ACCOUNT 701: Weekly Assignment B (Module 2)
This weekly assignment is made up of two parts. This document has been created to provide a summary
of each of these parts. The possible point value for this work is 30 points. Twenty-five of the points
allocated to the accuracy of your submission. The remaining points (5) are assigned based on the overall
presentation and timely submission of the assignment. The assignment should be completed using
Microsoft Excel and uploaded to the Canvas.
NOTE: A blank grid template has been provided on Canvas to simplify your transaction recording.
Part 1: You have been hired by your friends Ben and Elon to help them with the accounting for their business called
BE Electric Bikes, Inc. They do not keep the best accounting records but do write down details related to all business
transactions. You feel that with your accounting experience you will be able to record all of the transactions and
provide them with a set of financial statements that they can use to
ing to the bank. BE has two sources of
evenue: one is buying and selling electric bikes; the second is repairing and performing routine maintenance on
ikes. They are willing to perform service work on all bikes that customers might
ing to them. Below are the
transactions for the first two months that BE Electric Bikes is in business.
MAY 2019 TRANSACTIONS (FIRST MONTH)
1 Ben and Elon both invested $50,000 cash into the business (total amount invested was $100,000).
2 BE decided a building was needed for the business. To make sure that the business had enough cash they
secured a loan with the local bank for $48,000 cash. The terms of the loan are that $2,400 in principal will
e paid back each month. The loan agreement calculates interest on the outstanding loan at a rate of 5%
of the outstanding loan balance.
3 The perfect building was found. The building was located on a piece of property (“land”). They purchased
the building and land by paying cash in the amount of $100,000. The building was valued at $80,000 and
the land was valued at $20,000.
4 Rented a small storage space off-premises to keep the extra bike inventory. The total cost of the storage
space was $150. Cash was paid.
5 Performed repair services for various customers in the amount of $2, XXXXXXXXXX% of the customers paid in
cash. The remaining customers received bills.
6 Found a vendor of electric bikes that they wanted to work with (BE would purchase the bikes and then
esell to customers). The initial purchase was for ten bikes. Each bicycle was purchased for $1,000. The
vendor trusted them and gave them terms; no payment was made at this time.
7 Purchased a twelve-month insurance policy that covers the period of May 1 of the cu
ent year to April 30
of the next year. The total amount paid was $2,400 cash.
8 Sold one electric bike to a customer for $1,800 plus 5% sales tax. The customer paid in cash for the
purchase. NOTE: The sales tax is collected by BE, however, this is money that is owed to the government.
9 Sold two bikes to a customer in Canada. The total amount of the sales was $3,000. As the sale was out of
state/country no sales tax was charged. The customers paid BE with cash (U.S. dollars).
10 Incu
ed expenses for May 2019 advertising. The total amount paid was $800. The amount was
immediately paid (in full) with cash.
11 Performed $1,000 worth of bike repairs for customers. BE mailed out the invoices to the customers with
the expectation that the customers would pay in the future.
12 Purchased $400 of office supplies for the month of May. All supplies will be used by the end of May. The
purchase was made on BE’s company credit card.
13 Paid the telephone bill for the month of May with cash. The telephone bill was $350.
14 Paid in full (with cash) the amount that was due on the electric bikes purchased in #6 above.
15 All the customers from #11 paid (with cash) the outstanding balances that they had with BE.
16 To avoid having to deal with payroll taxes BE’s work force were hired through a staffing agency. To keep
things simple, BE refers to the workforce as “employees”. A bill was received for $1,500 from the staffing
agency for the work that the employees performed from May 1 to May 15th. The $1,500 was immediately
paid.
17 Received a bill for the electricity for the month of May. The total bill was $400.
18 BE discovered another company had a very similar name. To prevent confusion, the business used $6,000
cash to purchase the other company’s trademark on the BE name.
19 The customers that had outstanding balances from #5 above paid in full (with cash).
20 Sold another bike to a customer that lived in Illinois. No sales tax was charged. The customer did not have
his/her wallet so you sent a bill. The total amount of the sale was $1,600.
21 Made a payment of $100 towards the credit card purchase from #12 above.
22 Made the first loan payment that was due on the bank loan. The total payment was $2,600. See #2 for
details to determine the allocation between principal and interest.
23 Ben and Elon were very happy with the performance of their business. They each took $200 of cash out of
the business for personal use.
24 Sold two more bikes to a local family. The total sales price was $4,200 plus tax of 5%. The customers paid
in full with cash. TIP: Remember tax is charged and collected by the seller; however, the tax amount is
“due” to the appropriate governing body.
25 Received a bill for bike repair supplies that were used during the month. The total amount of the bill was
$300.
26 BE took employees out for business dinner. $100 was paid (in cash) for the meal.
31a Make any adjustments to the insurance that was purchased in transaction #7 above.
31b Received a bill from the staffing agency for the work that was performed from the 16th of the month to the
31st. BE will pay this bill in June. However, the records need to be updated to show that you owe for the
work they have done. The amount of bill was for $1,500.
31c Review of the building that was purchased revealed that it has an estimated salvage value of $8,000 and a
useful life of 40 YEARS. Record depreciation for the month of May.
JUNE 2019 TRANSACTIONS (SECOND MONTH)
1 BE paid the staffing agency for the bill related to the work that was performed from May 16th to May 31st.
This relates to transaction 31b above. The payment was made with cash. In addition, going forward, BE
has decided that it will no longer use the staffing agency. Instead, they have hired the employees direct.
2 Ben and Elon forgot their wallets when they went out for a personal lunch. Therefore, they paid for their
personal meals with a company check (remember, a check is the same as cash for accounting purposes).
The total amount paid was $50.
3 Paid the electric bill that was due from May XXXXXXXXXXThe payment was made with cash. This relates to the
May 17th transaction.
4 Purchased two more bikes for inventory. The price of the bikes increased since the last purchase. The
new price was $1,200 per bike. BE paid cash for this purchase.
5 Paid rent on the small off-premises bike storage location. Total rent was $150. Payment was made with
cash.
6 Sold another electric bike to a customer for $1,800 plus 5% sales tax. The customer paid you in cash for
the purchase. The company uses a “LIFO” inventory cost tracking method.
7 BE took employees out to reward them for their hard work. The total bill for the food was $150. BE paid
the bill with cash.
8 Paid the amount that was due from supplies purchased and used in the last month. See May 25th for more
information. A cash payment was made.
9 Performed repair services for various customers in the amount of $4,000. All customers paid BE with cash.
10 Paid (with cash) for advertising used during the month. The total amount of advertising was $1,000.
11 The customer from May 20th sent in a cash payment for half of the amount that they owed. The
emainder (the other half) is still outstanding.
12 Sold another bike to a customer that lived in Indiana. No sales tax was charged. The customer paid (with
cash) $1,700 for the entire purchase.
13 Paid the monthly telephone bill with cash. The bill for the month was $550.
14 Made a payment towards the credit card balance. $110 was paid. $100 of the payment was towards the
alance on the credit card. The remaining $10 related to interest charged by the credit card company.
15 BE performed $2,000 worth of bike repairs. The customers paid BE with cash.
16A Paid BE employees for the work that was performed (i.e. the cost of using the employees for time period)
from June 1 to June 15th. The employees earned $1,600 for the work they performed during this time
frame. However, the employees were only paid $1,300 in cash. The difference of $300 relates to payroll
taxes that were withheld from the employees pay. This $300 is the amount that BE owes to the
government on behalf