Assignment: Sanchez Consulting Company
Mark Sanchez established Sanchez Consulting Company on September 1, 2017, as a backup plan in case the Chicago Bears cut him as a back-up quarterback. Being cut from the Cowboys, Eagles and Jets has made him a little worried about his career as a quarterback. Since he was a good student at USC he thought he would put his college education to work.
The company had the following transactions during September.
a) Sept. 1 - The company sold shares of common stock for $30,000 cash.
b) Sept. 1 - The company purchased a one-year insurance policy for $300 in cash.
c) Sept. 1 - The company purchased office equipment costing $8,000 by signing a 6% note. The Equipment has a 5 year life and no salvage value. The note requires monthly principal payments of $225 beginning on October 1st until the balance is paid.
d) Sept. 10 - The company purchased $735 of office supplies for cash.
e) Sept. 15 - The company paid legal and registration fees to register their trademark. The fees incurred totaled $4,000, which were paid in cash.
f) Sept. 29 - The company billed customers $5,500 for consulting services performed.
g) Sept. 30 - The company paid $1,450 for employee's salary.
h) Sept. 30 - Since the company had a good month so Sanchez declared a $1,000 dividend to be paid on October 10th.
Additional Information:
i) On September 30th, the company took an inventory of the supplies and found that they had $500 of supplies on hand.
ii) Equipment purchased before the 15th of the month are depreciated for a whole month using the straight-line method.
iii) On October 3rd received the September utilities bill for $188.
Required:
a. Journalize the transactions.
b. Prepare the adjusting entries.
c. Post all entries to the accounts.
d. Prepare a Single-Step Income Statement, Retained Earnings Statement and a Classified Balance Sheet for his first month of operations.
e. Prepare the closing entries.
Be sure to round all your answers. No pennies!
Check Digit for Balance Sheet:
Total Assets = $41,657
Net Income = $3,429
Depreciation Methods
Madison Florists acquired a truck on January 1, 2017. The company paid $11,000 for the truck, $300 delivery charge, and $450 to paint the company name on the side of the truck and $250 for a motor vehicle license. The company's accounting manager estimates the truck to have a five-year useful life and a salvage value of $1,750.
Part 1
On January 1, 2017, how much should Madison Florist capitalize for the cost of the truck?
Part 2
Compute depreciation expense for 2017 and 2018 using each of the following methods. Also, compute book value at the end of each year.
a. Straight-line
|
Year
|
Depreciation expense for the year ended Dec. 31
|
Book value at Dec. 31
|
|
2017
|
$
|
$
|
|
2018
|
$
|
$
|
b. Declining-balance
Year Depreciation expense for the year ended Dec. 31 Book value at Dec. 31
|
Year
|
Depreciation expense for the year ended Dec. 31
|
Book value at Dec. 31
|
|
2017
|
$
|
$
|
|
2018
|
$
|
$
|
c. On April 1, 2019, Madison sold the truck for $6,000. Prepare the required entries to record the sale. Assume Madison depreciated the truck using the straight-line method. Madison did not record any depreciation expense in 2019. (Hint: you need two separate entries).