aa Chapter 9 Accounting for a Service Company a 9.3

Project 9.1: New Beginnings Lawn Care

Scenario

Your friend Ed started a new lawn service business, New Beginnings Lawn Care, to help pay his college expenses. You and Ed reach an agreement: you will help Ed with his accounting records and provide customer referrals, and he will help you with your painting business.

Task 1: Set Up a New Company

Step 1:  Create a new company in QuickBooks for New Beginnings Lawn Care. Use the following information.

Company name / [your name] Project 9.1 New Beginnings Lawn Care
Legal name / [your name] Project 9.1 New Beginnings Lawn Care
Tax ID / 314-14-7878
Address / 2300 Olive Boulevard
City / Bayshore
State / CA
Zip / 94326
E-mail / [enter your own email address]
Save in / C:/Program Files/Intuit/QuickBooks 2006
Filename / [your name] Project 9.1
Industry / Landscaping Services
What do you sell? / Services only
Sales tax / No
Estimates / No
Sales receipts / Yes
Billing statements / No
Invoices / Yes
Progress billing / No
Track bills you owe / Yes
Accept credit cards / I don’t currently accept credit cards and I don’t plan to.
Track time / Yes
Employees / No
Start date / 01/01/2008
Add a bank account? / Yes
Bank account name / [your name] Checking
Bank account opened / On or after 01/01/2008
Use recommended
expense accounts? / Yes
Use recommended
Income accounts? / Yes

Step 2:  Click Finish to exit the EasyStep Interview.

Step 3:  Select tax form: Form 1040 (Sole Proprietor). (From the Company menu, select Company Information. Select Income Tax Form Used: Form 1040 (Sole Proprietor).

Task 2: Customize the Chart of Accounts

Customize the Chart of Accounts for New Beginnings Lawn Service as follows:

Step 1:  Display account numbers in the Chart of Accounts.
Step 2:  Add the following accounts to the Chart of Accounts. Abbreviate account titles as necessary.
Account No. / 1700
Account Type / Fixed Asset
Account Name / Mower
Account Description / Mower
Tax Line / Unassigned
Opening Balance / 0 as of 01/01/2008
Account No. / 1710
Account Type / Fixed Asset
Account Name / Mower Cost
Subaccount of / Mower
Account Description / Mower Cost
Tax Line / Unassigned
Opening Balance / 0 as of 01/01/2008
Account No. / 1720
Account Type / Fixed Asset
Account Name / Accumulated Depreciation-Mower
Account Description / Accumulated Depreciation-Mower
Subaccount of / Mower
Tax Line / Unassigned
Opening Balance / 0 as of 01/01/2008
Account No. / 1800
Account Type / Fixed Asset
Account Name / Trimmer Equipment
Account Description / Trimmer Equipment
Tax Line / Unassigned
Opening Balance / 0 as of 01/01/2008
Account No. / 1810
Account Type / Fixed Asset
Account Name / Trimmer Equipment Cost
Account Description / Trimmer Equipment Cost
Subaccount of / Trimmer Equipment
Tax Line / Unassigned
Opening Balance / 0 as of 01/01/2008
Account No. / 1820
Account Type / Fixed Asset
Account Name / Accumulated Depr Trimmer
Account Description / Accumulated Depr Trimmer
Subaccount of / Trimmer Equipment
Tax Line / Unassigned
Opening Balance / 0 as of 01/01/2008
Account No. / 6551
Account Type / Expense
Account Name / Supplies Expense
Account Description / Supplies Expense
Tax Line / Sch C: Supplies (not from COGS)
Step 3:  Ê Print the Chart of Accounts for New Beginnings Lawn Care.

Task 3: Customer List

Step 1:  Create a Customer List for New Beginnings Lawn Care using the following information.

Customer / Beneficio, Katrina
Opening Balance / 0.00 as of 01/01/2008
Address Info:
First Name / Katrina
Last Name / Beneficio
Contact / Katrina Beneficio
Phone / 415-555-1818
Alt. Ph. / 415-555-3636
Address / 10 Pico Blvd
Bayshore, CA 94326
Additional Info:
Type / Residential
Terms / Net 30
Payment Info:
Account No. / 3001
Preferred Payment Method / Check

Step 2:  Add a job for Katrina Beneficio.

