PROJECT INSTRUCTIONS
Set up the General Ledger accounts, Accounts Receivable,
and Accounts Payable accounts. Use the following blank
forms (make as many copies as necessary). Insert the
beginning balances from the Trial Balance and
Schedules of Accounts Receivable and Payable
DATE- ITEM-POST REF-DEBIT-CREDIT-BALANCE-DEBIT-CREDIT
Journalize the following entries for the month of
January in the General Journal. Use the following blank
forms (make as many copies as necessary). When using
the Work in Process account, be sure to post to the
appropriate Job Cost Record
DATE -ACCOUNTS-POSTREF.-Dr- Cr
Narrative of Transactions
January 2—Paid Mass Media $4,200.00 for prepaid advertising in local newspapers for the
next 12 months.
January 2—Paid Pierce Properties $2,750.00 for January rent. Of this amount, 25% is for office
facilities and 75% is for factory facilities.
January 2—Paid Owen’s Insurance $6,000.00 for prepaid insurance for the first quarter of the year.
January 3—Received a check from Horsfield Happy Ice Cream as partial payment on account in
the amount of $5,000.00.
January 3—Paid Rockaway Metal the balance of $2,873.00 on account.
Narrative of Transactions
January 2—Paid Mass Media $4,200.00 for prepaid advertising in local newspapers for the
next 12 months.
January 2—Paid Pierce Properties $2,750.00 for January rent. Of this amount, 25% is for office
facilities and 75% is for factory facilities.
January 2—Paid Owen’s Insurance $6,000.00 for prepaid insurance for the first quarter of the year.
January 3—Received a check from Horsfield Happy Ice Cream as partial payment on account in
the amount of $5,000.00.
January 3—Paid Rockaway Metal the balance of $2,873.00 on account.
January 10—Receive a check from Horsfield Happy Ice Cream as partial payment on account in
the amount of $5,000.00.
January 10—Receive a phone bill in the amount of $1,402.22 from Unique Telephone Systems
on account.
January 15—Paid Liberty Bank $2,535.79 for December payroll taxes payable for the amounts of
FWT Payable, $1,613.11; FICA Tax Payable, $822.68.
January 15—Assign Job 76 to Cold Refrigeration for the purchase of a refrigeration system. The start date will be January 16th. The completion date will be no later than February 28th. The estimated direct material is $9,175.00. The estimated indirect material is $1,860.00. The estimated
direct labor is $15,600.00. The contract amount is $45,800.00.A deposit of $10,000.00 was provided by Cold Refrigeration in signing the contract. The deposit is unearned revenue. Half of the
contract will be billed upon 50% completion with the deposit applied against that billing with the remaining amount due immediately. A quarter of the contract will be billed upon 75% completion
of the contract with the amount due immediately. The remaining amount of the contract is to be billed when the job is 100% complete and is payable within 30 days of the billing.
January 16—Purchased $4,441.00 of factory supplies from Johnston Equipment paid in cash.
January 16—Purchased $2,965.00 of direct materials from Smith Synthetics on account.
January 16—Purchased $427.50 of office supplies from OfficeMax on account.
January 19—Apply from direct materials requisition $2,800.00 of direct materials. Apply from indirect materials requisition $325.00 of indirect materials. Apply from time cards s $7,950.00 of direct labor to Job 74 completing the job.Applied factory overhead is based on 25% of direct labor cost. Transfer the completed job to the COGS account from Direct Material and Indirect Material and Factory Overhead accounts. When making the journal entry for applying direct labor debit COGS for the gross pay and credit FWT Payable and FICA Tax Payable for the appropriate amounts with the net pay going to Salaries Payable.
January 20. —Paid the electric bill from Susquehanna Electric in the amount of $2,356.21 for the month of December. Allocate 30% to Factory Overhead
January 20—Paid the FUTA Tax Payable for the previous year.
January 20—Paid the SUTA Tax Payable for the previous year.
January 23—Ashman Alcove Designs paid the balance on account.
