(Answered)-Part B - Siesta Company In this part of the Comprehensive Problem

Hi, I need accounting assignment help please.? The Assignment have 3 parts (A, B, C). Part A is a make a balance. Part B is to make journal entries, and Part C is multiple choice questions.
Part B - Siesta Company

 

In this part of the Comprehensive Problem you will be making Journal Entries (JEs), a short

 

payroll problem and JE, Adjusting Journal Entries (AJEs) and a Bank Reconciliation (don?t

 

forget the JE for the Bank Reconciliation).

 

Transactions to record

 

(Some of the transactions require you to use the Quickbooks processes instead of making a

 

Journal Entry. This is noted in each transaction.)

 

1.

 

 

Dec. 1, Purchased 200 shares of Chevron Corp. common stock for $93.50 per

 

share to be held as a short-term investment. In addition to the purchase price $40

 

in brokerage fees were paid to acquire the stock. Check #101 was issued

 

for

 

payment [enter ck #101 under ?Memo?] [note: for the $40, remember

 

that ?any

 

cost incurred to acquire an asset must be recorded as a cost of that

 

asset? (e.g.

 

freight-in on purchased inventory is debited to the inventory

 

account). Unclick

 

the ?adjusting entry? box for all JEs you are recording.

 

2.

 

 

Dec. 1, purchased a computer from Computer World for $2,000. Sales tax of

 

7.5% must also be paid. Payment was made by signing a 2-year note which

 

requires interest at an annual rate of 8% to be paid every quarter. The

 

computer

 

is expected to last 3 years after which time it is expected to be sold

 

for $350. It

 

will be depreciated using the double declining method (due to the

 

rapid

 

obsolescence of computer hardware).

 

3.

 

 

Dec. 1, paid $1,680 to National Insurance Company for a one-year insurance

 

policy which ?runs? from Dec. 1, 2015 ? November 30, 2016. Check #102 was

 

issued for payment.

 

 

4.

 

 

Dec. 1, paid $3,600 to JB Commercial Properties for two months of building rent,

 

the months of December 2015 and January 2016. Check #103 was issued for

 

payment. Charge the December rent to ?Rent Expense? since that amount

 

will be

 

used up in the current month.

 

5.

 

 

Dec. 2, purchased $800 of supplies on credit under terms n/30 from Office

 

Supplies Inc. Since these items are not going to be resold by Siesta Company (i.e.

 

they are not inventory), sales tax at 7.5% must also be paid. Office Supplies Inc.

 

invoice #5450 was received at time of purchase (use in your description)

 

and

 

enter ?Office Supplies Inc. under the ?name? column and then add as a

 

vendor

 

when prompted.

 

6.

 

 

Dec. 19, received a quarterly dividend check for $180 from Chevron Corporation.

 

 

7.

 

 

Dec. 27, pay Mattress World invoice #MWI233 for $8,000 with check #105.

 

Note: Do not make a JE entry for this transaction. Rather complete the steps

 

under item #10 on p. 16 of Part A [i.e. click on ?Vendors?, ?pay bills? and

 

 

select the Mattress World invoice] and the system will automatically make the JE for

 

you. Realize what is occurring here => under item #10 in Part A the invoice from

 

Mattress World was received and entered into A/P but because terms were n/30

 

the invoice was not paid at that time, but now 30 days has almost passed.

 

8.

 

 

Dec. 28, it was determined that the ?packaging machine? was not needed for the

 

business and thus it was sold for $8,000. Two entries are needed to record the

 

disposal of fixed assets, one to catch-up the depreciation to the date of

 

disposal

 

(thus one month of depreciation needs to be recorded) and the

 

second to record

 

the disposal. Use the information given under step #1 on p.

 

5 from the Part A

 

handout (related to the depreciation method to use, etc.) to

 

help you record the

 

two entries (use a reference of #12-8a and #12-8b when

 

recording the two

 

entries).

 

9.

 

 

Dec. 28, sold 100 shares of the 200 shares of Chevron Corporation stock held as a

 

short-term investment for $104.25 per share. $40 in brokerage fees were incurred

 

to sell the stock. [hint: the $40 is a reduction in the ?proceeds from sale? (i.e.

