A completed assignment will include: A print out of all journal entries that hav

Question

A completed assignment will include: A print out of all journal entries that have been recorded, including adjusting entries and closing entries. Make sure to include the date and explanations. A print out of the completed T-accounts. A print out of the completed worksheet with the following columns: Trial Balance, Adjustments, Adjusted Trial Balance, Income Statement, Balance Sheet. A print out of the Income Statement, Statement of Owners’ Equity and Balance Sheet. Charles Price, a connoisseur of fine chocolate, opened Charles’ Fine Chocolate Co. in Stowe, VT on February 1, 2015, by investing $30,000 in cash into the business. The shop specializes in a selection of gourmet chocolate candies and a line of gourmet ice cream. You have been hired as manager. Your duties include maintaining the store’s financial records. On February 1, Charles paid three months’ rent for the store in advance at $2,000 per month. That same day, Charles purchased supplies for the store in the amount of $450 in cash from the Stowe Supply Co. The store received a delivery of candy from the Green Mountain Chocolate Factory worth $10,000 on February 1, just in time to open the store. Charles placed the order January 15. Because the store is just starting up, Charles purchased the candy on credit. The bill for the candy is due in 60 days. Charles took out an insurance policy to cover the store in the amount of $2,400. This is an annual policy that Charles paid for all at once on February 1. In order to have enough cash to pay employees and to purchase additional supplies and equipment for the store, Charles took out a loan from the Chittenden County bank in the amount of $24,000 on February 2. The loan is due in 2 years. As the new employee responsible for maintaining the store’s accounting records, you realize that you will need a computer for recordkeeping and tracking inventory. You express your concern to Charles, and on February 3, he purchases a computer costing $5,000. Charles pays cash for the computer. That same day, Charles purchases furniture and fixtures for the store (shelving to display the chocolates, other display cases, etc.) for $18,500. You determine that the useful life of the computer is 3 years, and the useful life of the furniture and fixtures is 5 years. Charles decides to pay cash for the furniture and fixtures as well. In order to let people in Stowe know about his new store, Charles takes out an advertisement in the Stowe Gazette on February 3 announcing the grand opening of the store. The advertisement cost $1,000. Because the Stowe Gazette is a small business, they do not accept credit. Charles therefore had to pay cash for the advertisement. Journal entries to record sales are entered into the general journal weekly. On February 8, week 1 sales were recorded. Week one sales were $5,500. Of this amount, $2,000 was in cash, the remainder on credit. Cost of chocolate sold was $1,500. The inventory account is updated at the same time sales are recorded. On February 10 Charles paid $500 to the Green Mountain Chocolate Factory for the chocolate received on February 1. Wages were paid on February 15 in the amount of $1,500. These wages covered the first fifteen days of February. Employees in total earn $100 per day. Sales for week 2 were recorded on February 15. Sales for week two totaled $2,500. Of this amount, $1,300 was in cash, the remainder was on credit. Cost of chocolate sold was $1,125. On February 16, Charles ordered additional supplies from the Stowe Supply Co. in the amount of $350. On February 19, the supplies were received. The supplies were purchased on credit and the bill for the supplies is due in 60 days. On February 20, one of the display cases was damaged. The cost to repair the damage was $215. Charles paid for the repair with cash. On February 20, the store received payment of $100 from a customer who purchased chocolate on credit during week 2. On February 21, a customer returned an un-opened box of chocolate. Charles gave the customer a full refund, in the amount of $50 in cash. The box of chocolate cost Charles $35. On February 22, a customer paid $100 in advance for a basket of gourmet chocolates that will be prepared and delivered to the customer’s home on March 14. On February 22, week 3 sales were recorded. Sales for week 3 totaled $4,445. Of this amount, $2,250 was in cash, the remainder on credit. Cost of chocolate sold was $2,050. On February 25, Charles paid the Green Mountain Chocolate Factory $1,000. On February 29, the store received a heating bill for the month of February. The amount of the bill is $1,000, which is not surprising given the cold Vermont winters. The bill is due on March 10. You perform an inventory of the supplies on February 29. The inventory reveals that there is $275 worth of supplies left on hand at the end of the month. Wages for the last two weeks of February will be paid on March 5. On February 29, week 4 sales are recorded. Sales for week 4 totaled $5,000. $1,800 was in cash, the remainder on credit. Cost of chocolate sold was $2,750. Required: For the month of February: Prepare journal entries for all transactions. Make sure to include the date and explanations. Prepare T-accounts for all accounts and post the amounts from the journal entries to the T-accounts. Prepare a worksheet with the following columns: Trial Balance, Adjustments, Adjusted Trial Balance, Income Statement, Balance Sheet Update the worksheet to reflect the unadjusted trial balance. Prepare all necessary month-end adjusting entries. Post the adjusting entries to the T-accounts. Complete the worksheet. Prepare an Income Statement, Statement of Owners’ Equity, and a Balance Sheet in good form. Prepare closing entries. Post closing entries to the T-accounts. All work must be performed in Excel. Formal financial statements can be prepared with a word-processing program (MS Word, for example). A completed assignment will include: A print out of all journal entries that have been recorded, including adjusting entries and closing entries. Make sure to include the date and explanations. A print out of the completed T-accounts. A print out of the completed worksheet with the following columns: Trial Balance, Adjustments, Adjusted Trial Balance, Income Statement, Balance Sheet. A print out of the Income Statement, Statement of Owners’ Equity and Balance Sheet.