January 27—Paid O-Ring Enterprises the balance owed on account.
January 27—Paid post office $300.00 cash for postage added to postage meter
January 28—Apply from direct materials requisition $4,600.00 of direct materials. Apply from indirect materials requisition $950.00 of indirect materials. Apply $8,000.00 (from time cards) of direct labor and factory overhead to Job 76 irect materials. Apply $8,000.00 (from time cards) of direct labor and factory overhead to Job 76, completing 50% of the job. Factory overhead is based on 25% of direct labor cost. Transfer the partially completed job from Direct Material and Indirect Material to WIP. When making the journal entry for applying direct labor, debit WIP for the gross
pay and credit FWT Payable and FICA Tax Payable for the appropriate amounts with the net pay going to Salaries Payable. Set up the accounts receivable and bill Cold Refrigeration for 50% of
the contract on account, applying the initial $10,000.00 deposit against the billing.
January 29—Received a check from Cold Refrigeration in the amount of $9,976.25 on account.
January 31—Received the following data for the monthly payroll:
Direct labor (already recorded) $19,600.00
Sales commission 5,132.50
Officers’ salaries 5,000.00
Office salaries 1,920.00
Record the monthly payroll. Direct labor payroll has already been recorded, as it was incurred in January. Debit other salary expense accounts for the appropriate amounts; credit FWT Payable for 15% of gross pay; credit FICA Tax Payable for 7.65% of gross pay; and credit Salaries Payable for the net pay. Record the payroll taxes imposed on the employer for all personnel for the month of January. (Prepare the “Schedule of Employer Payroll Taxes Allocation” using the appropriate tax rates.)
January 31—Received a check from Messina Missions for the balance on account
January 31—Received a check from Horsfield Happy Ice Cream for the remaining balance on account.
January 31—Paid all employee wages earned in January.
3. Post the general journal entries to the General Ledger,
the Accounts Receivable Ledger, and the Accounts Payable
Ledger. Use the Post Ref. column to ensure that each line
item of the journal entries is posted correctly to each
general ledger account. Posting from the journal to the
ledger is nothing more than rearranging the information;
however, focus and concentrate because it’s easy to make
a mistake.
4. Calculate the balances in the general ledger accounts. Use
an Excel spreadsheet or a printing calculator to run the
numbers several times. Don’t use a hand-held calculator,
as it’s far too easy to make a mistake using it.
5. Prepare the Schedules of Accounts Receivable and
Accounts Payable.
6. Prepare an Unadjusted Trial Balance using the balances
from the general ledger accounts.
ACCOUNT DEBIT CREDIT
7. Journalize the following adjusting entries in the
general journal.
Adjusting Entries
January 31—Expense Prepaid Advertising for the month of January.
January 31—Expense Prepaid Insurance for the month of January.
January 31—Office supplies physical inventory as of January 31 is $276.21.
January 31—Depreciation for the month of January for Factory Equipment is $2,987.12.
Depreciation for Office Equipment is $266.99.
January 31—Close out Factory Overhead of $190.24 to Cost of Goods Sold.
8. Post the adjusting journal entries to their respective
ledger accounts, and calculate new balances for
those accounts.
9. Prepare an Adjusted Trial Balance using the balances
from the general ledger accounts. Use the blank form
provided in step six.
10. Prepare an Income Statement following the formats
shown in the Example Company Statements using
the following blank form as a worksheet:
11. Journalize and post the closing journal entries in the
general journal.
Jan. 31—Prepare closing entries to close revenue and
expense accounts to Income Summary, and transfer the
net income to Retained Earnings.
12. Post the closing journal entries to the respective ledger
accounts, and calculate new balances for those
accounts.
13. Prepare a Post-Closing Trial Balance using the balances
from the general ledger accounts. Use the blank form
that was provided in step six.
14. From the Post-Closing Trial Balance, create the Balance
Sheet following the formats shown in the Example
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Set up the General Ledger accounts, Accounts Receivable,
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