Splash House Equipment Balance sheet and Income Statement

Graded ProjectSPLASH HOUSE
PROJECT
CONTENTS
INTRODUCTION AND COMPANY BACKGROUND
2
TRIAL BALANCE AS OF JUNE 30, 202X
3
SCHEDULE OF ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE
4
THE PROJECT
6
BEFORE YOU BEGIN: A SUMMARY OF COMPANY
TRANSACTIONS
7
SPLASH HOUSE EQUIPMENT TRANSACTIONS:
JULY 2 THROUGH JULY 31
10
BANK LOAN SCHEDULE REQUIREMENTS TRANSACTIONS
13
PREPARATION OF THE SCHEDULES
14
BLANK FORMS
16
APPENDIX A: SPLASH HOUSE EQUIPMENT LEDGER ACCOUNTS
19
APPENDIX B: SUB-LEDGERS: ACCOUNTS RECEIVABLE,
ACCOUNTS PAYABLE, INVENTORY
30
APPENDIX C: CHART OF ACCOUNTS: A COMPREHENSIVE LIST
34
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SPLASH HOUSE PROJECT
INTRODUCTION AND COMPANY
BACKGROUND
Splash House Equipment is a small store in St. Catharines, Florida, that sells water sport equipment
to families and sporting groups in the neighborhood. The business was registered over two years ago.
Splash House Equipment is a sole proprietorship, owned by Lee Romana, which sells kayaks, paddle boards, wetsuits, and fishing equipment for use on the lake nearby. Its largest client is a growing
private school, which buys equipment from the business each year for its water sports programs and
events.
As some of its items are relatively expensive, Splash House Equipment allows customers to either
pay up front or pay within 30 days of purchasing the goods. If they pay within 10 days, they’re entitled to a 2 percent discount on the sale price.
Splash House has just started a new digital marketing campaign, encouraging more people to take up
kayaking and purchase kayaks, especially the new Kayak 1000s, the best on the market.
Splash House owns one truck, which enables it to provide delivery service if needed. Delivery
is included in the cost to the customer. In addition, it’s a good source of free advertising for the
company.
The owner knows that he needs to get the accounts up to date, to make sure that the company stays
profitable and to help determine whether it can afford to hire additional employees full time to help
meet the needs of the business.
The previous bookkeeper has been helping to keep the books up to date since the beginning of the
year, but now the task is up to you.
The accounts are up to date as of the end of June 30, and everything you’ll need is in this book. The
company uses Sage accounting software, but—to hone your skills and enable you to demonstrate
your proficiency with the recording methodology—you’ll be completing this assignment manually.
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TRIAL BALANCE AS OF JUNE 30, 202X
The trial balance has been pulled from Sage for June 1, 202X to June 30, 202X. See the breakdown
below:
Account #
1060
Name
Debit
Florida Island Bank
Credit
49,000.00
1100
Accounts Receivable
26,463.00
1500
Merchandise Inventory
55,033.00
1520
Store Supplies
550.00
1530
Office Supplies
385.00
1540
Prepaid Insurance
1,350.00
1550
Prepaid Rent
6,600.00
1730
Plant & Machinery
2,000.00
1740
Plant & Machinery Accum. Dep.
200.00
1760
Motor Vehicles
1770
Motor Vehicles Accum. Dep.
20,000.00
1,500.00
2000
Accounts Payable
7,926.00
2001
TIC Bank Loan Payable
9,500.00
2170
Salaries Payable
15,000.00
2180
Salaries Tax Payable
1,342.70
2200
Federal Income Tax Payable
2210
Social Security Payable
2220
Medicare Payable
2230
State Tax Payable
2240
City Tax Payable
2250
FUTA
2260
SUTA
2300
Sales Tax
2310
Sales Tax on Purchase
3490
L. Romana Capital
3510
L. Romana Drawing
4000
Sales
4100
Sales Returns
4200
Sales Discounts
5000
Cost of Goods Sold
5100
Purchases
5120
Purchase Returns
5130
Purchase Discounts
5200
Store Supplies Expense
5400
Salaries Expense
5410
Salary Tax Expense
5495
Maintenance Expense
5496
Office Expense
6050
Advertising Expense
5,168.56
120,743.74
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6200
Bank Fees/Interest Expense
6500
Insurance Expense
6700
Office Supplies Expense
6750
Rent Expense
6850
Travel/Meal Expense
6900
Utiliites Expense
6920
Plant & Machinery Dep. Expense
6930
Motor Vehicles Dep. Expense
6950
Vehicle Expense
Total
161,381.00
161,381.00
SCHEDULE OF ACCOUNTS RECEIVABLE
AND ACCOUNTS PAYABLE
Accounts Receivable
Splash House is trying to keep track of everyone’s payments in cash and payments on receivables.
In St. Catharines, it generally doesn’t have any trouble with uncollectible accounts, but sometimes
it does have to prompt people for their payments. The accounts receivable ledger on June 30 is as
follows. All amounts include sales tax. All sales terms are 2/10, n/30.
