Champion Wave Surf, Inc. 3rd Edition Computer Simulation Project QuickBooks Online version (QBOv)

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Champion Wa e S f, Inc. Preface

Champion Wa e S f, Inc. i a comp e i ed acco n ing p ojec de igned fo den aking Financial Acco n ing. The p ojec i in ended o einfo ce concep a gh in Financial Acco n ing co e , hile allo ing den he e of Q ickBook of a e o aid in hei nde anding of comp e i ed acco n ing. The p ojec i no in ended o each Q ickBook , b impl e Q ickBook in a limi ed capaci o gi e den he oppo ni o nde and he ef lne of comp e and of a e in he acco n ing o ld, b ill compelling hem o f ll comp ehend each acco n ing an ac ion and he acco n ing p oce .

Introduction

Background

Champion Wa e S f, Inc. i a mall co po a ion, ope a ed b Ma Kolbe, he majo i ockholde . The b ine opened on Jan a 1, 2007, a i bea if l loca ion in Mo o Ba , Califo nia. Champion Wa e ha been cce f l in i fi o mon h of ope a ion , gaining pop la i among he local and o i on he Cen al Coa . In addi ion o elling fboa d , acce o ie and appa el, Champion Wa e al o p o ide fboa d epai e ice and offe p i a e fing le on .

A he ne acco n ing in e n fo he compan , o ha e been a ked o comple e he acco n ing fo he mon h of Ma ch, p epa e he financial a emen and clo e he book a he end of he fi q a e , Ma ch 31, 2007. Thi ill eq i e ha o po all acco n ing an ac ion d ing he mon h of Ma ch, econcile he bank acco n , po an adj ing en ie , p in and anal e he financial

a emen , and, finall , po he clo ing en ie . D ing he p oce , o a e e pec ed o a di o o n o k and make an co ec ing en ie a o go. Ma ha p o ided o i h he acco n ing file ,

hich ha e been comple ed h o gh Feb a 28, 2007.

Befo e o begin eco ding he an ac ion , i i impo an ha o become familia i h Champion Wa e' cha of acco n and o ho o ghl nde and he compan ' acco n ing p oced e . Ma ha p o ided o i h he comple e cha of acco n along i h ome de ailed info ma ion f om hi CPA ha o ho ld e ie .

Cha f Acc Summar ASSETS 101 Cash 102 Pett Cash 115 Certificate of Deposit 120 Accounts Receivable 125 Credit Cards Receivable 130 Interest Receivable 150 Merchandise Inventor 160 Prepaid Advertising 161 Prepaid Insurance 162 Prepaid Rent 170 Store Supplies 180 Equipment 181 Accumulated Depreciation, Equipment 185 Furniture & Fi tures 186 Accumulated Depreciation, Furniture & Fi tures LIABILITIES 201 Accounts Pa able 210 Dividends Pa able 220 Interest Pa able 240 Sales Ta Pa able 250 Wages Pa able 260 Unearned Revenue 280 Notes Pa able STOCKHOLDERS' EQUITY 310 Common Stock 320 Retained Earnings 390 Dividends

REVENUE 401 Sales Revenue 410 Lesson Revenue 420 Repair Revenue COST OF GOODS SOLD

501 Cost of Goods Sold

EXPENSES 601 Advertising E pense 605 Bank Charges 607 Cash Over / Short 610 Credit Card Processing E pense 612 Deliver E pense 615 Depreciation E pense, Equipment 616 Depreciation E pense, Furniture & Fi tures 620 Insurance E pense 625 Professional Fees 630 Rent E pense 635 Repairs & Maintenance 650 Salaries & Wages E pense 660 Store Supplies E pense 665 Telephone E pense 667 Utilities E pense OTHER INCOME & EXPENSES 700 Interest Income 750 Gain on Disposal of Asset 800 Interest E pense 850 Loss on Disposal of Asset

De ail fo Se ec ed Acco n ASSETS 101 Ca h Thi acco n i ed fo all ca h and check an ac ion and incl de amo n in he bank acco n and on hand a he o e. 102 Pe Ca h Thi acco n i ed fo he mall pe ca h f nd he compan ha e abli hed. The pe ca h f nd i $100 and i main ained on he imp e ba i . 115 Ce ifica e of Depo i Thi acco n i ed o eco d he compan ' in e men in he Ce ifica e of Depo i (CD). The compan p $8,000 in o he CD on Feb a 1, 2007. The CD ha a 6% ann al a e of in e e and an 18 mon h e m o ma i .

120 Acco n Recei able Thi acco n i ed o eco d amo n d e f om c ome . 125 C edi Ca d Recei able Thi acco n i ed o eco d amo n d e f om he c edi ca d p oce ing compan hen a c ome pa ia c edi ca d. App o ima el 2-3 da af e a c ome pa i h a c edi ca d, ca h i ecei ed in o he bank acco n , a hich ime he ecei able ho ld be elie ed and he eceip of he ca h ho ld be eco ded. The c edi ca d p oce ing compan cha ge a 2.5% fee on each an ac ion and ded c he fee f om he amo n depo i ed o he bank acco n .

