Chat with us, powered by LiveChat You were recently hired as an entry-level bookkeeper for a service business that recently opened. This is the first month in operation for the business and your first task is to record bu | Wridemy

You were recently hired as an entry-level bookkeeper for a service business that recently opened. This is the first month in operation for the business and your first task is to record bu

Assignment must be completed by 2/26/23 by 8pm EST

Scenario

You were recently hired as an entry-level bookkeeper for a service business that recently opened. This is the first month in operation for the business and your first task is to record business transactions for their first month using the source documents and transaction data the owner will provide to you. Because this is a small business that does not use computerized accounting, you will apply the accounting cycle in Excel to record transactions and generate financial reporting results for the owner.

Directions

  1. Company Accounting Workbook

Use accepted accounting principles to follow and record your business transactions for a one-month period from the first step of the accounting cycle through the reporting process. You will build on the workbook you created in Milestones One and Two, or you may start over with the blank Company Accounting Workbook Template (linked below in the What to Submit section), incorporating instructor feedback where applicable. After you complete your workbook, you will prepare a summary report of your work.

Your completed accounting workbook will consist of journal entries for each transaction and postings of transactions to account ledgers. You will develop a trial balance from the ledger balances, and use these balances to prepare the income statement, statement of owner's equity, and the balance sheet. After the preparation of the financial statements, closing entries will be entered to transfer earnings to equity and prepare temporary accounts for the new accounting period.

Use the instructions below to complete your workbook. Specifically, you must address the following rubric criteria:

  1. Record Financial Data: Use accepted accounting principles to accurately capture business transactions for the month using the data provided in the accounting data appendix (linked in the Supporting Materials section). You will need to address the following:  
    1. Accuracy: Prepare entries that are accurate in that they fully reflect the appropriate information.
    2. Completeness: Prepare entries that are complete for the month, including transferring posted entries to T accounts.
    3. Unadjusted Trial Balance: Prepare the unadjusted trial balance portion of the “Trial Balance” tab of the company accounting workbook, ensuring that the total debits and credits match.
  2. Financial Statements: Create financial statements using appropriate methods based on accepted accounting principles. Be sure to prepare these financial statements in the order listed, as there are important interdependencies among them. Finalize the process by closing temporary accounts.
    1. Income Statement: Prepare the income statement using the adjusted trial balance.
    2. Statement of Owner’s Equity: Prepare the statement of owner’s equity using the adjusted trial balance.
    3. Balance Sheet Assets: Prepare the balance sheet asset entries using the adjusted trial balance.
    4. Balance Sheet Liabilities: Prepare the balance sheet liabilities entries using the adjusted trial balance.
    5. Closing Entries: Complete the “Closing Entries” tab of the company accounting workbook by closing all temporary income statement amounts to create closing entries.
  3. Summary Report

After you have finished preparing all the financial statements, analyze the statements and write a short report summarizing your findings. Use the template provided in the What to Submit section to complete your report. There is also a Final Project Walkthrough video available in Supporting Materials that will provide guidance for completing your template. In addition to the financial statement results, the owners have requested that you provide them with additional information as further growth is anticipated. They would like more input from you to support the best possible decisions for the business.

In addition, the owners are requesting that you provide them with some suggestions on simple internal controls they can integrate to ensure protection of company assets, and accuracy in the company's financial data. The owners are also considering acquiring more long-term/fixed assets, such as vehicles, equipment, buildings, and so on. They would like your input on the different options available for depreciation of these costs. Adding sales of product is also a consideration for expansion. The owners want to know what accounting considerations will be involved with this change.

  1. Summary: Write a summary of what the financial statements indicate about the company’s financial health and performance.
    1. Purpose: Discuss the accounting process and the resulting financial statements as they relate to meeting the informational needs of the user.
    2. Process: Explain the process used to produce accurate account balances and financial statements from the individual transaction data.
      1. Consider what is being communicated through each of the financial statements you prepared (income statement, statement of equity and balance sheet) and how this information will be used in business decision making and planning.
    3. Analysis: Explain the company’s cash position, its net income as a percentage of sales, and its current liabilities to current assets position.
    4. Results: Discuss the results regarding profitability of the first month of operations.
      1. Consider how well the company is positioned to meet current liabilities.
      2. Be sure to include the percentage of revenues that result in profit/net income and the current ratio when discussing profitability and liquidity based on the recorded month’s results.
      3. Consider key points in your observations of results: is the company operating profitably (what percent of revenues result in profit/net income)? How well-poised are they to meet liabilities (discuss liquidity and current ratio)?
    5. Recommendations: Recommend a simple system of controls that can be implemented to ensure protection of company assets and the accuracy and integrity of their financial data as they anticipate further growth.
      1. Consider additional controls that will support the potential for adding merchandise and additional assets with business growth/expansion.
    6. Asset Valuation: Discuss the treatment of current and long-term assets on the balance sheet.
      1. Discuss at least two different methods of depreciation. Consider how the methods of depreciation will be determined.
      2. Discuss how LIFO, FIFO, and average methods will differ and provide examples of types of applicable merchandising.
      3. Consider how accounting will change with the addition of merchandise inventory.