Explanation / Answer

General Ledger

General Journal Date Accounts Debit Credit Feb. 1 #1 Cash 30000 Owners Investment 30000 (Owners invest cash in business) Feb. 1 #2 Prepaid Rent 6000 Cash 6000 (Pay three months' rent in advance) Feb. 1 #3 Supplies 450 Cash 450 (Purchase supplies) Feb. 1 #4 Inventory 10000 Accounts Payable 10000 (Purchase candy on credit) Feb. 1 #5 Prepaid Insurance 2400 Cash 2400 (Purchase insurance) Feb. 2 Cash 24000 Notes Payable 24000 (Take out a loan) Feb. 3 #1 Equipment 5000 Cash 5000 (Purchase computer) Feb. 3 #2 Equipment 18500 Cash 18500 (Purchase furniture and fixtures) Feb. 3 #3 Advertising Expense 1000 Cash 1000 (Pay for advertising) Feb. 8 #1 Cash 2000 Accounts Receivable 3500 Sales 5500 (To record sales for week 1) Feb. 8 #2 Cost of Goods Sold 1500 Inventory 1500 (To record sale of inventory) Feb. 10 Accounts Payable 500 Cash 500 (To record payment of cash) Feb. 15 #1 Salaries Expense 1500 Cash 1500 (To record payment of cash) Feb. 15 #2 Cash 1300 Accounts Receivable 1200 Sales 2500 (To record sales for week 2) Feb. 15 #3 Cost of Goods Sold 1125 Inventory 1125 (To record sale of inventory) Feb. 16 Supplies 350 Accounts Payable 350 (Purchase supplies on credit) Feb. 20 #1 Repair Expense 215 Cash 215 (To record repair to asset) Feb. 20 #2 Cash 100 Accounts Receivable 100 (Receive payment from customer) Feb. 21 #1 Sales Returns and Allowances 50 Cash 50 (To record sales return) Feb. 21 #2 Inventory 35 Cost of Goods Sold 35 (To record return of inventory) Feb. 22 #1 Cash 100 Unearned Revenue 100 (Cash received for future chocolates) Feb. 22 #2 Cash 2250 Accounts Receivable 2195 Sales 4445 (To record sales for week 3) Feb. 22 #3 Cost of Goods Sold 2050 Inventory 2050 (To record sale of inventory) Feb. 25 Accounts Payable 1000 Cash 1000 (To record payment of cash) Feb. 29 #1 Cash 1800 Accounts Receivable 3200 Sales 5000 (To record sales for week 4) Feb. 29 #2 Cost of Goods Sold 2750 Inventory 2750 (To record sale of inventory)

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