Posted: September 16th, 2017

Sew CoolJE, T accounts, TB solution

1. Near the end of her freshman year at college, Heather Miller is faced with the decision of whether to get a summer job, go to summer school, or start a summer dress making business. Heather has had some experience designing and sewing and believes it might be the most lucrative of her summer alternatives. She starts “Sew Cool.”

During June, the first month of business, the following occur:

A. Heather deposits $1,000 of her own MONEY into Sew Cool’s checking account.

B. Sew Cool purchases equipment for $1,000. The company signs a note payable for this purchase.

C. Sew Cool purchases Sew Cool purchases $1,000 in sewing supplies and material in cash.

D. Sew Cool gives Heather’s parents a check for $80 for rent and utilities.

E. Heather sews and sells twenty dresses during the month. Each dress has a price of $60. Cash is received for twelve of the dresses, with customers owing for the remaining eight.

F. The dresses sold above cost $35 each to make.

G.Sew Cool purchases advertising for $50 cash.

H. Sew Cool pays Heather a cash dividend of $10 cash.

I. Sew Cool’s taxes, PAID IN CASH, amount to $87.

(A)Prepare journal entries for the above transactions.

(B)Prepare T-accounts for each account used.

(C) Prepare a trial balance for June.

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