Summary Accounts Receivable
Customer
Amount Due
Date of Sale
Dodge Lodge
$2,023
June 1
Manyak Kayak Group
$3,079
June 15
Fay Family Recreation Center
$4,056
June 17
Namur Prince Scuba Club
$5,135
June 20
Pierce Family Sporting Group
$4,007
June 22
Aqua Vadis Sporting Group
$2,078
June 23
St. Catharines Private School
$6,085
June 27
Total
$26,463
Accounts Payable
Splash House Equipment prefers to keep up to date on its payments. Generally, the company is
diligent about recording payables, as doing so helps it make sound decisions on further purchases
of stock. The accounts payable schedule on June 30 is as follows. All supplier payable terms are
2/10, n/30.
Summary Accounts Payable
Company
Kayak Warehouse
Reelin in the Years Fishing Co.
Amount Due
Date of Purchase
$4,500
June 27
$500
June 27
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Cousteau Underwater Inc.
$1,000
June 28
The Boarding Skool
$1,200
June 29
$726
June 30
Odds and Rods Fishing Supplies
Total
$7,926
Schedule of Merchandise Inventory Items
Splash House Equipment has a warehouse at the back of the store that holds all their inventory
items prior to sale. Each quarter, Splash House conducts a physical count of the inventory to make
sure that all data is accurate. As of June 30, the company had the following merchandise schedule.
Quantity
Unit
Value
Sale
Price
Kayak 500
45
475
800
21,375
Paddle Board
29
247
425
7,163
Item
Total
Safety Kit
92
30
40
2,760
Wetsuit
67
220
400
14,740
Fishing Rod
23
125
163
2,875
Masks/Flippers/
Snorkel Sets
10
12
16
120
Kayak 1000
10
600
950
6,000
Total
$55,033
Splash House Equipment Income Statement
Splash House Equipment has been completing its financials each month. It produced the following
income statement report on June 30, 202X.
Splash House Equipment
Abridged Income Statement
June 1, 202X–June 30, 202X
4000-Gross Sales
$82,697
Expenses and COGS
5000-Cost of Goods Sold
46,957
5200-Store Supplies Expense
240
5400-Salaries Expense
15,000
5495-Maintenance Expense
112
5496-Office Expense
225
6050-Advertising Expense
3,572
6200-Bank Fees/Interest Expense
100
6500-Insurance Expense
225
6700-Office Supplies Expense
250
6750-Rent Expense
3,150
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6850-Travel/Meal Expense
340
6900-Utilities Expense
526
6950-Vehicle Expense
12,000
Total Expenses
$82,697
Net Profit
$0
THE PROJECT
Now that you’ve been made aware of the company’s financial picture as of June 30, you, the bookkeeper, can begin to work through Splash House’s transactions through the month of July. You’ll
have to journalize the transactions and post to the respective ledger accounts. Once the ledger
accounts have been brought to their ending balance as of July 31, you’ll then create the following
financial statements for the owner:
1. Schedule of Sales
15 points
2. Schedule of Accounts Receivable
15 points
3. Schedule of Accounts Payable
15 points
4. Schedule of Merchandise Inventory
15 points
5. Income Statement
20 points
6. Balance Sheet
20 points
The information you need to answer the following questions is within this workbook. You’ll find blank forms to help you create the required schedules.
How Cloud Accounting Works: Bank
Reconciliation versus Manual Journal
Splash House Equipment uses Sage50 as its accounting software. The company’s previous bookkeeper is handing over Splash House Equipment to you, and so tells you the following about the
accounts and cloud accounting in general:
“Once you understand the foundations of bookkeeping, you’ll be able to apply this knowledge to
any accounting software that your client uses. Sage50 is one of the most popular accounting software programs used in the United States, so it’s good to familiarize yourself with it. The duties for
each client may vary, but generally the work of a bookkeeper is split into four areas:
1. Invoices. All major accounting software programs allow you to create invoices directly
on the platform itself. You can input the contact details, bank account details, description,
and quantity before sending the invoice to the client. When you create this invoice, it will
automatically include this line item within your accounts receivable Account Title on your
balance sheet, indicating that you expect to receive payment on this invoice promptly.
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2. Receipts. All major accounting software also allows you to set up receipts directly on the
platform. Once you receive a bill from a supplier, you can input the details into the system
and approve the bill. Once approved, it will automatically be included in your accounts payable line item on your balance sheet, indicating that you expect to pay this invoice promptly.
3. Manual journals. If something occurs within the business that doesn’t affect the bank
account, you need to make a manual journal entry. An example of this could be a fixed asset
depreciation adjustment or a payroll journal indicating the payables for salaries, tax, and
pension.”
You’ll learn these functions in more detail on the job, but for now it’s good to keep them in mind as
you go through the month of July for Splash House Equipment.
Accounting software has made the job of bookkeeping a lot more efficient, but without the foundational knowledge acquired through good manual technique, it can create complications that aren’t
easily identified and corrected.
BEFORE YOU BEGIN: A SUMMARY OF
COMPANY TRANSACTIONS
Before you begin to handle the transactions of Splash House Equipment, let’s discuss the procedures that the company uses for four important aspects of its operations, starting with inventory
control.
Splash House Inventory Control
You’re already familiar with two alternate inventory systems, namely, the First-in/First-out (FIFO)
and Average Cost methods. Recall that the unit values of the items in question change when purchases of the items are made, resulting in different “layers” of inventory value.