Job Info:
Job Status / Awarded
Job Description / Mow/Trim Lawn
Job Type / Lawn

Step 3:  Add another customer.

Customer / Whalen, Tom
Opening balance / 0.00 as of 01/01/2008
Address Info:
First Name / Tom
Last Name / Whalen
Contact / Tom Whalen
Phone / 415-555-1234
Alt. Ph. / 415-555-5678
Alt. Contact / Work phone
Address / 100 Sunset Drive
Bayshore, CA 94326
Additional Info:
Type / Residential
Terms / Net 30
Payment Info:
Account / 3002
Preferred Payment Method / Check

Step 4:  Add a job for Tom Whalen.

Job Info:
Job Status / Awarded
Job Description / Mow/Trim Lawn
Job Type / Lawn

Step 5:  Add a new customer.

Customer / Rock Castle Construction
Opening balance / 0.00 as of 01/01/2008
Address Info:
Company Name / Rock Castle Construction
First Name / Rock
Last Name / Castle
Contact / Rock Castle
Phone / 415-555-7878
Alt. Ph. / 415-555-5679
Address / 1735 County Road
Bayshore, CA 94326
Additional Info:
Type / Commercial
Terms / Net 30
Payment Info:
Account No. / 3003
Preferred Payment Method / Check

Step 6:  Add a new job for Rock Castle Construction.

Job Info:
Job Status / Awarded
Job Description / Mow/Trim Lawn & Shrubs
Job Type / Lawn & Shrubs

Step 7:  Ê Print the Customer List.


Task 4: Vendor List

Step 1:  Create a Vendor List for New Beginnings Lawn Care using the following information.

Vendor / KC Gas Station
Opening Balance / 0 as of 01/01/2008
Address Info:
Company Name / KC Gas Station
Address / 100 Manchester Road
Bayshore, CA 94326
Contact / Norm
Phone / 415-555-7844
Print on Check as / KC Gas Station
Additional Info:
Account / 4001
Type / Fuel
Terms / Net 30
Credit Limit / 500.00
Tax ID / 37-8910541
Vendor / Mower Sales & Repair
Opening Balance / 0.00 as of 01/01/2008
Address Info:
Company Name / Mower Sales & Repair
Address / 650 Manchester Road
Bayshore, CA 94326
Contact / Carol
Phone / 415-555-8222
Print on Check as / Mower Sales & Repair
Additional Info:
Account / 4002
Type / Mower
Terms / Net 30
Credit Limit / 1000.00
Tax ID / 37-6510541

Step 2:  Ê Print the Vendor List.


Task 5: Item List

Step 1:  Create an Item List for New Beginnings Lawn Care using the following information.

Item Type / Service
Item Name / Mowing
Description / Lawn Mowing
Rate / 25.00
Account / 4070 – Services
Item Type / Service
Item Name / Trim Shrubs
Description / Trim Shrubs
Rate / 30.00
Account / 4070 – Services

Step 2:  Ê Print the Item List.

Task 6: Custom Invoice Template

Create a Custom Invoice Template with a Service Date column. This permits New Beginnings to bill customers once a month for all services provided during the month, listing each service date separately on the invoice.

To create a custom invoice, complete the following steps:

Step 1:  Click the Invoices icon in the Customer section of the Home page.

Step 2:  Click the Customize button on the upper right of the Create Invoices window.

Step 3:  Select Intuit Service Invoice. Then click New.

Step 4:  To add a Service Date column to the custom invoice, when the following Customize Invoice window appears:

§  Enter Template Name: Service Date Invoice.

§  Click the Columns tab.

§  ü Check Service Date: Screen.

§  ü Check Service Date: Print.

§  ü Check Item: Print.

§  Enter Title for Service Date: Date.

§  Renumber the Order so they appear as shown above.

§  Click OK to close the Customize Invoice window.

