Accounting

Accounting

Irene Pypypiv has been working as a dishwasher at a bakery, while attending pastry arts school. As a graduation present, Irene’s parents give her a graduation present of $40,000, which matches the $40,000 Irene has saved on her own.
The following actions were taken by Irene, after graduation.
By following the steps in the ‘Accounting Cycle’ (see document and/or slides, with details) record the transactions, in the accounting records of her company.
1. Analyze each of the transaction.
2. Journalize the transactions.
3. Post them to the general ledger.
4. Summarize the transactions, and the general ledger in a Trial Balance.
DATE Description
July 1 Irene deposits her parent’s gift of $40,000 into her personal bank account.
1 She opens a new bank account in the name of Sweetheart bakery, and deposits $60,000.
1 She pays $12,000 for year’s rent, in advance for a small bakery in a mall.
5 After painting and cleaning the bakery, Irene purchases new equipment, for $20,000 paying $3,000 in cash. Irene expects that the equipment will last 3 years, and can be sold for $2,000 at the end of three years.
6 Baking supplies, worth $2,100 including canned and dried goods are delivered, from Goody Grocers. Irene pays cash for the current delivery and arranges for weekly deliveries with payments due monthly on the first of the month following the delivery.
7 Purchased $800 worth of business cards and flyers from the local printer to be distributed, as needed.
8 Purchased fresh fruits, from local grocery for cash $50.
9 Bakery/Café grand opening with beverage sales of $300 and food sales of $450. All sales are in cash.
10 Purchased more fresh fruits from local shops for $70. Sales for the day are $200 of beverage sales and $180 of food sales. All sales are in cash.
12 Placed an ad in local paper for an employee, for $130.
13 Received delivery of baking supplies, from Goody Grocers, worth $350.
14 Interviewed and hired a full time baker/cashier café assistant, to start work on Jan 20.
19 Record food sales of $1,200 and beverage sales of $1,800 for the week of Jan 12-16. All sales in cash.
20 Your new employee begins work.
26 Received delivery of baking supplies, from Goody Grocers, worth $475.
26 Record food sales of $2,200 and beverage sales of $1,600 for the week of Jan 19-24. All sales in cash.
30 Irene withdrew $2,000 for personal use.
30 Paid employee for the month of July $350.
30 Received hydro bill for the month of July to be paid by February 10, $185.
5. The accounts must be adjusted for the end of the month, before preparing the financial statements. On reviewing the accounts, Irene realizes the following adjustments must be made:
a. The rent for July has expired. According to the ‘Matching Principle’ the rent for July must be expensed.
b. The baking supplies inventory, when counted has only $830 left.
c. The depreciation for the equipment must be recorded for the month of July.
6. Prepare a worksheet for the month of July, including the trial balance, the adjustments, the adjusted trial balance, income statement, and balance sheet columns.
7. Prepare the income statement and balance sheet, in proper form.
8. Prepare a classified balance sheet
9. Calculate the company’s working capital, current ratio, and acid-test ratio.
10. Prepare closing entries.
11. Prepare a post-closing trial balance.

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