You Are Setting Up A Sports Consulting Business And Need

You Are Setting Up A Sports Consulting Business And You Need to Jou

You are setting up a sports consulting business and you need to journalize the following transactions. Set up the following T accounts (cash, name-equity, office equipment, accounts payable, prepaid rent, wage expense, revenue, accounts receivable, unearned revenue, and advertising expense); then post the journal activity to the T accounts. Strike an ending balance for each T account.

1. 9/1 Deposited $100,000 of your personal funds into the business bank account.

2. 9/3 Purchased $14,000 of office equipment and computers on credit.

3. 9/4 Paid for four months of rent at a facility at $2,000 per month.

4. 9/10 Paid a college intern for help in setting up the business. The student worked 20 hours at $13 per hour.

5. 9/14 Advised a young professional athlete on setting up a retirement plan. The athlete paid you $1,000.

6. 9/15 Paid $4,000 on the bill for the office equipment.

7. 9/19 Advised a sports promoter on potential new business. You did not receive cash but you billed the promoter $2,500.

8. 9/22 A third new client pays you $12,000 as a retainer for future consulting work. You deposit the $12,000.

9. 9/23 The sports promoter pays you $500 on the bill she owes.

10. 9/28 Paid $6,000 for an ad to appear in a regional sports magazine.

Paper For Above instruction

Introduction

The process of setting up a new business involves detailed recording of all financial activities through journal entries and their subsequent posting to T accounts. This financial tracking ensures accurate fiscal management and prepares the foundation for comprehensive financial statements. In establishing a sports consulting business, multiple transactions occur that require meticulous journalization. This paper demonstrates how to record these transactions and post them into relevant T accounts, ultimately determining ending balances that reflect the business's financial status at the close of operations within the accounting period.

Journal Entries and T Accounts

On September 1st, the owner deposited personal funds into the business, creating an increase in cash and a corresponding increase in owner’s equity. The journal entry is a debit to Cash and a credit to Owner’s Equity. The T account for Cash increases on the debit side, and Owner’s Equity increases on the credit side. The ending balance in Cash after this entry is $100,000, and Owner’s Equity also increases by $100,000.

Two days later, on September 3rd, the business purchased office equipment on credit. The journal entry debits Office Equipment and credits Accounts Payable. The T accounts for Office Equipment show a debit (increase) of $14,000, and Accounts Payable show a corresponding credit. The balances reflect these transactions, with Office Equipment at $14,000 and Accounts Payable at $14,000.

On September 4th, the business paid rent for four months at $2,000 per month, totaling $8,000. This is a prepayment, so the journal debits Prepaid Rent and credits Cash. The T account for Prepaid Rent reflects a debit of $8,000, which then decreases over the months as rent expense is recognized. Cash decreases by $8,000, reflecting payment outflow.

On September 10th, the company paid a college intern for 20 hours at $13/hour. The wage expense is debited, and Cash is credited. Wages expense increases by $260, and Cash decreases accordingly. The T account for Wage Expense shows a debit of $260, and Cash balance is reduced by the same amount.

One day later, on September 14th, the business earned revenue from advising a professional athlete. The client paid $1,000 immediately, recorded as a debit to Cash and a credit to Revenue. The Cash T account increases, and Revenue increases, reflecting the earned income.

The following day, on September 15th, the company paid $4,000 toward the office equipment bill, reducing Accounts Payable and Cash. Accounts Payable decreases by $4,000 (credit), and Cash decreases by the same amount (debit). This reduces liabilities and cash outflows.

On September 19th, the business billed a sports promoter $2,500 for consulting services. Since no cash was received, Accounts Receivable increases (debit), and Revenue increases (credit). The T account for Accounts Receivable shows an increase, indicating an asset to be collected later.

The next transaction on September 22nd involves the receipt of a $12,000 retainer from a new client, deposited directly into Cash. The journal documents a debit to Cash and a credit to Revenue or Unearned Revenue depending on recognition. Assuming immediate recognition, Revenue increases, and Cash increases. The T account balances reflect these changes.

On September 23rd, the promoter pays $500 on her outstanding bill. This reduces Accounts Receivable (debit-side decrease) and increases Cash (debit). The accounts reflect reduced receivables and increased cash.

The final major transaction on September 28th involves paying for advertising in a regional magazine. The expenditure is debited to Advertising Expense, and Cash is credited. The Advertising Expense account increases, and Cash decreases accordingly, representing operating expenses incurred.

Conclusion

This series of transactions exemplifies fundamental accounting principles, such as dual-entry bookkeeping, affecting various accounts including assets, liabilities, income, and expenses. Properly journalizing each transaction and accurately posting to T accounts guarantee the integrity of financial data. These records are essential for preparing financial statements, assessing business performance, and making informed managerial decisions. The detailed transaction analysis illustrates how initial investments, operational expenses, revenue receipts, and liability payments are captured within the accounting system, forming a comprehensive picture of the business's financial health at the period's end.

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