130 In e e Recei able Thi acco n i ed o eco d in e e d e o he compan b no e ecei ed. 150 Me chandi e In en o Thi acco n i ed o eco d all of he o e' in en o , incl ding fboa d , acce o ie and appa el. All p od c co , incl ding an po a ion-in go in o hi acco n . The acco n i debi ed fo p cha e of in en o and c edi ed follo ing he ale of in en o . (See al o: Co of Good Sold.) 160 P epaid Ad e i ing Thi acco n i debi ed hen ad e i ing co a e paid mo e han one mon h in ad ance. The acco n i adj ed a he end of each mon h. Ad e i ing e ice fo he ea ha e been paid in ad ance, o aling $1,500.00. 161 P epaid In ance Thi acco n i debi ed hen in ance p emi m a e paid mo e han one mon h in ad ance. The acco n i adj ed a he end of each mon h. In ance p emi m fo he en i e ea o aling $1,920.00 e e paid in ad ance in Jan a . 162 P epaid Ren Thi acco n i debi ed hen en i paid fo a f e mon h. The acco n i adj ed a he end of each mon h. Ren o aling $5,400.00 a paid in Jan a fo he fi q a e of 2007. 170 S o e S pplie Thi acco n i ed fo he p cha e of all o e pplie . The acco n i adj ed a he end of each mon h o eflec he amo n of pplie on hand and e pen e he pplie ha ha e been con med. 180 Eq ipmen Thi acco n i ed o eco d he p cha e of fi ed a e . The compan p cha ed $5,360.00 of eq ipmen on Jan a 1, 2007. The eq ipmen ha an e pec ed life of 5 ea . The al age al e i e ima ed o be $800.00. 185 F ni e & Fi e Thi acco n i ed o eco d he p cha e of fi ed a e . The compan p cha ed $4,532.00 of eq ipmen on Jan a 1, 2007. The f ni e & fi e ha e an e pec ed life of 7 ea . The al age al e i e ima ed o be $500.00.

LIABILITIES 210 Di idend Pa able Thi acco n i ed fo di idend ha a e decla ed b no e paid o ockholde . 240 Sale Ta Pa able Thi acco n i c edi ed fo ale a collec ed f om c ome on all me chandi e ale ( fboa d , acce o ie and appa el). The ale a a e i 7.75%. Sale a i no cha ged fo epai e ice o le on . Sale a emain pa able n il emi ed o he S a e Boa d of Eq ali a ion a a la e da e. 260 Unea ned Re en e Thi acco n i ed eco d pa men f om c ome fo le on befo e e en e ha been ea ned. When he e en e i ea ned, i ho ld be debi ed f om hi acco n and ecogni ed in he app op ia e e en e acco n .

280 No e Pa able Thi acco n i ed o eco d amo n bo o ed f om he bank and o he o ce of financing f om c edi o . The compan bo o ed $30,000.00 a 8.5% f om Cen al Coa C edi Union on Jan a 1, 2007. REVENUE 401 Sale Re en e Thi acco n i ed o eco d he ale of me chandi e ( fboa d , acce o ie o appa el) o c ome . 410 Le on Re en e Thi acco n i ed o eco d e en e f om eaching fing le on . C ome a e cha ged a a e of $50.00 pe ho fo le on . C ome can pa in ad ance fo 10 ho of le on fo onl $450.00. Re en e ho ld no be ecogni ed n il i i ea ned. 420 Repai Re en e Thi acco n i ed o eco d e en e f om fboa d epai . COST OF GOODS SOLD 501 Co of Good Sold Thi acco n i debi ed fo he co of me chandi e old. All me chandi e i old a a 100% ma k- p o e i co . Each me chandi e ale an ac ion ho ld be follo ed b an en debi ing hi acco n and c edi ing Me chandi e In en o .

EXPENSES 601 Ad e i ing E pen e Thi acco n i ed fo ad e i ing e pen e inc ed in he c en mon h. Ad e i ing co paid in ad ance ho ld be debi ed o P epaid Ad e i ing. 607 Ca h O e / Sho Thi acco n i ed fo mall, imma e ial di c epancie , all a i ing in ela ion o pe ca h

an ac ions. 610 C edi Ca d P oce ing E pen e Thi acco n i ed o eco d fee ela ed o accep ing pa men f om c ome ia c edi ca d. The c edi ca d p oce ing compan cha ge a 2.5% p oce ing fee on each an ac ion, hich i ded c ed f om he amo n depo i ed o he bank acco n . The e i an addi ional mon hl fee ha ge eco ded a he end of he mon h f om da a on he bank a emen .

612 Deli e E pen e Thi acco n i ed o eco d co inc ed hen hipping me chandi e o c ome . Thi co ld al o be called " an po a ion-o ." 615 Dep ecia ion E pen e, Eq ipmen Thi acco n i ed o eco d dep ecia ion adj men . Dep ecia ion e pen e i calc la ed ing he aigh -line me hod and i eco ded mon hl . 616 Dep ecia ion E pen e, F ni e & Fi e Thi acco n i ed o eco d dep ecia ion adj men . Dep ecia ion e pen e i calc la ed ing he aigh -line me hod and i eco ded mon hl . 620 In ance E pen e Thi acco n i ed o eco d adj men fo in ance e pi ing in he c en mon h. In ance p emi m paid in ad ance ho ld be debi ed o P epaid In ance. 630 Ren E pen e Thi acco n i ed fo en in he c en mon h. Ren paid in ad ance ho ld be debi ed o P epaid Ren .

Acc g Me hods Accrual Basis The compan e he acc a ba of acco n ing. Adj ing en ie a e made mon hl in o de o ecogni e e en e and e pen e in he app op ia e mon h.

Depreciation The compan dep ecia e a e ing a gh - e dep ecia ion. Dep ecia ion i eco ded mon hl . Inventor The compan e he e e a in en o me hod, pda ing he Me chandi e In en o and Co of Good Sold acco n af e each ale an ac ion. In en o i old a a 100% ma k- p o e i co . Each me chandi e ale an ac ion ho ld be follo ed b an en debi ing Co of Good Sold and c edi ing Me chandi e In en o (fo 50% of he amo n of he ale). Purchase Discounts The compan e he g e h d o eco d p cha e di co n , meaning ha i eco d in en o p cha e a he g o p ice (li p ice). If he compan doe no make pa men o he endo in ime o ecei e he di co n , he e i no addi ional en o calc la ion nece a . Ho e e ,

if he compan make pa men i hin he di co n pe iod, he In en o and Acco n Pa able acco n each ho ld be ed ced fo he amo n of he di co n . Returns & Allowances The compan doe allo ale e n on occa ion. Sale e n a e debi ed f om he ela ed ale acco n di ec l and Sale Ta Pa able ge adj ed. The me chandi e hen need o be ecei ed back in o in en o and emo ed f om Co of Good Sold (a i i no longe old!). J a he e a e

o jo nal en ie nece a hen eco ding he ale of me chandi e, he e ill be o en ie needed o e e e he a e. C e L B ce, Ken Cha le , B dd Con ance, B e Ea l, Bobb Jack on, Ch i Jane, Be Jo eph, Mike Kell , Neal Lin hon, Da id Paige, Alli on Richa d , Jona hon Ta lo , Madeli e