Splash House uses a FIFO method, which presupposes that items usually will be acquired at an
increasingly expensive price, due to rising wages, increased materials costs, and so on. As such,
when items are purchased, their numbers and costs are separated into “layers” distinct from those
items currently in stock.
Let’s take an example. Suppose the company has 10 mask/flipper/snorkel sets (MFS sets) in stock
at $10 per unit. It then acquires 10 additional units at $12 per unit; the FIFO computation is as
follows:
10 × $10 = $100
10 × $12 = $120
Splash House will then record two distinct layers of inventory for MFS sets with a total inventory of
$220.00.
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Now comes the crucial part! When Splash House makes a sale, it will first sell all MFS sets at $10
and any subsequent sale of MFS sets will be recorded at the new unit value. So, if Splash House sells
14 sets, the value will be computed as: 10 × $10 = $100.00 and 4 × $12 = $48.00. The amount debited to COGS and credited to Inventory by the sales transaction will be ($100 + $48) = $148.00. The
company will then have 6 MFS sets in stock, valued at (6 × $12) = $72.00.
The FIFO method is acceptable by IRS for income tax reporting; it can be used to alter the ratio of
income to COGS, but it can also enable Splash House to keep its profit margin constant on all sales,
if that is its goal.
Splash House Purchasing
Splash House purchases various water sport items from suppliers and then sells them to consumers. For this project, you’ll focus on three items: Fishing rod, Safety kit, and Paddleboard.
Splash House must keep track of how many of each of these items are coming and going from
stock. To do this, it sets up “sub-ledger accounts” for each of these items. However, these are not
balance-sheet accounts; rather, they function as stock cards—revealing how many of each item is in
stock and at what unit value.
Suppose that the company purchases the following: 10 fishing rods at $125, 10 safety kits at $30,
and 10 paddleboards at $247. Further suppose, for simplicity’s sake, that these are purchased from
one supplier, The Water Works.
The invoice from the supplier (The Water Works) will list the items, their respective unit value, and
the total amount purchased, which comes to $4,020.
Now, besides eventually paying, Splash House must credit Accounts Payable for the total amount
owed, which is $4,020. It must also debit Inventory for the amount of the goods acquired, which is
$4,020.
Splash House will then enter the amount owed in an Accounts Payable subledger with the supplier’s name on it. This subledger doesn’t appear on the balance sheet; it’s only there to enable Splash
House to keep track of the amount owed (and paid) to the specific creditor, The Water Works.
Splash House will maintain these supplier accounts for all its suppliers. Keep in mind though, that
only the Accounts Payable “control” account appears on the balance sheet.
Splash House now enters the items acquired in their respective item subledgers—Fishing rod,
Safety kit, Paddleboard—listing the unit value of each and the total value. Again, this helps the
company keep track of its stock of each item. The information as each item is acquired or sold
affects only the Inventory “control” account, which is the balance sheet account.
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Splash House Selling Procedure
Splash House will sell the various items purchased to its customers at a profit; as such, the
amount charged to the customer for any item will differ from the unit value recorded in the item’s
subledger.
Let’s leave the FIFO method aside for the time being and presuppose that Splash House sells 5 fishing rods at $150 each and 5 safety kits at $35. In this case two distinct recording operations must
take place: (1) recording the sale and (2) recording the change in inventory.
Recording the sale entails the use of three accounts. First is a debit to Accounts Receivable for the
amount charged to the customer plus sales tax. In this case, the AR will be debited for $925 + $56
(6% sales tax rounded), totaling $981. The Sales account will be credited for $925, and the sales tax
on Sales account will be credited for $56. In addition, a customer subledger account will be created,
and the $1,045 entered into that customer account so that Splash House can keep track of that
specific receivable. However, as with the Account Payable subledgers discussed previously, the customer account is not a balance sheet account.
Splash House must now adjust its inventory as a result of the sale; therefore, it will reduce the
Fishing Rods subledger by 5 rods at $125.00 and reduce the Safety Kit subledger by 5 kits at $30.00
for a total of $775. This $775.00 must now be credited to Inventory—to reduce it—and debited to
Cost of Goods Sold, which will bring gross sales of $925 to net sales (925 – 775 = $150.00).
Splash House Sales Tax Procedures
In the United States, whenever a business provides a good or service, it must charge an added value
amount, which is then owed to the government. In the case of Splash House—a company based in
Florida—6% is levied whenever the company makes a sale, representing the amount owed to the government. This is a liability of the company—satisfied when the amount is remitted to the government
at a designated period.
Florida sales tax is paid to the Florida Department of Revenue on or before the 19th of the month
after the sales occurred.
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Now you’re ready to begin entering the following transactions.
SPLASH HOUSE EQUIPMENT
TRANSACTIONS: JULY 2 THROUGH
JULY 31
07/01: Pay June salaries: Check #82
07/02: Sale of 3 paddleboards to Dodge Lodge plus 6% Sales Tax. Terms are 2/10, n/30.
07/02: Purchased 5 wet suits and 5 Mask/Flipper/Snorkel sets from Cousteau Underwater Inc. The
wet suits cost $220 each and the MFS sets cost $12 each. Terms are 2/10, n/30. Took delivery today.
07/03: Issued check #83 to Kayak Warehouse for amount owed as of 06/27. Take discount on full
amount.
