Summary:

In this project the student will play the role of a bookkeeper who must not only organize the source documents of a start-up service business, but also create the bookkeeping system into which these source documents will be recorded.

Requirements:

After determining the appropriate accounts into which the various assets, liabilities, expenses, etc. should be categorized, the student will then:

1. Journalize the transactions that have transpired over the last month.
2. Journalize the payment of any outstanding bills, payables (ie. PST & GST) and wages.
3. Complete any necessary adjustments.
4. Complete the financial statements (Income Statement and Balance Sheet).
5. Close the accounts as at March 31, 2004 and prepare a Post-Closing Trial Balance.

Issues:

The current date is April 5th. The owner, Derryl Ferguson, started the business operations officially on March 1st, however he opened his business bank account and deposited his initial capital investment of $2,000.00 on February 27th. He did this so that there would be enough money in the account to cover his first and last month's rent, which was payable on March 1st. 

The owner now needs you to sort out a number of accounting issues.

1. The owner has to pay his one employee, Sebastian Wilson, for 110 hours worked in March (at $12.00 an hour), but he's not sure what to hold back in the way of deductions. He has yet to pay his employee for this reason, but he is hoping that you can issue a pay cheque today for the wages his employee earned in March.
2. The owner is not sure how to account for the sales made on VISA. (Note: VISA takes 4% of the total transaction.)
3. The owner is not sure how whether to expense or capitalize the diagnostic equipment purchased on March 3rd for $3,800.00
4. The owner has yet to collect on any of his receivables. He charges his credit customers 8% interest on their accounts. These accounts are interest free for the first 14 days, but they start accruing interest on the 15th day after the sale.
5. The owner is not sure what to do with GST and PST.

Source Documents:

Fortunately, the owner did create a separate business bank account, from which business related expenditures are made, and into which all business revenue has been deposited. The online bank statement is always available to be viewed, and the cleared cheques are returned to the owner.

Check List:

Your completed project should include:

• a General Journal (with all transactions, adjustments, and closing entries)
• a General Ledger (showing all transactions, adjustments, and closing entries)
• an Income Statement,
• a Balance Sheet,
• a Post-Closing Trial Balance

Requirement	Mark Value
General Journal:
prior transactions	25
transactions to settle outstanding bills, payables, and wages	25
adjustments	10
Closing Entries	10
General Ledger	10
Income Statement	5
Balance Sheet	10
Post-Closing Trial Balance	5
Total:	100