Ve d List A-To n Ad e i ing AT&T Cen al Coa Boa ding Coa al P ope ie , Inc. Fa m o n In ance La Office of C. B o n Pacific Ga & Elec ic Pipeline S f ea P emie Di ib ing Scanlan Acco n ing Se ice SLO Deli e & Shipping S fe ' S ppl

Set-up and Instructions

The QBOv (QuickBooks Online Version) of this computer simulation requires that the starting information for the project be onboarded by the student into their QuickBooks Online Student Account.

1. First, look for the email with the link to the video to help you with the onboarding process. a. Your instructor will provide the link. b. If possible, complete the onboarding process on a Desktop or Laptop computer. c. Have the video available for you to look at while you onboard the information into QBOv.

2. Second go to this web site to sign-up for QuickBooks Online free Student version: a. https://www.intuit.com/partners/education-program/products/quickbooks/student-qbo-signup/ b. Fill out the form and click the ‘Verify and Continue’ button. c. On the next page you will be asked to upload a file to help verify that you are a student.

i. Take a picture of you student I.D. or take a screen shot of your ‘My AVC’ portal. d. When you are verified, they will allow you to sign into your new QuickBooks online account.

Verification might take up to 24 hours to complete. 3. Call your Company CWS, INC – (Your initials) and make sure you are at the Dashboard of your

company. a. Example my initials are JMR. So, I would use the company name as CWS, INC – JMR b. This Company name will show up on any Reports that you generate, like a Profit/Loss.

4. Look up to the upper right-hand corner and click on the Gear icon. a. Look under Tools for the ‘Import Data’ link. b. Click on the ‘Import data’ link and you will see 5 buttons on the next page. You will use the

Chart of Accounts, Customers, and the vendor buttons to upload the supplied data. 5. Uploading the Chart of accounts:

a. see file “QBO_COA_CWS” for upload in Accounting-Chart of Accounts section in QBO. b. Click the button for uploading the Chart of Accounts and follow the instructions.

6. The uploading of the Customer and Vendor List. a. see file “QBO_Customer_CWS” for upload in Sales-Customers section in QBO. b. see file “QBO_Vendor_CWS” for upload in Expenses-Vendors section in QBO. c. Click the button for uploading the Customer or Vendor files and follow the instructions.

7. You will input the original financial information by performing 11 initial journal entries. a. Follow the video instructions

8. Once the initial 11 journal entries have been completed and verified with the information below, continue with the first week of journal entries.

O igi a J a E ie Journal Entry 1 - This is a large, single, compound entry. Date is 02/2 /200 .

Account Debit Credit

101 Ca h 16,373.48

102 Pe Ca h 100.00

115 Ce ifica e of Depo i 8,000.00

125 C edi Ca d Recei able 483.25

130 In e e Recei able 40.00

150 Me chandi e In en o 12,702.48

160 P epaid Ad e i ing 1,250.00

161 P epaid In ance 1,600.00

162 P epaid Ren 1,800.00

170 S o e S pplie 877.53

180 Eq ipmen 5,360.00

181 Acc m. Dep ecia ion-Eq ipmen 152.00

185 F ni e & Fi e 4,532.00

186 Acc m. Dep ecia ion-F n & Fi 96.00

220 In e e Pa able 425.00

280 No e Pa able 30,000.00

240 Sale Ta Pa able 2,476.31

250 Wage Pa able 240.00

260 Unea ned Re en e 1,215.00

310 Common S ock 10,000.00

401 Sale Re en e 31,943.54

410 Le on Re en e 1,535.00

420 Repai Re en e 790.00

501 Co of Good Sold 15,972.67

601 Ad e i ing E pen e 250.00

605 Bank Cha ge 36.00

607 Ca h O e / Sho 9.85

610 C edi Ca d P oce ing E pen e 587.60

612 Deli e E pen e 132.00

615 Dep ecia ion E pen e-Eq ipmen 152.00

616 Dep ecia ion E pen e-F n & Fi 96.00

620 In ance E pen e 320.00

625 P ofe ional Fee 400.00

630 Ren E pen e 3,600.00

635 Repai & Main enance 0.00

650 Sala ie & Wage E pen e 3,040.00

660 S o e S pplie E pen e 447.92

665 Telephone E pen e 173.15

667 U ili ie E pen e 151.92

700 In e e Income 40.00

800 In e e E pen e 425.00

78,912.85 78,912.85

Journal Entries 2-11:

Date Name Account Debit Credit

02/28/2007 150 Me chandi e In en o 463.89

S fe ' S ppl 201 Acco n Pa able 463.89

02/28/2007 150 Me chandi e In en o 285.71

Pipeline S f ea 201 Acco n Pa able 285.71

02/28/2007 625 P ofe ional Fee 174.00

La Off ice of C. B o n 201 Acco n Pa able 174.00

02/28/2007 667 U ili ie E pen e 68.30

Pacific Ga & Elec ic 201 Acco n Pa able 68.30

02/28/2007 Lin hon, Da id 120 Acco n Recei able 250.00

Lin hon, Da id 410 Le on Re en e 250.00

02/28/2007 B ce, Ken 120 Acco n Recei able 175.00

B ce, Ken 410 Le on Re en e 175.00

02/28/2007 Jane, Be 120 Acco n Recei able 225.00

Jane, Be 410 Le on Re en e 225.00

02/28/2007 Jo eph, Mike 120 Acco n Recei able 145.00

Jo eph, Mike 420 Repai Re en e 145.00

02/28/2007 Scanlan Acco n ing Se ice 625 P ofe ional Fee 275.00

Scanlan Acco n ing Se ice 101 Ca h 275.00

02/28/2007 Coa al P ope ie , Inc. 635 Repai & Main enance 485.19

Coa al P ope ie , Inc. 101 Ca h 485.19

In QBO, go to Reports. On Search bar, type in ‘Trial’. Select Trial Balance report. In upper left of window, input information as follows.