07/03: Sale of 2 Kayak 500s to Pierce Family Sporting Group plus Sales Tax. Terms are 2/10, n/30.
07/04: Fay Family Recreation Center returned two safety kits purchased in June because the kits
were incomplete. Splash House agreed to reduce the Center’s June 17 receivable accordingly. You
memo yourself to adjust all accounts affected by this return.
07/05: Returned the two defective Safety Kits to Reelin in the Years Fishing Co. Reelin in the Years
agreed to deduct the return from the June 27 account payable. You memo yourself to adjust all
accounts affected by this return.
07/05: Issued check #84 to Reelin in the Years to pay amount owed on June 27 account payable.
Take discount on full amount of account payable.
07/05: Sale of 1 Kayak 1000 to St.Catharines Private School. Terms are 2/10, n/30, plus sales tax.
07/06: Received check from Manyak Kayak Group to settle account receivable from
June 15.
07/06: Received check from Dodge Lodge as payment of its receivable as of June 1.
07/07: Received $5,000 check from Namur Prince Scuba Club in partial payment of its June 20
account receivable.
07/07: Issued checks #85 and #86 respectively to Cousteau Underwater Inc. and The Boarding
Skool in payment of account balances as of June 28 for Cousteau Underwater Inc. and June 29 for
The Boarding Skool. Take discount on full amount.
07/08: Sale to Namur Prince Scuba Club consisting of two wetsuits—sale price $400 each, plus
Sales Tax. Terms are 2/10, n/30.
07/08: Received electric bill from St. Catharines Electrical Power Co. The amount is $150 due on
07/18.
07/09: Sale of 10 MFS Sets to Aqua Vadis Sporting Group $16.00 each plus Sales Tax. Terms are
2/10, n/30.
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07/10: Sale of 10 Kayak 500s to Manyak Kayak Group plus Sales Tax. Terms are 2/10, n/30.
07/10: Received bill from Ultrasonic Gasoline Inc. for gasoline purchased for truck in June.
$200.00, due on July 27.
07/10: Check #87: Paid June 30 balance owing to Odds and Rods Fishing Supplies.
07/11: Purchased 10 fishing rods at $125.00 each from Odds and Rods Fishing Supplies and took
delivery today. Terms are 2/10, n/30.
07/11: Sale of one Kayak1000 to the Dodge Lodge plus Sales Tax. Terms are 2/10, n/30.
07/12: Sale of 5 fishing rods to Pierce Family Sporting Group plus Sales Tax. Terms are: 2/10, n/30.
07/12: Sale of 5 paddleboards to St. Catharines Private School plus Sales Tax.
07/13: Sale of 20 wet suits to Namur Prince Scuba Club plus Sales Tax. Terms are 2/10; n/30.
07/13: Issued check #88 to pay electric bill from July 8.
07/13: Sale of 10 Kayak 500s to Fay Family Recreation Center, plus Sales Tax.
07/14: Sale of 20 Kayak 500s to St. Catharines Private School plus Sales Tax. Terms are 2/10, n/30.
07/15: Issued check #89 to pay Odds and Rods Fishing Supplies for purchase of July 11. Compute
any discount available on purchase price alone.
07/15: Sale of 5 Kayak 1000s to Manyak Kayak Group plus Sales Tax. Terms are 2/10; n/30.
07/15: Ms. Romana just advised that the company truck had been in the Swifty Muffler Shop and
that the bill for the new muffler is $379. She asks you to issue her a check #90 so that she can pay
for the repairs.
07/15: Received check from St. Catharines Private School—full payment from July 5 sale.
07/16: Received two checks from Namur Prince Scuba Club. One check is for amount still owing
on June 20 receivable; the other is in payment of sale made on July 8.
07/17: Received check from Aqua Vadis Sporting Group in payment of its July 9 receivable.
07/18: Received check from Manyak Kayak Group in payment of its July 10 receivable.
07/18: Ms. Romana has been trying to interest the Knot Yacht Club in some of Splash House’s items
and has taken the president and treasurer out to dinner at Captain Steamliner’s restaurant. The bill
was $250, which she paid on her company credit card. She asks you to note this transaction on your
books. This bank credit card is like a check being used and not like a visa card.
07/20: Based upon the loan schedule, record the payment of principal and interest for the month of
July. Hint: Consult the trial balance and make separate entries to record payment of the principal
and payment of the interest.
07/22: Received payment from Dodge Lodge for receivable of July 11.
07/22: Received payment from Pierce Family Sporting Group and St. Catharines Private School in
payment of their July 12 receivables.
07/23: Received payment from Fay Family Recreation Center for July 13 receivable.
07/24: Received payment from St. Catharines Private School for receivable of July 14.
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07/25: Issued check #91 to pay Ultrasonic Gasoline Inc. for bill due July 27.
07/31: Record the following end of month adjustments to be paid next month:
Salary, store supplies, office supplies, rent, insurance, plant & machinery depreciation, motor vehicles depreciation.