 

reduces the amount of cash received); also, if ? of the shares purchased

 

were sold

 

? of the cost recorded under #1 above needs to be removed from the

 

books)

 

10.

 

 

Dec. 29, the BOD of Siesta Company declared and paid a $2,200 dividend

 

to stockholders. Check #106 was issued to the clearing house which tracks stock

 

ownership and makes the dividend payments for Siesta Company.

 

 

11.

 

 

Dec. 30, Jane Doe, a customer, walked into the store and purchased a comfort bed

 

set (item #ComB1) for $1,800 and was also charged sales tax at 7.5%. Jane Doe

 

wrote out her check #170 for $1,935 for payment in full.

 

Do not make a JE here as when you perform the steps listed below the system

 

automatically generates the needed entry(s).

 

o You are to set-up Jane Doe as a customer (see step 4 on p. 9 of Part A)

 

o On the Sales Tax Setting tab for ?tax code? make sure ?tax? [taxable item]

 

is selected and that the ?tax item? is ?State of MN?

 

o Then issue the customer sales invoice #3 (see step 8 on p. 13 of Part A if

 

unsure of how to generate a sales invoice).

 

o Make sure you enter the appropriate quantity and item and a unit price of

 

$1,800. Note that the total invoice amount equals $1,935

 

o Normally the invoice would be printed and given to the customer at this

 

point (on the upper toolbar select ?print? and then ?preview?). Click save

 

and close, which will then cause the customer invoice to be in the system.

 

o But payment still needs to be received against the invoice and then the

 

check is to be deposited into the bank [otherwise an ?undeposited funds?

 

amount will appear on the trial balance]. If you do not remember how to

 

record a receipt and make the deposit into the bank follow the procedures

 

under step 9 on p. 15 of Part A.

 

 

12.

 

 

Dec. 30, Remitted (made) payment to Office Supplies Inc. invoice #5433 for the

 

purchase of supplies made on credit on December 2 (transaction #5 above) by

 

issuing check #107 for $860. You can either make a JE here [when

 

entering the

 

A/P side of a JE under ?Name? you will need to pull down ?Office

 

Supplies

 

Inc.?], or by issuing a check(pay bills) where the system

 

automatically makes the

 

entry for you [on the home page flow-chart click on

 

?pay bills?]

 

13.

 

 

Dec. 30, the two employees are to be paid in cash for work performed during the month

 

of December. Complete the following table to determine the amounts to be recorded in

 

the two entries which are required =>

 

(1).

 

 

The ?employee entry? related to the gross and net pay [record two entries

 

here, one for each employee?s check, use 12-13(a) and 12-13(b) as

 

reference numbers for the JEs and check #108 for Joe

 

#109 or Real McCoy], and

 

 

McCoy and check

 

(2)

 

 

the ?employer entry? needed for the employer payroll taxes (FICA and

 

Unemployment Taxes) [record this entry as #12-13?].

 

 

 

All taxes will be paid on January 2, 2016.

 

 

Use the ?Payroll Taxes Payable? account for all taxes to be remitted to the

 

governments on January 2, 2016,

 

use the ?Wages Expense? account for gross pay, and

 

use the ?Payroll Tax Expense? account for the employer payroll taxes incurred.

 

(Use #13a and the check numbers, and #13b as references in your journal

 

entries.)

 

Employee

 

Joe McCoy

 

Real McCoy

 

Total

 

 

Gross

 

Wages

 

$3,500

 

$2,500

 

$6,000

 

 

Employer

 

Taxes for:

 

Joe McCoy

 

Real McCoy

 

Total

 

 

Gross

 

Wages

 

$3,500

 

$2,500

 

$6,000

 

 

FIT

 

$260

 

$190

 

$450

 

 

SIT

 

 

OASDI

 

(6.2%)

 

 

Medicare

 

(1.45%)

 

 

Total

 

Taxes

 

 

Net Pay

 

 

$95

 

$65

 

$160

 

 

OASDI

 

(6.2%)

 

 

Medicare

 

(1.45%)

 

 

Unemploymen

 

t (2.6%)

 

 

Total Employment

 

Taxes

 

 

Note: prior to performing step 14 below, you should verify that you have amounts

 

properly recorded. The following are check figures at December 31, 2015 for Siesta

 

Company prior to the recording of the AJE?s at December 31, 2015: [you can print-out or

 

view the trial balance or income statement & balance sheets to check your balances)

 

Check figures after you have completed steps #1 ? #13 above.

