EXERCISE ONE
Seems like Forrest Gump had another business not shown in his
biographical movie of Forrest Gump.
Lets set up the business based on the data he tells us:
Hey, class, my name is Forrest, Forrest Gump. Lt. Dan set up a new business on September 1, 2002. We are going to have one less thing to worry
about once this is done!
Jenny, my wife (editorial note: she hadnt died yet), liked my
running so much she thought we could start a running business that delivered
stuff. You know, a courier or something
...
Lt. Dan took some of my Apple money and we used $100,000 to start
this thing. I got some cute little
pieces of paper that say Jennys Running Service Common Stock. Jennys my wife, you know. I think that was
September 1.
You know, I went out right away and bought 200 cases of chocolate
candy. My mom always said life is like a box chocolates, you never know what
you will get.... (ed. Comment, you are probably wondering what kind of
professor you got). I paid for it in cash, and you know, they cost me
$15,000. Jenny likes candy. She says we
can use that for advertising. Shes so
smart, my Jenny is. You know, we still
havent given anyone any of that candy yet!
Some nice man liked me so much (I think he liked my Bubba Gump
shrimp) that on September 10th, he actually gave ME $5,000 and I hadnt done a
thing yet for that man! He said he would
send me work as the year went on. Wasnt he nice?
I decided I couldnt use my shrimp boats or my mower to do the
deliveries, so we had to buy some equipment.
You know it rains sometimes, and the people get tired of running or
riding their bikes. You know, I never did learn to ride a bike! The nice man at
the automobile place sold Lt. Dan two nice SUVs for $60,000, but Lt. Dan (hes
so smart), only paid $5,000 in cash for this!
He said something about 0% interest for 4 years or something. Do you know what he means? I personally like to run. Jenny always told me to Run, Forrest, Run!
Lt. Dan is such a good guy.
Hes walking a lot better now. He
said we had to pay for the place all of our people work, I think he called it
rent. We have to pay $1,000 a month on the 15th , but thats ok. He also said something about eggs- spence or
somethin...
You know, all those nice people who work for me are out there
delivering things all the time. We sent
bills to all the people we delivered things for on October 20th. Jenny said the total of all of that was
$25,000. Can you believe that? Those nice people promised they would pay us
in about a month. One less thing to
worry about...
Can you believe it? Those nice
SUVs need to get gas almost every day! The nice man at the corner gas station
said, Forrest, you can get all the gas you want from my station! Ill send YOU
a bill every month. You know, the
mailman gave me a real thick envelope this month. Lt. Dan looked at it and told
me and Jenny (Jenny is my girl, you know) that we owe $2,000! Jenny never should have gone to
California....
And you know,it gets hot here, and Jenny says we have to pay for
electicity and all that kind of stuff too. We sent a check to the utility
company and had to pay $1,000! But, what
are you going to do?? I never did understand
how a wire could make something cooler....
Remember those nice people who are delivering things for me? I told
you about them earlier... anyway, Lt. Dan told me they are my M PLOY EEEEs or
something like that, and you know, they get paid every month. He said the Pay ROLL was a total of $10,000
this month, but it might get bigger because we might hire more people! We even hired someone today! He said we paid
them September 30th!
Jenny just told me something I forgot. Jennys really good about
that, you know. She told me that we also paid $3,000 for something called Insurance. She said we wouldnt have to pay again for 12
months. Imagine That! She said we got that on September 4th, I think thats
what she said.
Lt. Dan and Jenny think we are going to make some money. What do you think?
Can I use that money to put some money aside for Little Forrests college?
And thats all I have to say about that....
Ok, ladies and gents, time to do it to it!
General
Ledger
Cash Accounts Receivable
+ +
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Supplies Trucks
+ +
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Accounts Payable Notes Payable
+ +
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Common Stock Unearned Revenue
+ +
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Service Revenue Rent Expense
+ +
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Salaries Expense Utility Expense
+ +
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Fuel Expense ?
+ +
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JENNYs RUNNING SERVICE
Trial Balance
Accounts Debit Credit