BANK LOAN SCHEDULE
REQUIREMENTS TRANSACTIONS
Splash House Equipment needed to buy some more equipment for the summer activities. As there
had been a reduction in sales during spring of 2020 compared to previous years, it made the decision to take on a bank loan. The United States government was working hard at providing small
businesses with tax and financing incentives, so Splash House determined that taking on a loan at
this time made sense. The details are as follows:
Bank Loan from TIC
Date Acquired:
1 February 2020
Total Amount:
12,000
Interest Amount:
720
Terms:
2 years
3% fixed interest
Monthly Payments
28 February 2020
First Payment:
PREPARATION OF THE SCHEDULES
Now that you’ve posted your transactions to the company’s ledger accounts, it’s time to prepare the
selected schedules for Splash House Equipment.
Sales Schedule
One of the important aspects of the company’s operations that Ms. Romana wants to monitor is the
relationship of inventory to sales. She wants to better ascertain which items sell better than others
and how much inventory of any item she should stock. As a means to helping her get a good overview of the process, you’ll create a simple sales schedule, dated July 31 202X. Please use the fillable
form supplied at the end of the project.
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Accounts Receivable Schedule
Provide a schedule of accounts receivable to Splash House Equipment dated July 31, 202X, using
the fillable form supplied at the end of the project.
Accounts Payable Schedule
Provide a schedule of accounts payable for Splash House Equipment dated July 31, 202X, using the
fillable form supplied at the end of the project.
Schedule of Merchandise Inventory
Ms. Romana values comparing the schedule of merchandise inventory against the sales schedule, thereby enabling her to get a better idea of how much inventory to stock relative to customer
demand. It also gives the Splash House Equipment team a record with which to compare their
physical stock count. Please complete the schedule of merchandise inventory dated July 31, 202X,
using the fillable form supplied at the end of the project.
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Income Statement
Create an income statement for Splash House Equipment for the month of July. This statement
should look like the one below.
Splash House Equipment
Income Statement
Period ending July 31 202X
Sales
XXXX.XX
Sales Returns
XXXX.XX
Sales Discounts
XXXX.XX
Net Sales
XXXX.XX
Cost of Goods Sold
XXXX.XX
Purchase Returns
XXXX.XX
Purchase Discounts
XXXX.XX
Gross Profit on Sales
XXXX.XX
XXXX.XX
Store Supplies Expense
XXXX.XX
Salaries Expense
XXXX.XX
Salary Tax Expense
XXXX.XX
Maintenance Expense
XXXX.XX
Office Expense
XXXX.XX
Advertising Expense
XXXX.XX
Bank Fees/Interest Expense
XXXX.XX
Insurance Expense
XXXX.XX
Office Supplies Expense
XXXX.XX
Rent Expense
XXXX.XX
Travel/Meal Expense
XXXX.XX
Utilities Expense
XXXX.XX
Plant & Machinery Dep. Expense
XXXX.XX
Motor Vehicles Expense
XXXX.XX
Vehicle Expense
XXXX.XX
Total Expenses
XXXX.XX
Net Income (loss)
XXXX.XX
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Balance Sheet
Create a balance sheet for Splash House Equipment dated July 31, 202X. Please create your own
report form balance sheet to showcase your understanding of how a balance sheet is presented.
You’ll be creating the new statements for income and the balance sheet in Word. Make your
statement similar to the one below.
Splash House Equipment
Balance Sheet
As of July 31 202X
Assets
Florida Island Bank
XXXX.XX
Accounts Receivable
XXXX.XX
Merchandise Inventory
XXXX.XX
Store Supplies
XXXX.XX
Office Supplies
XXXX.XX
Prepaid Insurance
XXXX.XX
Prepaid Rent
XXXX.XX
Total Current Assets
XXXX.XX
Plant & Machinery
XXXX.XX
Plant & Machinery Accum. Dep.
Motor Vehicles
XXXX.XX
XXXX.XX
Motor Vehicles Accum. Dep.
XXXX.XX
Total Long-term Assets
XXXX.XX
XXXX.XX
Total Assets
Liabilities
Accounts Payable
XXXX.XX
Salaries Payable
XXXX.XX
Salaries Tax Payable
XXXX.XX
Federal Income Tax Payable
XXXX.XX
Social Security Payable
XXXX.XX
Medicare Payable
XXXX.XX
State Tax Payable
XXXX.XX
City Tax Payable
XXXX.XX
FUTA
XXXX.XX
SUTA
XXXX.XX
Sales Tax
XXXX.XX
XXXX.XX
Total Current Liabilities
Long-Term Liability
Galena Bank Loan Payable
XXXX.XX
XXXX.XX
Total Long-Term Liabilities
Owner’s Equity
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L. Romana Capital
XXXX.XX
L. Romana Drawing
Net Loss
XXXX.XX
Total Owner’s Equity
XXXX.XX
Total Liabilities & Owner
Equity
XXXX.XX
BLANK FORMS
Blank Form for Schedule of Sales
List each item once, along with the total sold and the total dollar amount of sales for each.
Item
Sales Value of
Quantity Sold
Quantity Sold
Fishing Rods
Kayak 500
Kayak 1000
Mask/Flippers/Snorkel Set
Paddle Board
Safety Kit
Wet Suits
Totals
Blank Form for Schedule of Accounts
Receivable
List each customer once, give the total amount still owed, the oldest date of sale, and due date.
