Develop Chart of accounts, internal controls, first month
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Develop a corporation chart of accounts, taking into consideration the following:
Capital structure (debt and or equity)
Employees with associated payroll accounts
Tangible plant assets with associated depreciation accounts
There should be a minimum of 4 employees and at least 3 tangible assets. The corporation is a merchandising operation, so you will need to consider the necessary accounts.
Develop the first month's transactions. Prepare the first month's journal entries based on your chart of accounts. You will need to determine and explain your choice of depreciation method, choice of debt structure, and consider the rates of pay for the employees.
In your narrative, discuss how ethics is related to a company having a chart of accounts. What kinds of internal controls might be helpful in your particular company? List a minimum of 3 internal controls.
Consider the cash flow statement areas of operating, investing, and financing. Given your company type and the debt make-up, discuss the importance of the cash flow statement. What section of the cash flow statement is the most important? Why?
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Solution Summary
Your tutorial is 507 words plus a chart of accounts and one month of transactions for Jag Plumbing Supply.
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Jag Plumbing Supply
Jag and his partner, Elk, created a Plumbing Supply business that sells plumbing parts and provides plumbing services. They hired four employees, one plumber and three clerks. Their chart of accounts and first month of transactions are in the attached Excel file.
The accounts including capital accounts for Jag and Elk because it is a partnership (not a corporation) and also they don't have retained earnings as all earnings will be split between the partners. There are three tangible assets, truck, tools and equipment, each depreciated over a different useful life. Since these partners are simple folks, the straight-line method was used (easy).
The partners borrowed what they needed to start because interest rates were low and neither had tons of money and they ...
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