Perpetual Inventory System

Exercise-1

The following general journal entries are typical entries relating to the acquisition and subsequent sale of goods, using a perpetual inventory system:

2007
Jan. 1  Merchandise Inventory                        $10,000.00
              Accounts Payable                                                $10,000.00
          1000 units at $10 per unit

     10  Cash                                                        4,200.00
             Sales                                                                         4,200.00
          300 units at $14

     10  Cost of Good Sold                                   3,000.00
             Merchandise Inventory                                               3,000.00
           300 units at $10

     14  Merchandise Inventory                              4,500.00
              Cash                                                                         4,500.00
          600 units at $6.50 per units

    20  Cash                                                         11,200.00
             Sales                                                                         11,200.00
         800 units at $14 per unit

    25  Cost of Goods Sold                                    7,750.00
              Merchandise Inventory                                              7,750.00
         700 units at $10.00 per unit
         100 units at $7.50 per unit

The entry of January 1 records the purchase of merchandise on credit. This entry and others that follow would normally be recorded to special journals; however, for ease of analysis they are recorded in simple two-column general journal form. Unlike the periodic system, which uses the merchandise purchases account, the perpetual system records purchases of merchandise directly in the inventory account.
Each type of good acquired is posted to a specific subsidiary ledger account that contains an explanation similar to that of the journal entry. The actual subsidiary ledger account is also known as a STOCK RECORD CARD. The purpose of the stock record card is to list specific information pertaining to the goods acquired and subsequently sold.

The following represents the typical form of the subsidiary ledger, stock record card:

Items Stock #-324A                                                          Description: Hand Tool
Location: Edwood 5 B                                                       Basis --FIFO


                          Received                                  Issued                                    Balance                
Date   Units   Unit Cost  Total Cost     Units   Unit Cost   Total Cost     Unit  Unit Cost    Total Cost  
2007
Jan. 1 1,000   10.00       10,000                                                         1,000   10.00       10,000
10      
                                                          300        10.00        3,000           700    10.00         7,000
14        600      7.50         4,500                                                            700   10.00         7,000
                                                                                                             600     7.50         4,500  
                                                                                                                                        11,500
17                                                     700         10.00        7,000
                                                         100           7.50           750           500    7.50           3,750

Sole Propietorship

Solution from Exercise 1 - B

 ShehGarLynn's Dress Shop

Trial Balance

For the Month Ended January 31, 2007

Cash in Bank (BOA)...............................................$40,000.00

Petty Cash .............................................................        443.00

Accounts Receivable..............................................       7,000.00

Prepaid Rent .........................................................       9,000.00


 Accounts Payable...................................................                                  5,000.00

Shehla's Capital ......................................................                                 50,000.00

Sales ......................................................................                                   7,500.00

Sales Return and Allowances ..................................         500.00

Purchases...............................................................       5,000.00

Cleaning Expenses .................................................          215.00

General Expenses ..................................................             30.00

Delivery & Shipping Expenses ...............................              12.00                                

Total......................................................................     $62,500.00            $62,500.00

Sole Proprietorship

Solution from Exercise 1-A

	ShehGarLynn'S Dress Shop
	Journal Entries
	For the month Ended January 31, 2007
Date
Jan. 10	Cash	$  50,000.00
	Shehla's Capital		$  50,000.00
	To record Shehla invested into business
Jan. 11	Cash in Bank	$  50,000.00
	Cash		$  50,000.00
	To record cash deposited to Bank of America
Jan. 15	Petty Cash	$        500.00
	Cash in Bank		$        500.00
	To established petty cash check no. 1
Jan. 16	Prepaid Rent	$    9,000.00
	Cash in Bank		$    9,000.00
	To pay 3 months advance of rent at $3,000 per month
Jan. 17	Purchases	$    5,000.00
	Accounts Payable - Nellie		$    5,000.00
	To record merchandise purchased from Nellie's
	Term; 2/10, n/30
Jan. 18	Cleaning Expenses	$          15.00
	Petty Cash		$          15.00
	To record the expenses voucher no. 1
Jan. 19	Accounts Receivable	$    3,500.00
	Sales		$    3,500.00
	To record the sales invoice no. 1
	Term; 2/10, n/30
Jan. 25	General Expenses	$          15.00
	Petty Cash		$          15.00
	To record the postage expense voucher no.
Jan. 26	Accounts Receivable	$    2,500.00
	Sales		$    2,500.00
	To records sales invoice no. 2
	Term; 2/10 n/30
Jan. 27	General Expenses	$          15.00
	Petty Cash		$          15.00
	To record first aid expenses, voucher no. 3
Jan. 28	Purchase	$    4,000.00
	Accounts Payable		$    4,000.00
	To record merchandise purchase on account
	Term; 2/10, n/30
Jan. 29	Delivery Expenses	$          12.00
	Petty Cash		$          12.00
	To record the expenses voucher no. 4
Jan. 30	Accounts Receivable	$    1,500.00
	Sales		$    1,500.00
	To record sales invoice no 3
	Term; 2/10, n/30
Jan. 30	Cleaning Expenses	$        200.00
	Cash in Bank (BOA)		$        200.00
	To record the expenses paid check no. 3
Jan. 31	Sales Returns and Allowances	$        500.00
	Account Receivable		$        500.00
	To record the returned merchandise
	Issued credit memo invoice no. 2

