itemizing each enterprise owing us cash on the finish of the month and totaling
them and itemizing each enterprise we owe cash to on the finish of the month and
totalling them. We use the 2
subsidiary ledgers to get this data.

Put together
the Earnings Assertion utilizing the A number of step format and the Stability Sheet
utilizing the categorized format. The Notes
Payable – present stability on the Stability Sheet needs to be $15,000 and the
Notest Payable – noncurrent stability on the Stability Sheet needs to be $13,750.

6. Put together closing entries, submit to the
ledger, and put together a post-closing trial stability

The
best option to put together your closing entries can be to make use of your accomplished
worksheet. Shut the credit score quantities in
the Earnings Assertion column into revenue abstract for the primary entry. Shut the debit quantities from the Earnings
Assertion columns into Earnings Abstract for the second entry. Shut the distinction between the 2 revenue
abstract quantities (ought to equal internet revenue) in to the Capital account within the
third entry. Lastly, shut the
drawing account into the capital account within the fourth entry. These entries are accomplished within the Basic Journal
after which posted into the Basic Ledger.
Remember to point out Closing entry within the Merchandise column. You’ll then put together the post-closing
trial stability by going by way of the ledger and itemizing each account that
nonetheless has a stability and itemizing the stability (as both a debit or a credit score –
based mostly on what it’s within the ledger).

(Have
you made positive that your balances in your subsidiary ledgers match their
controlling accounts within the common ledger?
Does the web revenue out of your work sheet match the web revenue you
reported in your Earnings Assertion?)

Within the Exhibit part you
will discover:

Chart of Account

Tax Withholding Chart

Verify Figures

Within the Types part you’ll
discover:

The transactions varieties you must
document within the numerous journals

Within the Journals part you
will discover:

Gross sales Journal – start with bill
1001

Purchases Journal

Money Receipts Journal – start with
bill 101

Money Funds Journal – start with
examine 1001

Basic Journal (ONLY transactions
that CANNOT go into one of many particular journals)

Within the Ledgers part you
will discover:

Accounts Receivable Subsidiary Ledger

Accounts Payable Subsidiary Ledger

Merchandise Stock Subsidiary
Ledger

Basic Ledger

Within the Checkbook part you
will discover:

Checkbook – start with examine 1001

Within the Payroll part you
will discover:

Particular person Earnings Information

Payroll Register – Start with examine
101 (assign to workers so as – don’t truly write out checks to the
workers)

Within the Monetary Assertion
part you will discover:

Unadjusted Trial Stability

Work Sheet

Schedule of Accounts Receivable

Schedule of Accounts Payable

Earnings Assertion (A number of Step
format)

Assertion of Owners’ Fairness

Stability Sheet (Labeled format)

Put up Closing Trial Stability

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