Accounting
Please set up a professional consulting, Subchapter S corporation with employees (though payroll will be entered manually). [Company Name: “QB15 Project-your first name”] The company has a 10/31 year-end and provides three classes of Excel consulting services for customers:
– Excel set-up and training (EST)
– Advanced services (AS)
– Technical support (TS)
In addition to revenues, employee labor and travel costs are also tracked by class. Use account numbers for the chart of accounts, and modify the chart as appropriate (adding additional accounts and deleting those not needed). As a service organization, assume the company does not collect or pay sales tax. As a Sub S corporation, assume the company is subject to the state of Illinois’ 1.5% personal property replacement tax on net income. Employee payroll taxes applied on gross payroll average 18% for Federal income tax, 5% for state income tax, and 7.65% for FICA taxes (matched by the employer).
Record the following transactions. Where noted, insert your own amount within the designated range for the particular revenue or expense. Create your own names for customers A through H.
October 2015
1) $100,000 is received from owners to fund the corporation
2) A long-term note is established with the bank to provide additional start-up funding ($60-90,000). The interest rate is 6%.
3) $42,000 of rent is paid to the vendor Lenient Landlord to cover the period 10/15/15 – 1/15/16
4) October advertising expenses are billed to the company by the following vendors:
a. Chicago News ($10-18,000)
b. Web Tracers ($10-15,000)
c. Excell! Magazine ($4-8,000)
5) IT equipment is acquired for cash from Tech Brothers ($22-26,000). The company expenses IT costs when incurred.
6) Office furnishings are billed to the company by Professional Look Designers ($35-45,000). Furnishings are depreciated over 5 years using a half-life in the first year.
7) Services are billed to A customer (provide a name) according to the following classes:
a. $23,500 EST
b. $7,000 TS
8) Services are billed to B customer for $31,000 of EST.
9) $27,000 of insurance is paid to National Insurance for the first three months of coverage.
10) $9,000 of TS services are paid in cash by C customer.
11) You are reimbursed for $2,800 of travel expenses by the company (TS class).
12) Office supplies (asset) of $2,150 are billed to the company by Office Stop.
13) A sales order is recorded for customer D for AS for upcoming services ($46-55,000).
14) Customer A pays for services billed.
15) The company pays the outstanding bills for Chicago News and Web Tracers.
16) Services are billed to E customer according to the following classes:
a. $40,000 AS
b. $16,000 TS
17) Customer B pays $20,000 for services billed.
18) Customer D is billed for 50% of services ordered and provided.
19) The company pays the outstanding bill for Excell! Magazine.
20) Gross payroll for November is paid ($30-40,000). Round taxes to nearest dollar. 50% of costs are for EST; 30% for AS; 20% for TS. Hint: Remember to break out the payroll taxes (so gross pay & net pay), including the separate FICA match.
21) Depreciation is recorded for October.
22) $650 of office supplies are used in October.
23) A half-month interest on the note payable is accrued.
24) Federal personal property replacement taxes are accrued.
November, 2015
25) Interest is paid to the bank on the note payable.
26) Federal personal property replacement taxes are paid.
27) Customer B pays balance of bill.
28) Services are ordered by F Customer for the following services:
a. $30,000 EST
b. $5,000 TS
29) Services are billed to B Customer for $8,000 of TS.
30) $14,400 of AS are paid in cash by C Customer.
31) Company pays the outstanding bill for Professional Look Designers.
32) Customer D is billed for the other half of services ordered and provided.
33) November advertising expenses are billed to the company by the following vendors:
a. Chicago News ($5-10,000)
b. Web Tracers ($21-27,000)
c. Excell! Magazine ($10-14,000)
34) $29,000 of AS services are billed to A Customer.
35) Company pays the outstanding bill for Office Stop.
36) Customer E negotiates a $2,000 reduction in their bill for AS services and pays the full balance of remaining charges outstanding.
37) Customer F is billed for the EST services.
38) Employees are reimbursed for travel costs of $8,000. 65% is for EST, 25% for AS, and 10% for TS.
39) The company pays the outstanding bill for Chicago News.
40) Customer D pays for services billed.
41) Customer B pays for services billed.
42) The company pays the outstanding bill for Web Tracers.
43) IT support services of $12,500 are billed to the company by Tech Brothers.
44) $55,000 of EST services are billed to G Customer.
45) Services are ordered by H Customer for the following services. Customer H pays a $10,000 deposit to cover planning work performed by company staff.
a. $50,000 AS
b. $20,000 TS
46) $300 of office supplies are used in November.
47) A dividend is recorded for payment in December ($10-15,000).
48) Gross payroll for early November is paid ($40-50,000). Round taxes to nearest dollar. 60% of costs are for EST; 30% for AS; 10% for TS.
49) Interest is accrued for the month.
50) Federal personal property replacement taxes are accrued.
Hint: Do not forget the other month-end accruals/adjusting entries.
Please password-protect your file and provide me with that password so I can answer questions, as necessary, and review detail after submittal.
Due date for project: November 25, 2015 (11:30 a.m.)
Submit via email –
a) Print-out of Chart of Accounts
b) Balance Sheet and Income Statement as of 10/31/15
c) Balance Sheet and Income Statement as of 11/25/15