RECORD THE TRANSACTIONS:
Summary of Events: Use this to record your transactions and any transaction that affects your business.
Horizontal Worksheet: It can be used to determine how each transaction will affect the financial statements, i.e. - which accounts are used.
Use of this worksheet is required, as it is a great tool and will make preparing your financial statements much easier.
After you record all the transactions, remember to close the books and make the adjustment entries each business makes at the end of an accounting period.
Financial Statements: You are required to prepare an Income Statement, Statement of Changes in Stockholders' Equity, and Balance Sheet.
The provided template should greatly reduce the amount of work you are to do.
Create your own financial statements. It is probably easiest to use the pre-formatted template provided.
Prepare one copy of your three financial statements (Income Statement, Statement of Changes in Stockholders' Equity, and Balance Sheet) and your requirements for forming a Corporation document.
January 1 - You started the business by contributing $100,000 of personal capital in exchange for common stock
January 1 - Paid $5,000 to the lawyers to incorporate your business entity
January 2 - Acquired computers for the business for $5,000
January 3 - Acquired inventory held for re-sale for $20,000
January 4 - First sale took place, as you sold half of the inventory originally purchased. You sold it for $50,000 cash
February 1 - You hired your first employee, and paid $5,000 cash for wages. You paid the same amount of wages on the first of each month for the remainder of the year.
February 15 - Sold the rest of the inventory for $75,000 cash
March 15 - You got sued by an outside party, and got an invoice from lawyers for $2,000 for legal work performed, due in April
April 1 - Paid the legal invoice due
April 25 - Bought more inventory from your supplier, for $20,000 on credit
May 1 - Borrowed $100,000 from the bank, at an annual rate of 10%, due on December 31.
May 31 - Sold all remaining inventory for $50,000, on credit.
June 30 - Collected on all outstanding Accounts Receivable.
July 15 - Sold all of the computers for $1,000 in cash.
September 1 - bought more inventory, for $30,000 using long-term note payable.
October 1 - sold inventory - all that you had on hand, for $50,000 on credit.
November 1 - collected on accounts receivable, in all cash.
December 31 - made interest payment on the note
December 31 - paid $5,000 bonus in cash to employee.
December 31 - after books were closed, you paid 50% of all the remaining profit as cash dividend.