What to Submit

To complete this project, you must submit the following:

Company Accounting Workbook
Your workbook should be completed and submitted as a Microsoft Excel file based on the template provided.

Project Summary Report
Use this template to submit a 1- to 2-page Word document summarizing the financial statements you created.

Chart of Accounts

This chart of accounts should help you identify the appropriate accounts to record to as you are analyzing and journaling transactions for this workbook. There is nothing to complete on this page; this is simply a resource for you.
Asset Accounts Liability Accounts Equity Accounts
Acct # Acct # Acct #
Cash 101 Notes Payable 201 Owner's Capital 301
Accounts Receivable 102 Accounts Payable 202 Owner Draws 302
Prepaid Rent 103 Wages Payable 203
Office Furniture 104
Office Supplies 105
Accumulated Depreciation (contra asset) 106
Revenue Accounts
Acct #
Service Revenue 401
Expense Accounts
Acct #
Rent expense 501
Business License Expense 502
Insurance Expense 503
Repairs and Maintenance 504
Advertising Expense 506
Wages Expense 507
Utilities Expense 508
Depreciation Expense 509
Cash
Baking Supplies
Prepaid Rent
Prepaid Insurance
Baking Equipment
Office Supplies
Accounts Receivable
Accumulated Depreciation
Merchandise Inventory
Notes Payable
Accounts Payable
Wages Payable
Interest Payable
Common Stock
Dividends
Bakery Sales
Merchandise Sales
Baking Supplies Expense
Rent Expense
Insurance Expense
Misc. Expense
Business License Expense
Advertising Expense
Wages Expense
Telephone Expense
Interest Expense
Depreciation Expense
Office Supplies Expense
Cost of Goods Sold

General Journal

A Company
General Journal Entries Journal Entry Tips
The debited account is recorded first, credited account recorded second.
Debits and credits must always equal!
Date Accounts Debit Credit There can be compound entries in which two accounts receive a debt to an equivalent credited amount to one account.
1-Mar Cash 125,000.00 Be sure to use your chart of accounts (the first page of this workbook).
Notes payable 125,000.00 Each account you will record to is already listed and organized by classification of the account.
1-Mar Licence expense 250.00
Cash 250.00
2-Mar Rent expense 950.00
Prepaid rent 950.00
Cash 1,900.00
5-Mar Office furniture 2,750.00
Cash 15,000.00
Owner's capital 17,750.00
6-Mar Cash 650.00
Service revenue 650.00
8-Mar Advertising expense 500.00
Accounts payable 500.00
10-Mar Accounts receivable 1,725.00
Service revenue 1,725.00
15-Mar Insurance 750.00
Cash 750.00
20-Mar Utilities expense 135.00
Accounts payable 135.00
20-Mar Repairs and maintenance expense 95.00
Cash 95.00
22-Mar Owner's drawings 500.00
Cash 500.00
25-Mar Office supplies 215.00
Cash 215.00
25-Mar Client service 350.00
350.00
30-Mar Advertising expense 500.00
Cash 500.00
30-Mar Accounts receivable 1,725.00
Cash 1,725.00
31-Mar Wages expense 275.00
Cash 275.00
31-Mar Accounts receivable 3,500.00
3,500.00
31-Mar Accumulated Depreciation 45.83
45.83
Total 155,865.83 155,865.83 If Red, this means your debits and credits do not equal. Be sure to review for errors.

Ledger Accounts

Assets Liabilities Equity Revenue Expenses
Cash Notes Payable Owner's Capital Service Revenue Rent Expense
$ 125,000.00 $ 250.00 $ 125,000.00 $ 17,750.00 $ 6,225.00 $ 950.00
$ 15,000.00 $ 1,900.00
$ 650.00 $ 750.00
$ 1,725.00 $ 95.00
$ 275.00 $ 500.00
$ 75.00 $ 215.00
$ 500.00
$ 142,725.00 $ 4,210.00 $ – 0 $ 125,000.00 $ – 0 $ 17,750.00 $ – 0 $ 6,225.00 $ 950.00 $ – 0
$ 138,515.00 $ 125,000.00 $ 17,750.00 $ 6,225.00 $ 950.00
Accounts Rec. Accounts Payable Owner Draws Business License Expense
$ 3,500.00 $ 135.00 $ 500.00 $ 250.00
$ 3,500.00 $ – 0 $ – 0 $ 135.00 $ 500.00 $ – 0 $ 250.00 $ – 0
$ 3,500.00 $ 135.00 $ 500.00 $ 250.00
Prepaid Rent Wages Payable Insurance Expense
$ 950.00 $ 275.00 Posting to the ledger/t accounts $ 750.00
Don't overthink it!
You are just posting each debit and credit from the journal entries to the account you identified in the entry.
These accounts are set to calculate your balances for you.
Please be careful not to delete the running totals as those will calculate the ending balance.

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