 

 

Cash = $96,749

 

Inventory = $4,340

 

Total liabilities = $3,969 (per the balance sheet)

 

Net income (loss) = $3,080

 

Total debits (and total credits) per the G/L trial balance = $179,264

 

 

Note: if your amounts do not agree with the above check figures the first

 

thing you should do is an:

 

?Analytical Review? Check - at this stage this should be a two-step process:

 

 

 

Run the trial balance, or a balance sheet & income statement, to determine

 

that all accounts have a proper ending ?normal balance? (remember that

 

all accounts have either a debit or credit ?normal balance?).

 

o For example, the account ?Supplies? is an asset account, and thus

 

must have a debit balance in it at the end of the period. If it has a

 

credit balance in it, an error(s) is present which should be

 

corrected.

 

 

 

 

13.

 

 

Review the ending balances for reasonableness (e.g. if cash is $1,000 and

 

A/R = $35,000, which appears disproportionate, an entry that should have

 

been posted to cash might have been posted to A/R).

 

 

Recording end-of-the-period adjusting entries (AJEs) in the general journal

 

(other than bank reconciliation entries)

 

Generally the first end-of-the-period procedure performed is to print out a copy of the

 

?unadjusted trial balance? and review accounts for ?appropriateness? (e.g. proper ending

 

balances) and to review accounts which normally need adjusting entries to be made to.

 

You will need to make general journal entries at December 31, 2015 related to the

 

following: (for the reference enter the letter given below for each transaction => the first

 

transaction will have a reference of #A). [You should now check the ?Adjusting entry?

 

box when making the entry (this designates the entry as an adjusting in reports you might

 

generate, such as the journal)].

 

 

A.

 

 

Prepaid Insurance

 

 

B.

 

 

Supplies (a physical count showed that $600, out of amount purchased on Dec. 2

 

remained on hand at 12/31/15).

 

 

C.

 

 

possibly the Prepaid Rent account (depending upon how you recorded transaction

 

#4 above => if you did not charge the December rent to rent expense you will

 

need to adjust that amount out of the prepaid rent account)

 

 

D.

 

 

Depreciation (on the pallet jack, fork lift and computer) for one month [you many

 

choose to make only one entry, with one dr. and 3 cr., or you may make 3

 

separate entries].

 

You will need to refer to p. 5 on the Part A handout for information needed to

 

compute depreciation as well as referring to the information which

 

 

follows.

 

The fork-lift was used a total 120 hours in December.

 

 

whole

 

 

For the new computer, remember the capitalized cost = $2,150 and that the double

 

declining balance method of depreciation is used with an estimated useful life of 3

 

years (as you should know you should ignore the residual value of $350 which is

 

given under #2). Record the depreciation on the computer to the nearest

 

dollar.

 

 

E.

 

 

Accrued interest on the Note Payable (related to transaction #2) [round your

 

answer/accrual to the nearest whole dollar => remember many adjusting entry

 

amounts are based upon estimates, and that the materiality constraint

 

applies as

 

well]

 

F.

 

 

Utilities for December are estimated to be $150.

 

 

G.

 

 

Complete the bank reconciliation for the month of December and enter the

 

appropriate JE [see 14 below; label your JE as ?bank rec?].

 

 

14.

 

 

End-of-the-Year bank reconciliation.

 

An end-of-the-month ?closing procedure? that should be performed by all companies is a

 

bank reconciliation (?bank rec?), which you learned is an ?explanation? of any

 

difference that might exist between the balance in the G/L cash account at the end of the

 

period and the balance on the bank statement at the end of the period.