Partnership

A PARTNERSHIP is a joining of two or more individuals as co-owners of a business for profit. When funds are needed to organize the business, the partnership will enable the capital needed to be raised through the contributions of each partner to the partnership. Many professions, such as accounting, law, and medicine, use the partnership form of business organization for this reason.



Part-Exe-001

Exercise 1

March 7, 2007, Shehla, Gary, and Lynn entered into a partnership, Name their business "ShehGarLynn's"  The agreement called for Shehla to contribute the following asset: Cash, $25,000; land, 125,000; for Gari to contribute  Cash, $200,000; for Lynn to contribute Cash $50,000. Profit and Loss sharing ratio agreed upon their capital invested into business.

March 8, 2007, Both parties agreed Lynn's will manage the company with $5,000 monthly salaries plus 750 monthly allowance, and agreed to increase her salaries after a year. companies paid her advance for the month of March. check no. 1

March 8, 2007, Lynn deposit the cash in Bank of America for checking account. No. 05040711

March 9, 2007, They both agree to purchase a home care facilities amounting $750,000 on loan basis with Bank of America 5% interest for 30 years to pay...

March 10, 2007, Lynn issued a check to pay $500 Rene's cleaners for general cleaning of the home care facilities. check no. 2

March 10, 2007, Lynn issued a check to pay $750 for miscellaneous expense.check no. 3

March 10, 2007, Lynn established a petty cash fund, $ 500, check no. 4

March 11, 2007, Lynn bought office equipment; such as 5 computer at $500 each, 1 printer at $300, 1 xerox machine at $500, on credit to Best buy. no interest with in 1 year to pay.

March 12, 2007, Lynn issued check no. 5, amounting $300 to Office Depot for payment of office supplies.

March 12, 2007, Lynn hired Registered Nurse and pay $45/hr, 4 hours a day.

March 12, 2007, Lynn hired LVN  and pay $25/hr, full time, 8 hrs a day

March 13, 2007, Receive 5 patient at $5,000 each

March 14, 2007, Lynn hired 2 CNA and pay $18/hr, full time., 2 shift, day/night

March 15, 2007, Additional 5 patient at $5,000 each

March 16, 2007, Hired 2 CNA  and 2 LVN  full time.

March 17, 2007, Hired 1 office assistant $11/hr, full time 8 hrs a day.

March 18, 2007, Additional 5 patient at $5,000 each

March 19, 2007, Issued check no. 6 amounting $700 to pay for food services. for 1 week 10 patient

March 20, 2007, Issued check no. 7 amounting $300 to pay Rene's Cleaners.

Marc 30, 2007, Received statement from best buy amounting $150.


Compute the following:

1. What is the profit and loss sharing ratio accordingly?
2. Compute the salaries of all the staff.
3. Prepare the Journal entries
4. Prepare Trial Balance for the month ended.

Petty Cash

Petty cash is a small amount of discretionary funds in the form of cash used for expenditures where it is not sensible to make any disbursement by cheque,

Lets go back to SheGarLynn'S Dress Shop established a petty cash of  $500.00

The Journal entry was:

Petty Cash ...........................$500.00
    CAsh in Bank (BOA) .......................$500.00
To record the petty cash fund issued Jan. 15, 2007, check no. 1

The petty cash fund during that month was being paid the following date:

January 15, 2007 - Paid $15.00 to Marcelo Delivery, voucher no. 1
January 15, 2007 - Bought pencils and pens, cost $10.00, voucher no. 2
January 16. 2007 - Paid local newspaper of advertising, $20.00, voucher no. 3
January 16, 2007 - Paid postage on incoming packages, $5.90, voucher no. 4
January 17, 2007 - Shehla, the owner, borrow $100.00 for personal use, voucher no. 5
January 18, 2007 - Reimbursed employee for stamp, $50.00, voucher no. 6
January 19, 2007 - Bought ink for printer, $75.00, voucher no. 7
January 20, 2007 - Paid $10.00 to Belyn delivery service, voucher no. 8
January 21, 2007 - Paid for mailing packages, $15.25, voucher no. 9
January 22, 2007 - Paid for making duplicate keys, $26.30, voucher no. 10
January 23. 2007 - For trash removal, $10.00, voucher no. 11



Question:

1. How much should the accountant reimburse the fund for expenditure made?
2. Prepare the journal entry to records the expenses.

