T accounts for the following entries for the month of September:You start your own business, a sole proprietorship, as an environmental consultant onSeptember 1, 2013, doing business as EH & S Consulting. You contract with clients to perform consulting services and charge them an hourly rate for your time. Clients will also reimburse you for your out of pocket expenses such as photo copy costs, travel expenses and long distance telephone calls.
To start your business you take $5,000.00 from your personal savings account and borrow $20,000.00 from your local bank. The bank loan is for five years at 6% interest and your monthly payment which starts on October 1st is $386.66. The amortization table for the loan which tells is at the end of this assignment.
You rent office space for $1,500.00 per month by signing a two-year lease. You pay $4,500.00 as the first months' rent, last months' rent and security deposit.
You purchase $537.82 in office supplies by charging the cost on your personal credit card and then reimbursing yourself for the cost the following week.
You buy office equipment that was listed as costing $6,000.00 for $5,250.00 by signing a purchase agreement that allows you to take the equipment for no money down and pay $218.75 per month starting in January 2005for two years. At the end of the two year period the equipment will have no residual value.
You a twenty four month contract for telephone and internet service from a service provider for $125.00 per month. Your first payment was made on September 1st and all future payments are due on the first of the month.Your purchase business insurance and the premium for one year is $1,050.00 and is due November 1st.Business is good that first month and you bill the following clients for services rendered:
Name Fees Reimbursable costs
- Able Company $3,500.00 $329.87
- Baker Company $4,000.00 $43.72
- Charlie Company $2,375.00 $157.73
- Delta company $7,500.00 $422.69
- Total $17,375.00 $954.01
The "Reimbursable costs" you billed to clients was for your out of pocket travel costs, so you write a check to yourself on September 30th for $954.01.