Step 5:  To view the custom invoice:

§  If the Create Invoices window is not still open, click Invoice icon in the Customer section of the Home page to open the Create Invoices window.

§  If necessary, from the Create Invoices window, select Template: Service Date Invoice.

§  Notice that the first column of the invoice is now the Date column.

Step 6:  Close the Create Invoices window.

Task 7: Record Transactions

During the year, New Beginnings Lawn Service entered into the transactions listed below.

Step 1:  Record the following transactions for New Beginnings Lawn Care. Customers are billed monthly. Ê Print invoices, checks, and deposit summaries as appropriate. Use memorized transactions for recurring transactions.

Date / Transaction
01/01/2008 / Ed Norman invested $1,500 cash in the business.
02/01/2008 / Purchased a mower for $800 cash from Mower Sales & Repair (Check No. 501).
02/20/2008 / Purchased trimming equipment from Mower Sales & Repair for $200 on account.
03/01/2008 / Purchased $100 of gasoline and supplies on account from KC Gas Station.
03/20/2008 / Paid $200 on your account with Mower Sales & Repair. Paid $100 on your account with KC Gas Station.
04/30/2008 / Printed and mailed invoices to customers for the following work performed in April. Use the Intuit Service Date Invoice to record all work performed for the same customer on one invoice, indicating the date of service in the DATE column.
04/01/2008
04/15/2008 / Mowed Katrina Beneficio’s lawn
Mowed Katrina Beneficio’s lawn / 6 hrs
6 hrs
04/04/2008
04/19/2008 / Mowed R.C. Construction’s lawn
Mowed R.C. Construction’s lawn / 8 hrs
8 hrs
04/08/2008
04/22/2008 / Mowed Tom Whalen’s lawn
Mowed Tom Whalen’s lawn / 4 hrs
4 hrs
05/01/2008 / Purchased $100 of gasoline and supplies on account from KC Gas Station.
05/15/2008 / Received payments from Beneficio (Check No. 755), Whalen (Check No. 645), and Rock Castle Construction (Check No. 1068) for April invoices.
05/30/2008 / Paid KC Gas Station bill.
05/30/2008 / Mailed invoices to customers for the following services provided during May.
05/01/2008
05/15/2008 / Mowed Katrina Beneficio’s lawn
Mowed Katrina Beneficio’s lawn / 6 hrs
6 hrs
05/04/2008
05/19/2008 / Mowed R.C. Construction’s lawn
Mowed R.C. Construction’s lawn / 8 hrs
8 hrs
05/08/2008
05/22/2008 / Mowed Tom Whalen’s lawn
Mowed Tom Whalen’s lawn / 4 hrs
4 hrs
06/01/2008 / Purchased $100 of gasoline and supplies on account from KC Gas Station.
06/15/2008 / Received payments from Beneficio (Check No. 895), Whalen (Check No. 698), and Rock Castle Construction (Check No. 1100) for May services.
06/30/2008 / Paid KC Gas Station bill.
06/30/2008 / Mailed invoices to customers for the following services provided during June.
06/01/2008
06/02/2008
06/15/2008 / Mowed Katrina Beneficio’s lawn
Trimmed Katrina Beneficio’s shrubs
Mowed Katrina Beneficio’s lawn / 6 hrs
7 hrs
6 hrs
06/04/2008
06/05/2008
06/19/2008 / Mowed R. C. Construction’s lawn
Trimmed R.C. Construction’s shrubs
Mowed R. C. Construction’s lawn / 8 hrs
9 hrs
8 hrs
06/08/2008
06/09/2008
06/22/2008 / Mowed Tom Whalen’s lawn
Trimmed Tom Whalen’s shrubs
Mowed Tom Whalen’s lawn / 4 hrs
3 hrs
4 hrs
07/01/2008 / Purchased $100 of gasoline and supplies on account from KC Gas Station.
07/15/2008 / Received payments from Beneficio (Check No. 910), Whalen (Check No. 715), and Rock Castle Construction (Check No. 1200) for June services.