Click the ‘Run Report’ button after inputting the information below.

Your Trial Balance should look like the one on this page. All the Debits and Credits should be same. The totals at the bottom should be the same. If it is, you are ready to move forward to the first week of journal entries.

If your Trial Balance Report does not look the same as the one to the right, you will need to go back and look for any errors. If you find errors, go to the next page to know what you need to do to fix your errors.

Do not be hard on yourself if errors are found on the previous inputs or on inputs in the weeks to come. Data input errors are common. We all make errors. That is why we have an established procedure to correct our errors. Correcting errors in the correct way shows that you have the ability to accept your errors and the integrity to admit your errors. These are positive traits to carry onto your business careers.

Champion Wave Surf, Inc. Trial Balance

As of February 28, 2007

Debit Credit 101-Cash 15,613.29

102-Petty Cash 100.00 115-Certificate of Deposit 8,000.00 120-Accounts Receivable 795.00 125-Credit Cards Receivable 483.25 130-Interest Receivable 40.00 150-Merchandise Inventory 13,452.08 160-Prepaid Advertising 1,250.00 161-Prepaid Insurance 1,600.00 162-Prepaid Rent 1,800.00 170-Store Supplies 877.53 180-Equipment 5,360.00 181-Accumulated Depreciation, Equipment

152.00

185-Furniture & Fixtures 4,532.00 186-Accumulated Depreciation, Furniture & Fixtures

96.00

201-Accounts Payable

991.90

220-Interest Payable

425.00 240-Sales Tax Payable

2,476.31

250-Wages Payable

240.00

260-Unearned Revenue

1,215.00 230-Notes Payable

30,000.00

310-Common Stock

10,000.00 401-Sales Revenue

31,943.54

410-Lesson Revenue

2,185.00 420-Repair Revenue

935.00

501-Cost of Goods Sold 15,972.67 601-Advertising Expense 250.00 605-Bank Charges 36.00 607-Cash Over / Short 9.85 610-Credit Card Processing Expense 587.60 612-Delivery Expense 132.00 615-Depreciation Expense, Equipment 152.00 616-Depreciation Expense, Furniture & Fixtures 96.00 620-Insurance Expense 320.00 625-Professional Fees 849.00 630-Rent Expense 3,600.00 635-Repairs & Maintenance 485.19 650-Salaries & Wages Expense 3,040.00 660-Store Supplies Expense 447.92 665-Telephone Expense 173.15 667-Utilities Expense 220.22 700-Interest Income

40.00

800-Interest Expense 425.00 TOTAL $80,699.75 $80,699.75

Correction of Errors once ou start the first week of entries: If o di co e ha o ha e made an e o , o ill need o follo he e p oced e . Do no di ec l modif o dele e he o iginal en . In ead o ill

need o e e e he o iginal en and hen po a ne en .

1. Begin b iden if ing he jo nal en ha need o be co ec ed. Yo ill need o comple el e e e ha en , o o ma an o i e do n o p in o he de ail of he an ac ion (acco n ( ) debi ed / c edi ed and e pec i e amo n ). S a a ne jo nal en , and po he " e e al" of o inco ec en . U ing he da e of he o iginal en , o ill debi he acco n ( ) o o iginall c edi ed, and c edi he acco n ( ) o o iginall debi ed. Yo ho ld incl ded "Re e al of ERROR" in he memo field. P e "Sa e & Ne ."

2. S a ano he ne jo nal en and po he an ac ion co ec l , follo ing he p oced e fo da a en .

I i impo an ha o e e e o e o in ead of modif ing o dele ing he o iginal en . Modifica ion and dele ion ill appea on he a di ail epo ha o ill need o n in a he end of he a ignmen .

Backing-up Your Data

QBO a oma icall back p o da a.

E porting Data to Microsoft E cel

Wi h he de i ed financial epo open, p e he "E po " b on a he op igh of he indo . The E po Repo indo ill appea . Selec "a ne E cel o kbook" if hi i he fi epo o a e c ea ing. If o a e c ea ing m l iple epo ha ho ld be a ed in one file, choo e "an e i ing E cel o kbook" and hen "B o e" o find he E cel file o hich o an o add he epo . P e "E po " a he bo om of he indo .

Week of March 4 - 10, 2007

Champion Wave Surf, Inc.

Week of March 4 - 10, 2007 Transactions

a) 101-Cash 468.71 401-Sales Revenue 435.00 240-Sales Tax Payable 33.71

Sold merchandise to customer for cash.

b) 501-Cost of Goods Sold 217.50 150-Merchandise Inventory 217.50

To record cost of merchandise sold and relieve inventory

101-Cash 471.17 610-Credit Card Processing Expense 12.08

125-Credit Cards Receivable 483.25 Received payment from credit card processing company, less fees.

March 4, 2007 Sold surfboard and apparel to customer for $435.00 plus sales tax (7.75%). The customer paid cash. The sales receipt number was 7030401.

This transaction is already posted as an example. You can view the two journal entries posted by opening the General Journal Entries window, and clicking the "Previous" arrow to find the entries. Do not post the entries again.

March 4, 2007 Sold apparel to customer for $75.00 plus sales tax. The customer paid cash. The sales receipt number was 7030402.

March 4, 2007 Sold apparel to customer for $279.50 plus sales tax. The customer paid with a credit card. The sales receipt number was 7030403.

March 4, 2007 Received cash into the bank account from the credit card processing company for a transaction of $483.25 processed on February 28, 2007, sales receipt number 7022805.