Bank Reconciliation

ShehGarLynn

Bank Reconciliation

For the month ended June 30, 2011

Checkbook Balance            Sub-Total      Total              Bank Balance           Sub-Total       Total

Balance per Book                                                  $6,418.59       Balance Per Bank  
         $7,542.03               

Add:                                                                                       Add:

Note Receivable                  $1,500.00                              Deposit in Transit  
                           944.07

Interest                                       30.00          1,530.00      

Sub-total                                                       7,948.50      Sub-total
                          8,486.10  

Less:                                                                                  Less: Outstanding Check

NSF                                         120.00                              Check No. 523                    $148.95

Service Charge                           14.34             134.36      Check No. 525                        97.50

                                                                                         Check No. 526                       425.40       671.85

Reconciled Book Balance                              $7,814.25    Reconciled Bank Balance                     $7,814.25                     


General Journal

a). Cash                                           $1,530.00

        Note Receivable                                           $1,500.00

        Interest Income                                                    30.00
To record the note collection by the bank.

b). Account Receivable                          120.00
        Cash                                                                  120.00
To record NSF check from customer

c). Service Charge Expense                      14.34
       Cash                                                                      14.34

Sole Proprietorship

Exercise 1

Shehla invest into business name ShehGarLynn's Dress Shop as Sole Proprietorship

The following transaction is my example for Sole Proprietorship:

January 10, 2007  Shehla invested $50,000 cash in opening the ShehGarLynn's Dress Shop.

January 11, 2007 She deposit the cash in Bank of America for checking account.

January 15, 2007  She established a petty cash fund, $ 500, check no. 1

January 16, 2007 She issue a check no. 2 for 3 months' rent in advance, at $3,000 per month.

January 17, 2007 Purchased merchandise from Nellie's Company on account, $5,000, terms 2/10, n /30.

January 18, 2007 Paid from the petty cash fund $15 for  cleaning package, voucher no. 1 (consider this a cleaning expense.)

January 19, 2007 Sold merchandise to Ronald Company on account, $3,500, invoice no. 1, terms 2/10, n/30.

January 25, 2007 Paid from petty cash fund for postage, $15, voucher no. 2

January 26, 2007 Sold Merchandise to Ronald Company on account, $2,500, invoice no. 2, term 2/10, n/30

January 27 Paid from the petty cash fund for First Aid emergency, $15, voucher no. 3

January 28 Purchased merchandise from Merly's Company on account, $4,000, terms 2/10, n/30

January 29 Paid for delivery expense from petty cash fund, $12, voucher no. 4

January 30 2007 Sold merchandise to Ronald Company on account, $1,500, invoice no. 3, terms 2/10, n/30.

January 30 2007 Paid Cleaning Service, $200, Check no. 3.

January 31 Ronald Company returned merchandise costing $500 from invoice no. 2. ShehGarLynn's Dress Shop issued credit memo to Ronald Company for $500.

Instruction:

A. Prepare Journal Entries the following transaction above

B. Prepare Trial Balance

Bank Reconciliation

This is just an example, for the transaction of Shehgarlynn's  Proprietorship in computing the Bank Reconciliation for the month ended June 30, 2011. But if you want to learn more about it click the link Bank Reconciliation.

Exercise BR 001

On June 30, 2011, the balance in the Shehgarlynn Proprietorship's checkbook and cash account was $6,418.59. The balance shown on the bank statement on the same day was $7,542.03.

Notes:

1.  The firm's records indicate that a deposit of $944.07 make on June 30, was not on the statement.
2. A service charge of $14.34 and a debit memorandum of $120 covering NSF check have not yet been entered  in the firm's books. (The check was issued by Paul Gibbs, a credit customer).
3. The following checks were still outstanding . Check No. 523 for  $148.95, Check No. 525 for $97.50, Check No. 526 for $425.40
4. A credit memo shows that the Bank has collected a $1.500 note receivable and interest of $30 for the firm.

Instruction:

1. Prepare a bank reconciliation statement for the firm as of June 30, 2011.
2. Record general journal entries for any items on the bank reconciliation that must be journalized.