**Kate's Cards: September 2019 Events** In September 2019, Kate incorporated Kate’s Cards after researching different organizational forms and started setting up her business. The following events took place during this month: 1. **Capital Investment:** Kate deposited $10,000 she had saved into a newly opened business checking account and received common stock in exchange. 2. **Marketing Material Design:** She designed a brochure to promote her greeting cards at local stationery stores. 3. **Brochure Feedback:** Kate paid Fred Simmons $50 to critique her brochure before its final design and printing. 4. **Equipment Purchase:** She bought a new iMac computer tablet, specialized graphic arts software, and a commercial printer for $4,800 in cash. These items were recorded under the same equipment account. 5. **Supply Purchases:** Kate purchased supplies like paper and ink for $350 at a local stationery store, securing a 30-day credit account with the store. 6. **Card Design:** She created her first 5 card designs to show to potential customers. 7. **Order Fulfillment:** The stationery store where she bought her supplies was impressed and ordered 1,000 of each of the 5 card designs at $1 per card, totaling $5,000. The customer was informed that the cards would be printed and delivered within the week. 8. **Additional Supplies:** Kate purchased more supplies on account, totaling $1,500. 9. **Delivery and Payment:** Kate delivered the 5,000 cards and was paid immediately in cash, although the owner mentioned future payments could be on a 30-day credit term if sales went well. 10. **Cost of Goods Sold:** The cost to Kate for these cards was $1,750, which needs to be recorded as a debit to an expense called Cost of Goods Sold. 11. **Settlement of Debt:** Kate paid off her balance for the supplies in full. 12. **Insurance Purchase:** She bought a one-year insurance policy for $1,200, paid in cash. This needs to be recorded under current month expenses and prepaid amounts. 13. **Equipment Depreciation:** Kate estimated all her equipment will have a useful life of 4 years (48 months). This sequence of transactions describes the initial setup and operational activities involved in starting up Kate’s Cards. ### Accounting Exercise Instructions #### Transactions 10. **Order Cost Entry:** The cost to Kate for the order was $1,750 for the supplies she had purchased. *(Hint: This cost should be recorded as a debit to an expense called Cost of Goods Sold.)* 11. **Payment Entry:** Kate paid her balance due for the supplies in full. 12. **Insurance Policy Purchase:** Kate purchased a one-year insurance policy for $1,200, paying the entire amount in cash. *(Hint: Two accounts will need to be debited here, one for the current month expense and one for the prepaid amount.)* 13. **Depreciation Determination:** Kate determined that all of her equipment will have a useful life of 4 years (48 months) at which time it will not have any resale or scrap value. *(Hint: Kate will expense 1/48th of the cost of the equipment each month to Depreciation Expense. The credit will be to Accumulated Depreciation.)* 14. **Salary Payment:** Kate paid herself a salary of $1,000 for the month. 15. **Rent Expense:** Kate paid rent expense for the month in the amount of $1,200. #### Required Tasks a. **General Ledger Preparation:** Prepare a general ledger with the following accounts: - Cash - Accounts Receivable - Supplies Inventory - Prepaid Insurance - Equipment - Accumulated Depreciation - Accounts Payable - Common Stock - Retained Earnings - Sales Revenue - Cost of Goods Sold - Consulting Expense - Insurance Expense - Depreciation Expense - Wages Expense - Rent Expense Prepare journal entries for the above transactions using these accounts. b. **Transaction Posting:** Post the accounting transactions for the month of September 2019 to the general ledger accounts. c. **Trial Balance Preparation:** Prepare a trial balance for Kate’s Cards as of September 30, 2019. #### Additional Resources For further assistance, please watch the accompanying video tutorial below: - **Video Title:** Term Project ch. 2 *(No graphs or diagrams were present in this text.)*