This transaction has not been posted yet.

Week of March 4 - 10, 2007

March 5, 2007

Received cash into the bank account from the credit card processing company for sales receipt number 7030403, processed on March 4, 2007.

March 5, 2007 Sold accessories and apparel to customer for $338.98 plus sales tax. The customer paid cash. The sales receipt number was 7030501.

Wrote check number 10026 to Pacific Gas & Electric for $68.30 to pay the utilities bill received and posted last month.

March 5, 2007 Wrote check number 10027 to AT&T for $118.73 for the telephone bill received in the mail today.

March 6, 2007

March 6, 2007 Performed repairs on a surfboard and mailed invoice number 30601 for $157.50 to customer Brett Constance to bill for the services.

March 6, 2007 Wrote check number 10028 to Surfer's Supply for payment in full on an invoice for merchandise received and posted last month. The original amount of the invoice was 463.89. The invoice was dated February 27, 2007, with terms of the purchase 1/10, n/30. The invoice was recorded using the gross method.

Week of March 4 - 10, 2007

March 7, 2007 Received cash payment of $175.00 from customer Ken Bruce for surfing lessons taught last month. The customer was billed in February with invoice number 22802, for 3.5 hours of lessons.

March 7, 2007 Received cash payment from customer Bobby Earl for $450.00 in advance for 10 hours of surfing lessons. Bobby will begin taking lessons in April. Gave Bobby receipt number 30701 for record of his payment.

March 9, 2007 Sold apparel to customer for $252.26 plus sales tax. The customer paid with a credit card. The sales receipt number was 7030901.

March 8, 2007 Purchased surfboards and accessories from vendor for $1,050.00. Paid cash at the time of purchase for invoice number CCB1298.

March 8, 2007 Taught a 1 hour surfing lesson. Provided receipt number 30801 for the customer, Budd Charles, who paid cash at the time of the lesson.

March 6, 2007 Wrote check number 10029 to Pipeline Surfwear for payment in full on an invoice received last month. The original amount of the invoice was $285.71. The invoice was dated February 7, 2007, with terms of the purchase 2/10, n/20. The invoice was recorded using the gross method.

Week of March 4 - 10, 2007

March 10, 2007 Taught a 4 hour surfing lesson to Madeline Taylor. Prepared invoice number 31001. She will pay later.

March 9, 2007 Purchased $194.65 of store supplies on account from Premier Distributing. The invoice number was PD897 and the terms were Net 15.

March 10, 2007 Sold 3 surfboards and accessories for $1,132.50 plus tax. The customer paid with a credit card. The sales receipt number was 7031001.

March 10, 2007 After two months of successful operations, the board of directors met and declared $4,000 of dividends, which would be paid to the stockholders at the end of the month. Ref: Div 3/10/07

Week of March 4 - 10, 2007

Check Figures

Champion Wave Surf, Inc. SELECTED Check Figures As of March 10, 2007

Mar 10, 07

Debit Credit

101 · Cash 15,985.87 120 · Accounts Receivable 977.50 125 · Credit Cards Receivable 1,492.08 150 · Merchandise Inventory 13,240.82 170 · Store Supplies 1,072.18 201 · Accounts Payable 368.65 240 · Sales Tax Payable 2,671.08 390 · Dividends 4,000.00 401 · Sales Revenue 34,456.78 410 · Lesson Revenue 2,435.00 420 · Repair Revenue 1,092.50 501 · Cost of Goods Sold 17,229.29 610 · Credit Card Processing Expense 607.21 660 · Store Supplies Expense 447.92 665 · Telephone Expense 291.88 667 · Utilities Expense 220.22 800 · Interest Expense 425.00

TRIAL BALANCE TOTAL 87,642.01 87,642.01

Assignment After posting all of the transactions and ensuring your trial balance matches the check figures provided, print the trial balance as of March 10, 2007, as well as the journal for March 4 - 10, 2007. These reports can be found by selecting "Reports" from the menu bar across the top, then choosing "Accountant & Taxes." The Trial Balance and Journal can both be found here. Be sure to adjust the dates in each report to reflect the transactions in Week #1, March 4 - 10, 2007.

Selected figures from the trial balance as of March 10, 2007 are below. If your account balances do not match the check figures provided, you need to correct your errors before proceeding. Be sure to carefully review the instructions for correcting errors.

Week of March 11 - 17, 2007

Champion Wave Surf, Inc.

Week of March 11 - 17, 2007 Transactions

March 11, 2007 Purchased merchandise on account from Central Coast Boarding. Central Coast Boarding provided invoice number CCB1335 totaling $1,648.50. Terms of the purchase are 2/10, n/30.

March 12, 2007 Received cash into the bank account from the credit card processing company for sales receipt number 7031001, processed on March 10, 2007.

March 11, 2007 Wrote check number 10030 for $174.00 to pay the February bill from Law Office of C. Brown for services provided on account.

March 12, 2007 Taught 6 hours of surfing lessons to a customer who had paid in advance during February (sales receipt number 21402) at the special discounted rate of $45 per hour.

March 11, 2007 Received cash into the bank account from the credit card processing company for sales receipt number 7030901, processed on March 9, 2007.

March 12, 2007 Received payment of $145.00 on invoice number 7022403 from customer Mike Joseph for repair services performed on account during February.

Week of March 11 - 17, 2007

12 March 15, 2007 Received partial payment of $175.00 on invoice 21703 from customer David Linthon for services provided on account during February.

March 13, 2007 Returned $500 of damaged merchandise from the purchase on March 11, 2007 to Central Coast Boarding, invoice number CCB1335.

March 14, 2007 Sold apparel and accessories to customer for $595.00 plus sales tax. The customer paid with cash. The sales receipt number was 7031401.

March 14, 2007 Sold surfboards to customer for $836.50 plus sales tax. The customer paid with a credit card. The sales receipt number was 7031402.

March 15, 2007 Taught 5 hours of surfing lessons on account for customer Jonathon Richards. Provided the customer with invoice number 31501 for the services.