Customer
Total Amount Due
Oldest Date of Sale
Due Date
Aqua Vadis Sporting Group
Dodge Lodge
Fay Family Recreation Center
Manyak Kayak Group
Namur Prince Scuba Club
Pierce Family Sporting Group
St. Catharine’s Private School
Total Due
© PENN FOSTER, INC. 2021
SPLASH HOUSE PROJECT
Graded Project
PAGE 16
Blank Form for Schedule of Accounts Payable
List each vendor once, the oldest date of purchase, the total amount owed, and the oldest due date.
Owed to:
Description
Total
Amount
Owed
Due Date
The Boarding School
Cousteau Underwater Inc.
Kayak Warehouse
Odds and Rods Fishing Supplies
Reelin In The Years Fishin Co.
Total
Blank Form for Merchandise Schedule
Merchandise Inventory Items – July 202X
Opening
Balance
(dollars)
Item
New Unit
Purchase
Unit Quantity
Sold
Latest
Vendor
Purchase
Price
Total $
Ending
Balance
Fishing Rods
Kayak 500
Kayak 1000
Mask/Flippers/Snorkel Set
Paddle Boards
Safety Kit
Wet Suits
Totals
© PENN FOSTER, INC. 2021
SPLASH HOUSE PROJECT
Graded Project
PAGE 17
APPENDIX A: SPLASH HOUSE
EQUIPMENT LEDGER ACCOUNTS
NOTE: Not to be submitted to the school
Florida Island Bank #1060
Date
Description
DR
CR
Balance
49,000 DR
Accounts Receivable #1100
Date
Description
DR
CR
Balance
26,463 DR
© PENN FOSTER, INC. 2021
SPLASH HOUSE PROJECT
Graded Project
PAGE 18
Merchandise Inventory #1500
Date
Description
DR
CR
Balance
55,033 DR
Store Supplies #1520
Date
Description
DR
CR
Balance
550 DR
Office Supplies #1530
Date
Description
DR
CR
Balance
385 DR
Prepaid Insurance #1620
Date
Description
DR
CR
Balance
1,350 DR
Prepaid Rent #1630
Date
Description
DR
CR
Balance
6,600 DR
© PENN FOSTER, INC. 2021
SPLASH HOUSE PROJECT
Graded Project
PAGE 19
Plant and Machinery #1730
Date
Description
DR
CR
Balance
2,000 DR
Plant and Machinery Accumulated Depreciation #1740
Date
Description
DR
CR
Balance
200 CR
Motor Vehicles #1760
Date
Description
DR
CR
Balance
20,000 DR
Motor Vehicles Accumulated Depreciation #1770
Date
Description
DR
CR
Balance
1,500 CR
Accounts Payable #2000
Date
Description
DR
CR
Balance
7,926 CR
© PENN FOSTER, INC. 2021
SPLASH HOUSE PROJECT
Graded Project
PAGE 20
TIC Bank Loan Payable #2001
Date
Description
DR
CR
Balance
9,500 CR
Salaries Payable #2170
Date
Description
DR
CR
Balance
15,000 CR
Salaries Tax Payable #2180
Date
Description
DR
CR
Balance
1,342.70 CR
Federal Income Tax Payable #2200
Date
Description
DR
CR
Balance
DR
CR
Balance
DR
CR
Balance
Social Security Tax Payable #2210
Date
Description
Medicare Payable #2220
Date
Description
© PENN FOSTER, INC. 2021
SPLASH HOUSE PROJECT
Graded Project
PAGE 21
State Tax Payable #2230
Date
Description
DR
CR
Balance
Description
DR
CR
Balance
Description
DR
CR
Balance
Description
DR
CR
Balance
Description
DR
CR
Balance
City Tax Payable #2240
Date
FUTA #2250
Date
SUTA #2260
Date
Sales Tax #2300
Date
5,168.56 CR
© PENN FOSTER, INC. 2021
SPLASH HOUSE PROJECT
Graded Project
PAGE 22
L. Romana Capital #3490
Date
Description
DR
CR
Balance
120,743.74 CR
Sales #4000
Date
Description
DR
CR
Balance
Description
DR
CR
Balance
Description
DR
CR
Balance
Sales Returns #4100
Date
Sales Discounts #4200
Date
© PENN FOSTER, INC. 2021
SPLASH HOUSE PROJECT
Graded Project
PAGE 23
Cost of Goods Sold #5000
Date
Description
DR
CR
Balance
DR
CR
Balance
DR
CR
Balance
Purchase Returns #5120
Date
Description
Purchase Discounts #5130
Date
Description
© PENN FOSTER, INC. 2021
SPLASH HOUSE PROJECT
Graded Project
PAGE 24
Store Supplies Expense #5200
Date
Description
DR
CR
Balance
Description
DR
CR
Balance
DR
CR
Balance
Description
DR
CR
Balance
Description
DR
CR
Balance
DR
CR
Balance
DR
CR
Balance
Salaries Expense #5400
Date
Salary Tax Expense #5410
