Accounting Assignment - checking account journal (Sara Sahara)

Create journal and ledger entries. Use the reference numbers provided in your entries to cross-reference 13% HST applies.

1. On December 1, 2010 you start up a new paralegal practice by opening a general practice bank account and a trust bank account at your local bank. You deposit $25,000 of your own money in the general bank account using a personal check #111 for the amount and you use reference #1.

2. A new client approaches you, Sara Sahara. She agrees to give you a retainer in trust. Set up the appropriate ledger accounts.

3. On Dec. 5, Sara mailed and you received a retainer check of $2,000 (reference #2, her check #222). You deposit the money at the bank.

4. On Dec. 16, Sara came to the office to discuss a legal matter and the meeting lasted 4 hours and then you spent a further 3 hours on research. You record and mail your account to Sara Sahara of $500 for your total time plus HST on invoice #333 and reference #3.

5. Since you have recorded and billed Sara, now transfer the appropriate funds from the trust account to the general account. Sara's funds are transferred using trust check #12 and reference #4. Then record these amounts in the appropriate journals and ledgers using the date of Dec 17. Note: Be attentive here.

6. The following expenses are paid from the practice's general account. First, record the expenses in the general disbursements journal...then...

7. Record the billing of all expenses including to clients and transfer any client reimbursements from the trust bank account as of Dec 31.

Dec. 31, general check 801, rent, $800, paid for your Desert View Office Property
Dec. 31, general check 802, total telephone, $100 for phone including $50 for Sara's case

You mail Sara's $50 invoice #336 and transfer the funds by your trust check #13 with reference #5.

8. On Dec. 31, the bank deducted $60 from the general account for bank fees related to the trust account. Record the payment appropriately. Note: This cost is not recoverable from clients and the trust account funds and therefore must be an expense that the practice pays as a cost of doing business.