March 15, 2007 Received payment in full on invoice number 31001 from Madeline Taylor.

Week of March 11 - 17, 2007

March 16, 2007 Received cash into the bank account from the credit card processing company for sales receipt number 7031402, processed on March 14, 2007.

March 16, 2007 Wrote check number 10032 to pay two weeks of wages to the store clerk, totaling $800.00 for the time period 2/26 - 3/11. The store clerk works Monday through Friday and gets paid $80.00 per day. Three days of wages were accrued at the end of February.

March 16, 2007 Purchased additional inventory from Surfer's Supply on account. Surfer's Supply provided invoice number SS9241 totaling $675.90 with terms 1/10, n/30. The merchandise was sent FOB shipping point. The responsible party will pay SLO Delivery & Trucking for delivery services directly.

March 16, 2007 Customer, Allison Paige, paid $450.00 with a credit card for 10 hours of surfing lessons to begin during the summer. Provided the customer with receipt number 31601.

March 16, 2007 Wrote check number 10031 for $235.00 to Scanlan Accounting Services for accounting services provided today.

March 17, 2007 Merchandise purchased from Surfer's Supply yesterday arrived. The responsible party paid $62.00 cash to SLO Delivery & Trucking for shipment number SLO3846.

Week of March 11 - 17, 2007

20 March 17, 2007 Replenished the petty cash fund by writing check number 10033 for $88.75. The petty cash box contained two receipts as follows: Repairs & Maintenance $55.00 and Professional Fees $35.00.

March 17, 2007 Purchased $98.50 of store supplies on account from Premier Distributing. The invoice number was PD938 and the terms were Net 15, FOB Destination. The responsible party paid $25.00 cash to SLO Delivery & Trucking.

Week of March 11 - 17, 2007

Check Figures

Champion Wave Surf, Inc. SELECTED Check Figures As of March 17, 2007

Mar 17, 07

Debit Credit

101 · Cash XX,120.80 120 · Accounts Receivable 707.50 125 · Credit Cards Receivable 450.00 150 · Merchandise Inventory 14,411.47 170 · Store Supplies 1,170.68 201 · Accounts Payable 2,117.55 240 · Sales Tax Payable 2,782.02 390 · Dividends 4,000.00 401 · Sales Revenue 35,888.28 410 · Lesson Revenue 2,955.00 420 · Repair Revenue 1,092.50 501 · Cost of Goods Sold 17,945.04 610 · Credit Card Processing Expense 667.05

TRIAL BALANCE TOTAL XX,393.35 XX,393.35

Assignment After posting all of the transactions and ensuring your trial balance matches the check figures provided, print the trial balance as of March 17, 2007, as well as the journal for March 11 - 17, 2007.

Selected figures from the trial balance as of March 17, 2007 are below. If your account balances do not match the check figures provided, you need to correct your errors before proceeding. Be sure to carefully review the instructions for correcting errors.

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Mid-Month Review

10 How has the debt to assets ratio changed since February 28, 2007? What does this mean?

What is the current ratio as of March 17, 2007?

How has the current ratio changed since February 28, 2007? What does this mean?

What is the debt to assets ratio as of March 17, 2007?

What is the trial balance total as of March 17, 2007?

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Week of March 18 - 24, 2007

Champion Wave Surf, Inc.

Week of March 18 - 24, 2007 Transactions

March 18, 2007 The customer who purchased surfboards on March 14, 2007, returned one surfboard with a list price of $425.00. The customer received the refund in cash and was provided receipt number 31801 for the transaction.

March 19, 2007 Collected $225.00 from customer, Betty Jane, who was invoiced in February for lessons taught, invoice number 21703.

March 19, 2007 Taught a 3 hour surfing lesson for cash. Provided the customer with receipt number 31902.

March 18, 2007 Sold apparel to customer for $198.24 plus sales tax. The customer paid cash. The sales receipt number was 7031802.

March 18, 2007 Received cash into the bank account from the credit card processing company for receipt number 31601, processed on March 16, 2007.

March 19, 2007 Customer, Budd Charles, brought his surfboard in for repairs. Repairs were completed and the customer was given invoice number 31901 for $119.00.

Week of March 18 - 24, 2007

12 March 21, 2007 Purchased merchandise from Pipeline Surfwear for $795.00, invoice number PS40627. The merchandise was delivered FOB shipping point at a cost of $45.00. All amounts due were paid in cash at the time of delivery.

March 20, 2007 Received cash payment from customer, Brett Constance, referencing invoice number 30601.

March 21, 2007 Sold accessories to customer for $319.28 plus sales tax. The customer paid with a credit card. The sales receipt number was 7032101.

March 20, 2007 Sold 3 surfboards and accessories to customer for $1,649.50 plus sales tax. The customer paid cash. The sales receipt number was 7032001. Shipped the merchandise to the customer's home address, FOB destination. An invoice for shipping costs will be sent to the responsible party.

March 20, 2007 Taught 4.5 hours of surfing lessons to a customer who had paid in advance during February (receipt number 20703) at the special discounted rate.

March 21, 2007 Received an invoice for $209.00 from the landlord, Coastal Properties, Inc., for repairs made in the store. The invoice number was CP200768, net 10.

Week of March 18 - 24, 2007

18 March 24, 2007 Wrote check number 10036 to pay the bill received from the landlord on March 21, 2007.

March 22, 2007 Taught a 2 hour surfing lesson to customer David Linthon, who paid cash for the lesson, plus paid off the $75.00 balance he owed from an invoice in February. Provided the customer with receipt number 32201 for the payment.

March 23, 2007 Wrote check number 10035 to Law Office of C. Brown for $165.00 to pay for a legal consultation that day.

March 23, 2007 Paid Central Coast Boarding the amount due on invoice number CCB1335 dated March 11, 2007.

March 23, 2007 Paid Surfer's Supply the amount due on invoice number SS9241 dated March 16, 2007.