 

Normally the following three documents are needed to prepare a bank rec:

 

(1).

 

 

A print-out of the detailed G/L ?cash? account for the current month (there are

 

multiple ways to get the detail, the steps for one of which follows)

 

o

 

o

 

o

 

o

 

o

 

o

 

o

 

o

 

o

 

o

 

 

On the toolbar select ?Reports?, then

 

?Accountant & Taxes?

 

?Transaction Detail by Account?

 

Set the date to ?This Fiscal Year?

 

Customize Report

 

Filters

 

Under the ?Accounts? pull-down menu curse down and select ?Cash?

 

OK

 

To print this detail out, on the toolbar select ?Print?

 

Report

 

 

(2).

 

 

A copy of the bank statement from the bank (which is given to you below, and

 

which I suggest you print out in order to help you do the reconciliation).

 

 

(3).

 

 

A copy of the prior month?s bank rec (as o/s checks from the prior month might

 

still not have cleared the bank at the end of the current month).

 

Because this is the first month of business for Siesta Company, no prior month

 

bank rec is available.

 

 

Required ? follow the directions on the bank reconciliation template which is given on the last

 

page of this handout, and which was also made available to you in a separate file (and which I

 

suggest you print-out and complete long-hand first). This template is to be

 

completed by

 

you as a Word doc and then uploaded into the drop-box along with the

 

other required

 

documents per the instructions given below.

 

 

US Bank

 

Bank Statement for Siesta Company

 

Balance on November 30, 2015

 

total deposits & credits

 

total checks & debits

 

Balance on December 31, 2015

 

Increases

 

Date

 

 

Amoun

 

t

 

 

Descriptio

 

n

 

 

Running Balance

 

$110,000

 

30,780

 

(40,200)

 

$100,580

 

Decreases

 

Date

 

December 3

 

December

 

10

 

 

December

 

16

 

December

 

20

 

 

December

 

30

 

December

 

31

 

Total

 

 

Amoun

 

t

 

$18,740

 

$1,680

 

$3,600

 

 

Check

 

#/description

 

101

 

102

 

103

 

 

$12,200 Deposit

 

$180

 

 

Deposit

 

 

$18,385 Deposit

 

$15 Interest

 

$30,780

 

 

December

 

24

 

December

 

27

 

December

 

30

 

December

 

31

 

 

$8,000 105

 

$5,940 104

 

$2,200 106

 

$40 Service charge

 

$40,200

 

 

Final Check figures after you have completed steps #1 ? #14 above.

 

Cash = $96,724

 

Total assets = $157,285

 

Net income = $1,852

 

 

Total current assets = $120,974

 

Total liabilities = $4,133

 

Comprehensive Problem Part B

 

Bank Reconciliation

 

 

(1).

 

 

Per the directions given in item #14 of the problem, you are to complete the two-column

 

bank reconciliation given below. [Make sure you type in your name after ?Name:?

 

above.]

 

 

(2).

 

 

Make any necessary adjusting journal entry needed from this bank reconciliation in the

 

template given below the bank rec, and then enter this AJE into the general journal in

 

Quickbooks (use a posting reference of ?G? or ?rec?)

 

 

(3).

 

 

Save a copy and upload it into the drop-box along with the other required documents.

 

Siesta Company

 

Bank Reconciliation

 

December 31, 2015

 

 

Balance per book

 

 

$

 

 

Balance per bank

 

 

$100,580

 

 

Add:

 

 

$

 

 

Add: deposit in

 

transit

 

Less: o/s checks

 

 

$

 

 

Less:

 

 

$

 

$

 

$

 

Adjusted balance per

 

books

 

 

$

 

 

.

 

 

Adjusted balance

 

per bank

 

 

$

 

$

 

 

.

 

 

Make any necessary AJE?s here (you should have one debit and two credits; the dr. entry has

 

been made for you)

 

a/c #

 

#650

 

 

a/c description

 

Miscellaneous Expense

 

 

Dr.

 

40

 

 

Cr.

 

 



 

---

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