07/31/2008 / Paid KC Gas Station bill.
07/31/2008 / Mailed invoices to customers for the following services provided during July.
07/01/2008
07/15/2008 / Mowed Katrina Beneficio’s lawn
Mowed Katrina Beneficio’s lawn / 6 hrs
6 hrs
07/04/2008
07/19/2008 / Mowed R.C. Construction’s lawn
Mowed R.C. Construction’s lawn / 8 hrs
8 hrs
07/08/2008
07/22/2008 / Mowed Tom Whalen’s lawn
Mowed Tom Whalen’s lawn / 4 hrs
4 hrs
08/01/2008 / Purchased $100 of gasoline and supplies on account from KC Gas Station.
08/15/2008 / Received payments from Beneficio (Check No. 935), Whalen (Check No. 742), and Rock Castle Construction (Check No. 1300) for July services.
08/31/2008 / Paid KC Gas Station bill.
08/31/2008 / Mailed invoices to customers for the following services provided during August.
08/01/2008
08/15/2008 / Mowed Katrina Beneficio’s lawn
Mowed Katrina Beneficio’s lawn / 6 hrs
6 hrs
08/04/2008
08/19/2008 / Mowed R.C. Construction’s lawn
Mowed R.C. Construction’s lawn / 8 hrs
8 hrs
08/08/2008
08/22/2008 / Mowed Tom Whalen’s lawn
Mowed Tom Whalen’s lawn / 4 hrs
4 hrs
09/01/2008 / Purchased $100 of gasoline and supplies on account from KC Gas Station.
09/15/2008 / Received payments from Beneficio (Check No. 934), Whalen (Check No. 746), and Rock Castle Construction (Check No. 1400) for August services.
09/30/2008 / Paid KC Gas Station bill.
09/30/2008 / Mailed invoices to customers for the following service provided during September.
09/01/2008
09/15/2008 / Mowed Katrina Beneficio’s lawn
Mowed Katrina Beneficio’s lawn / 6 hrs
6 hrs
09/04/2008
09/19/2008 / Mowed R.C. Construction’s lawn
Mowed R.C. Construction’s lawn / 8 hrs
8 hrs
09/08/2008
09/22/2008 / Mowed Tom Whalen’s lawn
Mowed Tom Whalen’s lawn / 4 hrs
4 hrs
10/01/2008 / Purchased $50 of gasoline on account from KC Gas Station.
10/15/2008 / Received payments from Beneficio (Check No. 956), Whalen (Check No. 755), and Rock Castle Construction (Check No. 1500) for September services.
10/31/2008 / Paid KC Gas Station bill.
10/31/2008 / Mailed invoices to customers for the following services provided during October.
10/01/2008
10/02/2008
10/15/2008 / Mowed Katrina Beneficio’s lawn
Trimmed Katrina Beneficio’s shrubs
Mowed Katrina Beneficio’s lawn / 6 hrs
7 hrs
6 hrs
10/04/2008
10/05/2008
10/19/2008 / Mowed R. C. Construction’s lawn
Trimmed R.C. Construction’s shrubs
Mowed R. C. Construction’s lawn / 8 hrs
9 hrs
8 hrs
10/08/2008
10/09/2008
10/22/2008 / Mowed Tom Whalen’s lawn
Trimmed Tom Whalen’s shrubs
Mowed Tom Whalen’s lawn / 4 hrs
3 hrs
4 hrs
11/15/2008 / Received payments from Beneficio (Check No. 967), Whalen (Check No. 765), and Rock Castle Construction (Check No. 1600) for October services.

Step 2:  Ê Print the Check Register for January 1, 2008, to December 31, 2008.

Task 8: Adjusting Entries

Step 1:  Make adjusting entries for New Beginnings Lawn Care at December 31, 2008, using the following information.

§  The mowing equipment cost $800 and has a four-year life and no salvage value.

§  The trimming equipment cost $200 and has a two-year life and no salvage value.

Step 2:  Ê Print the Journal for the year.

Task 9: Financial Reports

Ê Print the following reports for New Beginnings Lawn Care.

4  General Ledger (remember to omit unused accounts with zero balances from the printout)