March 22, 2007 Wrote check number 10034 to Premier Distributing to pay the open invoices from March 9 and March 17, 2007 in full.

Week of March 18 - 24, 2007

20 Repaired surfboard for customer Chris Jackson. Provided customer with invoice number 32401 for $95.00.

March 24, 2007 Wrote check number 10037 for $5,400.00 to pay rent for the second quarter (April, May & June 2007).

March 24, 2007

Week of March 18 - 24, 2007

Check Figures

Champion Wave Surf, Inc. SELECTED Check Figures As of March 24, 2007

Mar 24, 07

Debit Credit

101 · Cash 12,075.26 120 · Accounts Receivable 464.00 125 · Credit Cards Receivable 344.02 150 · Merchandise Inventory 14,373.70 201 · Accounts Payable 0.00 240 · Sales Tax Payable 2,917.02 401 · Sales Revenue 37,630.30 410 · Lesson Revenue 3,407.50 420 · Repair Revenue 1,306.50 501 · Cost of Goods Sold 18,816.05 610 · Credit Card Processing Expense 678.30

TRIAL BALANCE TOTAL 91,616.82 91,616.82

Assignment After posting all of the transactions and ensuring your trial balance matches the check figures provided, print the trial balance as of March 24, 2007, as well as the journal for March 18 - 24, 2007.

Selected figures from the trial balance as of March 24, 2007 are below. If your account balances do not match the check figures provided, you need to correct your errors before proceeding. Be sure to carefully review the instructions for correcting errors.

Week of March 25 - 31, 2007

Champion Wave Surf, Inc.

Week of March 25 - 31, 2007 Transactions

March 25, 2007 The customer who purchased accessories on March 21, 2007, returned one item with a list price of $38.00. The customer received the refund in cash and was provided receipt number 32501 for the transaction.

March 26, 2007 Received payment in full from customer Jonathon Richards referencing invoice number 31501.

March 26, 2007 Sold a surfboard and accessories to customer Neal Kelly for $512.92 plus sales tax. Neal also paid for ten hours of lessons in advance. The customer paid for the entire purchase with a credit card and was provided sales receipt number 7032601.

March 26, 2007 Repaired surfboard for customer Bobby Earl. Provided invoice number 32602 to Bobby for $72.00 to be paid later.

March 25, 2007 Received cash into the bank account from the credit card processing company for sales receipt number 7032101, processed on March 21, 2007.

March 25, 2007 Received invoice number SLO3953 from SLO Delivery & Shipping for $79.00 referencing sales receipt 7032001 from March 20, 2007. Terms are Net 10.

Week of March 25 - 31, 2007

Purchased merchandise from Pipeline Surfwear on account. The vendor provided invoice number PS2015 for $1,138.00 with terms 2/15, n/25. The merchandise was shipped FOB destination and the responsible party paid the shipping costs of $95.00 in cash.

March 28, 2007 Wrote check number 10038 to pay SLO Delivery & Shipping in full for invoice number SLO3953.

March 27, 2007 Received invoice number PG4660998 from Pacific Gas & Electric for $127.32 and will pay later.

March 27, 2007 Sold surfboard to customer for $488.00 plus sales tax. The customer paid for the purchase with a credit card and was provided sales receipt number 7032701.

March 28, 2007

March 28, 2007 Mr. Kolbe decided to get additional insurance coverage to provide more protection relating to the risk of shark bites while teaching surfing lessons. Received invoice number F9111 from Farmtown Insurance for $630.00 for six months of coverage commencing on April 1, 2007.

March 27, 2007 Shipped the merchandise from sales receipt number 7032701 to the customer's address at a cost of $65.00. The shipping terms were FOB destination. The responsible party paid cash to the shipping company directly.

Week of March 25 - 31, 2007

March 28, 2007 Received cash into the bank account from the credit card processing company for sales receipt number 7032601, processed on March 26, 2007.

March 29, 2007

March 30, 2007 Mr. Kolbe decided to launch a new advertising campaign, hoping to boost sales for the months leading up to the summer. Received an invoice number A6390 from A-Town Advertising for $795, for advertising during April, May and June.

Received cash into the bank account from the credit card processing company for sales receipt number 7032701, processed on March 27, 2007.

March 29, 2007 Received check for $119.00 from customer Budd Charles referencing invoice number 31901.

March 29, 2007 Taught 3 hours of lessons to Neal Kelly (sales receipt number 7032601).

March 30, 2007 Wrote check number 10039 to pay two weeks of wages to the store clerk, totaling $800.00 for the time period 3/12 - 3/25. The store clerk works Monday through Friday and gets paid $80.00 per day.

Week of March 25 - 31, 2007

20 March 31, 2007 The company sold equipment for $350.00. The equipment orignally cost $536.00 and there is accumulated depreciation on that equipment of $22.80. Ref: S033107

March 31, 2007 Distributed cash to pay dividends declared earlier in the month to the shareholders. Ref: Div 3/10/07

Week of March 25 - 31, 2007

Check Figures

Champion Wave Surf, Inc. SELECTED Check Figures As of March 31, 2007

Mar 31, 07

Debit Credit

101 · Cash 9,635.00 120 · Accounts Receivable 167.00 150 · Merchandise Inventory 15,030.24 201 · Accounts Payable 2,690.32 240 · Sales Tax Payable 2,991.64 260 · Unearned Revenue 1,957.50 401 · Sales Revenue 38,593.22 420 · Repair Revenue 1,378.50 501 · Cost of Goods Sold 19,297.51 610 · Credit Card Processing Expense 725.12

TRIAL BALANCE TOTAL 91,843.88 91,843.88

Assignment After posting all of the transactions and ensuring your trial balance matches the check figures provided, print the trial balance as of March 31, 2007, as well as the journal for March 25 - 31, 2007.

Selected figures from the trial balance as of March 31, 2007 are below. If your account balances do not match the check figures provided, you need to correct your errors before proceeding. Be sure to carefully review the instructions for correcting errors.