Date
Description
Maintenance Expense #5495
Date
Office Expense #5496
Date
Advertising Expense #6050
Date
Description
Bank Fees/Interest Expense #6200
Date
Description
© PENN FOSTER, INC. 2021
SPLASH HOUSE PROJECT
Graded Project
PAGE 25
Insurance Expense #6500
Date
Description
DR
CR
Balance
Description
DR
CR
Balance
Description
DR
CR
Balance
Description
DR
CR
Balance
Description
DR
CR
Balance
DR
CR
Balance
Office Supplies Expense #6700
Date
Rent Expense #6750
Date
Travel/Meal Expense #6850
Date
Utilities #6900
Date
Plant & Machinery Dep. Expense #6920
Date
Description
© PENN FOSTER, INC. 2021
SPLASH HOUSE PROJECT
Graded Project
PAGE 26
Motor Vehicles Dep. Expense #6930
Date
Description
DR
CR
Balance
Description
DR
CR
Balance
Vehicle Expense #6950
Date
Kayak 500
Date
#
Purchases
Units
Cost
Sold
Amount
Amount
Units
Balance
COGS
06/30
Units
Cost
Amount
45
475
21,375
Paddle Board
Date
#
Purchases
Units
Cost
Sold
Amount
Amount
Units
06/30
© PENN FOSTER, INC. 2021
SPLASH HOUSE PROJECT
Graded Project
Balance
COGS
Units
Cost
Amount
29
247
7,163
PAGE 27
Safety Kit
Date
#
Purchases
Units
Cost
Sold
Amount
Amount
Units
Balance
COGS
06/30
Units
Cost
Amount
92
30
2,760
Wetsuit
Date
#
Purchases
Units
Cost
Sold
Amount
Amount
Units
Balance
COGS
06/30
Units
Cost
Amount
67
220
14,740
Fishing Rod
Date
#
Purchases
Units
Cost
Sold
Amount
Amount
Units
Balance
COGS
06/30
© PENN FOSTER, INC. 2021
SPLASH HOUSE PROJECT
Graded Project
Units
Cost
Amount
23
125
2,875
PAGE 28
Masks/Flippers/Snorkel Sets
Date
#
Purchases
Units
Cost
Sold
Amount
Amount
Units
Balance
COGS
06/30
Units
Cost
Amount
10
12
120
Kayak 1000
Date
#
Purchases
Units
Cost
Sold
Amount
Amount
Units
06/30
© PENN FOSTER, INC. 2021
SPLASH HOUSE PROJECT
Graded Project
Balance
COGS
Units
Cost
Amount
10
600
6,000
PAGE 29
APPENDIX B: SUB-LEDGERS:
ACCOUNTS RECEIVABLE, ACCOUNTS
PAYABLE, INVENTORY
NOTE: Not to be submitted to the school.
Dodge Lodge
Date
June 30
Description
DR
CR
Balance
Balance
2,023 DR
Manyak Kayak Group
Date
June 30
Description
DR
CR
Balance
Balance
3,079 DR
Fay Family Recreation Center
Date
June 30
Description
DR
Balance
CR
Balance
4,056 DR
© PENN FOSTER, INC. 2021
SPLASH HOUSE PROJECT
Graded Project
PAGE 30
Namur Prince Scuba Club
Date
June 30
Description
DR
CR
Balance
Balance
5,135 DR
Pierce Family Sporting Group
Date
June 30
Description
DR
CR
Balance
Balance
4,007 DR
Aqua Vadis Sporting Group
Date
June 30
Description
DR
Balance
CR
Balance
2,078 DR
© PENN FOSTER, INC. 2021
SPLASH HOUSE PROJECT
Graded Project
PAGE 31
St Catharine’s Private School
Date
June 30
Description
DR
CR
Balance
Balance
6,085 DR
Kayak Warehouse
Date
June 30
Description
DR
CR
Balance
Balance
4,500 CR
Reelin in the Years Fishing Co.
Date
June 30
Description
DR
CR
Balance
Balance
500 CR
Cousteau Underwater Inc.
Date
June 30
Description
DR
Balance
CR
Balance
1,000 CR
© PENN FOSTER, INC. 2021
SPLASH HOUSE PROJECT
Graded Project
PAGE 32
The Boarding Skool
Date
June 30
Description
DR
CR
Balance
Balance
1,200 CR
Odds and Rods Fishing Supplies
Date
June 30
Description
DR
Balance
CR
Balance
726 CR
© PENN FOSTER, INC. 2021
SPLASH HOUSE PROJECT
Graded Project
PAGE 33
APPENDIX C: CHART OF ACCOUNTS: A
COMPREHENSIVE LIST
The following list contains many more of the possible accounts that could be in a company’s chart
of accounts. Please note that you wouldn’t be expected to use every one of them in your bookkeeping career, as a good many of them apply to very specific business contexts. For example, QPP
and QST accounts are used solely in the province of Quebec. For the purposes of this exercise, we
assume that all activity occurred within the state of Florida.