Bank Reconciliation

Champion Wave Surf, Inc. Bank Reconciliation

Central Coast Credit Union Customer Service 123 Higuera Street (805) 555-BANK San Luis Obispo, CA 93401

Beginning Balance 16,373.48 Account 1234567890 Deposits & Credits 10,696.12 Champion Wave Surf Inc. Check & Debits (13,431.61) 123 Embarcadero Road Ending Balance 13,637.99 Morro Bay, CA 93442

Deposits 4-Mar 471.17 12-Mar 145.00 20-Mar 157.50 4-Mar 468.71 14-Mar 641.11 23-Mar 175.00 4-Mar 80.81 15-Mar 200.00 25-Mar 335.42 5-Mar 365.25 15-Mar 175.00 26-Mar 250.00 6-Mar 293.63 16-Mar 878.80 28-Mar 977.60 7-Mar 450.00 18-Mar 438.75 29-Mar 119.00 7-Mar 175.00 18-Mar 213.60 8-Mar 50.00 19-Mar 225.00 Interest Earned:

11-Mar 265.01 19-Mar 150.00 31-Mar 27.66 12-Mar 1,189.76 20-Mar 1,777.34

Checks Debits 10024 275.00 8-Mar 1,050.00 10025 485.19 17-Mar 62.00 10026 68.30 18-Mar 457.94 10027 118.73 21-Mar 840.00 10028 459.25 23-Mar 669.14 10029 285.71 23-Mar 1,148.50 10030 174.00 25-Mar 40.95 10031 235.00 27-Mar 65.00 10032 800.00 10033 88.75 Other Withdrawals 10034 293.15 30-Mar 119.00 NSF 10036 209.00 31-Mar 12.00 Service Charge 10037 5,400.00 31-Mar 75.00 Credit Card Processing Fee

Statement for the Month Ending March 31, 2007

The bank statement for the month ending March 31, 2007 has just arrived. You need to reconcile the bank account (manually) in the space provided below and then prepare and post the related journal entry (Ref: Bank Rec). Be sure to mark the journal entry as "Adjusting."

Bank Reconciliation

Balance per books:

Add:

Deduct:

Reconciled Book Balance:

Balance per bank:

Add:

Deduct:

Reconciled Bank Balance:

March 31, 2007

Adjusting Entries

Champion Wave Surf, Inc.

Adjusting Entries Prepare and post journal entries at March 31, 2007 for each of the month-end adjustments. (All adjusting entries for January and February have been posted already.)

1 AJE #1

2 AJE #2

3 AJE #3

4 AJE #4

5 AJE #5

6 Depreciation - Equipment AJE #6

Interest Receivable The company put $8,000 into the CD on February 1, 2007. The CD has a 6% annual rate of interest and an 18 month term to maturity. Interest earned during February was already posted at February 28, 2007.

The company purchased $5,360.00 of equipment on January 1, 2007. The equipment has an expected life of 5 years. The salvage value is estimated to be $800.00.

Prepaid Advertising Advertising services for the year (Jan 2007 - Dec 2007) have been paid in advance, totaling $1,500.00.

Store Supplies A count of the store supplies at month-end indicated that there was $632.50 of supplies on hand.

Prepaid Insurance Insurance premiums for the entire year totaling $1,920.00 were paid in advance in January.

Prepaid Rent Rent totaling $5,400.00 was paid in January for the first quarter of 2007.

Adjusting Entries

7 Depreciation - Furniture & Fixtures AJE #7

8 Interest Payable AJE #8

9 Wages Payable AJE #9

10 Inventory AJE #10

The company purchased $4,532.00 of equipment on January 1, 2007. The furniture & fixtures have an expected life of 7 years. The salvage value is estimated to be $500.00.

The company borrowed $30,000.00 at 8.5% from Central Coast Credit Union on January 1, 2007.

The store clerk works Monday through Friday and gets paid $80.00 per day.

A count of the inventory at month-end indicated that there was $14,771.60 of merchandise on hand.

Adjusting Entries

Check Figures

Champion Wave Surf, Inc. SELECTED Check Figures As of March 31, 2007

Mar 31, 07

Debit Credit

101 · Cash X,X56.66 120 · Accounts Receivable 286.00 150 · Merchandise Inventory 14,771.60 201 · Accounts Payable 2,690.32 240 · Sales Tax Payable 2,991.64 260 · Unearned Revenue 1,957.50 401 · Sales Revenue 38,593.22 700 · Interest Income 107.66 800 · Interest Expense 637.50

TRIAL BALANCE TOTAL XX,648.04 XX,648.04

Selected figures from the adjusted trial balance as of March 31, 2007 are below. If your account balances do not match the check figures provided, you need to correct your errors before proceeding. Be sure to carefully review the instructions for correcting errors.

Final Review & Analysis

Champion Wave Surf, Inc.

Final Review & Analysis

5 Numerically express the accounting equation as of March 31, 2007.

What is net income for March 1 - March 31, 2007?

What is net income year-to-date (January 1 - March 31, 2007)?

What is the cash balance as of March 31, 2007?

What is the accounts payable balance as of March 31, 2007?

Final Review & Analysis

10 Would you invest in Champion Wave Surf, Inc.? Why or why not? Be specific and analytical!

What is the current ratio as of March 31, 2007? How has the current ratio changed since February 28, 2007? What does this mean?

What is the gross margin percentage for the quarter ending March 31, 2007? (Use "Total Income" as your sales figure.)

What is the return on sales ratio for the quarter ending March 31, 2007? (Use "Total Income" as your sales figure.)

Hypothetically, if the company used the allowance method for accounting for bad debts, and determined that it needed to set-up an allowance of 1/2% of total income for the quarter, what would be the net realizable value of accounts receivable?

Trial Balance after adjustments as of March 31, 2007

Produce a 1-2 page recommendation letter to the owner of Champion Wave Surf, Inc. on how the company can implement an Internal Control Policy(s). See chapter 6.