Ledger Name
Category
Computer Equipment Cost
Assets
Vehicle Cost
Assets
Cash on Hand
Bank
Checking
Bank
Bank Account 1
Bank
Savings Account
Bank
Bank Account 1
Bank
Accounts Receivable
Assets
Payroll Advances & Loans
Assets
Prepaid Expenses
Assets
Inventory
Assets
Allowance for Doubtful Debtors
Assets
Building – Cost
Fixed Assets
Building – Accumulated Depreciation
Fixed Assets
Plant and Machinery – Cost
Fixed Assets
Plant and Machinery – Accumulated Depreciation
Fixed Assets
Motor Vehicles – Cost
Fixed Assets
Motor Vehicles – Accumulated Depreciation
Fixed Assets
Accounts Payable
Liabilities
RBC Bank Loan
Liabilities
Corporate Taxes Payable
Liabilities
Salary Payable
Liabilities
Salary Tax Payable
Liabilities
Social Security Payable
Liabilities
Medicare Payable
Liabilities
Federal Income Tax Payable
Liabilities
State Income Taxes Payable
Liabilities
FUTA
Liabilities
SUTA
Liabilities
Local Income Tax Payable
Liabilities
© PENN FOSTER, INC. 2021
SPLASH HOUSE PROJECT
Graded Project
PAGE 34
Ledger Name
Category
QPIP Payable
Liabilities
RRSP Payable
Liabilities
RRSP – Employer’s Share
Liabilities
GST/HST Charged on Sales
Liabilities
GST/HST Paid on Purchases
Liabilities
GST/HST Payable
Liabilities
QST Charged on Sales
Liabilities
QST Paid on Purchases
Liabilities
QST Payable
Liabilities
GST/QST Adjustments
Liabilities
BC PST Collectible on Sales
Liabilities
SK PST Collectible on Sales
Liabilities
MB PST Collectible on Sales
Liabilities
Customer Deposits
Liabilities
Accruals
Liabilities
Additional Paid-In Equity
Equity
Drawings
Equity
Retained Earnings
Equity
Share Capital
Equity
Sales – Products
Revenue
Sales – Services
Revenue
Sales Discounts
Revenue
Shipping Revenue
Revenue
Professional Fees
Revenue
PST Commission
Revenue
Interest Income
Revenue
Other Income
Revenue
Cost of Goods Sold
Expenses
Purchase Discounts
Expenses
Shipping Expenses
Expenses
Inventory Adjustments
Expenses
Salary Expense
Expenses
Unemployment Tax Expense
Expenses
Salary Tax Expense
Expenses
QPP Expense
Direct Expenses
WCB Expense
Direct Expenses
EHT Expense
Direct Expenses
QPIP Expense
Direct Expenses
QHCF Expense
Direct Expenses
RRSP – Employer’s Share
Direct Expenses
Employee Benefits
Direct Expenses
Subcontrators
Expenses
© PENN FOSTER, INC. 2021
SPLASH HOUSE PROJECT
Graded Project
PAGE 35
Ledger Name
Category
IT and Software
Expenses
Accounting and Legal
Expenses
Advertising
Expenses
Amortization Expense
Expenses
Bad Debts
Expenses
Bank Fees and Interest
Expenses
Business Fees and Licenses
Expenses
Credit Card Fees
Expenses
Exchange Rate Gain/Loss
Expenses
Miscellaneous Expenses
Expenses
Income Tax Expenses
Expenses
Insurance
Expenses
Meals and Entertainment
Expenses
Maintenance and Repairs
Expenses
Property Taxes
Expenses
Office Supplies
Expenses
Rent or Lease
Expenses
Telephone
Expenses
Travel
Expenses
Utilities
Expenses
Vehicle
Expenses
GST/HST/QST Unreclaimable Tax Expenses
Expenses
Plant and Equipment Depreciation
Expenses
Vehicle Depreciation
Expenses
© PENN FOSTER, INC. 2021
SPLASH HOUSE PROJECT
Graded Project
PAGE 36
Splash Additional Information:
Sales Tax rate 6%
In Publication 15 use tables starting on page 17 for monthly payroll
Splash Employees:
Lee Romana, the owner, works in the business thus taxes are taken out like the other employees. He
has yearly income at 72000 thus $6000 a month his status is Married filing Jointly.
Adam Apple (Senior salesman) Married filing Jointly monthly salary of $4000 but in peak sale months
gets additional pay. $1000 in June for total gross wages of $5000
Linda Lemon (bookkeeper retired) Single status, hourly $15 and worked 160 hours in June thus gross
wages of 2400.
Paula Plum (associate salesman) Single status, just started mid-June with monthly pay $3200. Since only
half month this is 1600 in June (must take half the monthly rate for federal income tax)
Student (your Name) taking over for Linda. Single Status and $15 hourly rate. Didn’t work in June
Gross wages for June $15000
July wages will need to be an adjustment since they are not paid out until first week of August.
Lee Romana same monthly pay thus $6000
Adam Apple monthly wage of $4000 plus another 1750 holiday and peak pay total $5,750
Paula Plum monthly wages $3200 plus 1530 holiday and peak pay total of $4730
Student worked a total of 160 hours for the month but because working on 7/4 you get double pay for
that 8-hour day.
Payroll Rates (non-Federal)
SS 6.2%
Medicare 1.45%
State Tax 4.95%
Local Tax 1%
FUTA 6% for 2021 year first $7000
SUTA 6.2%
End of the month adjustments
Month ending payroll and the following must be adjusted.
•
Month ending payroll
•
•
•
•
Supplies – Store supplies adjustment needed for $125 and Office Supplies Adjustment needed
for $150
Inventory count taken for supplies finding the amount still available.
Prepaid Insurance 6/30 paid 1350 for last 6 months of the year.
Prepaid Rent 1/1 of $13200 for the year
Depreciation
Plant equipment purchase 3/01/21 salvage 200, 3 yrs.
Motor vehicle 1/03/21, $2000 salvage 6 yrs.