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06 Oct Overview In Milestone One, you

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Overview

In Milestone One, you completed the first part of your course project to demonstrate your ability to accurately record financial data. In Milestone Two, you will use your journal entries from Milestone One to continue working through the next stages of the accounting cycle in preparation for creating financial statements in Module Seven.

Scenario

You are a certified public accountant (CPA) who is working with a small bakery to prepare their financial statements for three months of the current fiscal year. Because the company is a startup and so small, the accounting is done manually in Microsoft Excel. You have been given the accounts and information you need to prepare their financial statements, but you will need to use the accounting cycle to report accurate information to the finance department.

Prompt

Accrual Basis: In your company accounting workbook, apply the accrual basis of accounting and prepare adjusting entries to ensure accurate accounting for expenses that lack transactions in the current period. (You may refer to the Company Accounting Workbook Template Spreadsheet if necessary, but keep in mind that your work for this milestone should be added to the work you completed in your workbook for the previous milestone.)

Specifically, you must address the following rubric criteria:

  • 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.
  • Adjusting Entries: Prepare the “Adjusting Entries” tab of the company accounting workbook. Ensure that the entries are correctly transferred to the adjusting entries portion of the “Trial Balance” tab.
  • Adjusted Trial Balance: Prepare the adjusted trial balance on the “Trial Balance” tab, ensuring that the debit and credit totals match.

Guidelines for Submission

Build on your work from Milestone One to complete the “Trial Balance” and “Adjusting Entries” tabs in your company accounting workbook. This should be completed and submitted using Microsoft Excel. Please note that there are drop-down menus embedded in the “Accounts” columns as well as formulas throughout the spreadsheet to help you complete the workbook without accidentally introducing errors.

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 Common Stock 301
Baking Supplies 102 Accounts Payable 202 Dividends 302
Prepaid Rent 103 Wages Payable 203 Cost of Goods Sold 303
Prepaid Insurance 104 Interest Payable 204
Baking Equipment 105
Office Supplies 106
Accounts Receivable 107
Accumulated Depreciation 108
Merchandise Inventory 109 Revenue Accounts
Acct #
Bakery Sales 401
Merchandise Sales 402
Expense Accounts
Acct #
Baking Supplies Expense 501
Rent Expense 502
Insurance Expense 503
Misc. Expense 504
Business License Expense 505
Advertising Expense 506
Wages Expense 507
Telephone Expense 508
Interest Expense 509
Depreciation Expense 510
Office Supplies Expense 511
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

October Journal Entries

A Company
General Journal Entries
October, 20xx
Date Accounts Debit Credit
1-Oct $
$
1-Oct
3-Oct
7-Oct
10-Oct
11-Oct
13-Oct
13-Oct
14-Oct
30-Oct
31-Oct
31-Oct
31-Oct
Total – 0 – 0 <== Do the debits equal the credits? (they should)

November Journal Entries

A Company
General Journal Entries
November, 20xx
Date Accounts Debit Credit
Total – 0 – 0 <== Do the debits equal the credits? (they should)

December Journal Entries

A Company
General Journal Entries
December, 20xx
Date Accounts Debit Credit
Be sure to review the Inventory Valuation tab (Columns M-P) for all Inventory related journal entries as they are given to you!
Total – 0 – 0 <== Do the debits equal the credits? (they should)

Inventory Valuation

FIFO
Purchases Sales Ending Inventory Purchases
Date No. of Items Unit Price Total Price No. of Items Unit Price Total Price No. of Items Unit Price Total Price Date Microsoft: Below are the journal entries for each inventory related transaction! All you need to do is copy and paste it into the correct dates on the December Journal tab! Dr Cr 12/7: 10 boxes purchased at $6
7-Dec 10 $ 6.00 $ 60.00 10 $ 6.00 $ 60.00 7-Dec Merchandise Inventory (10 x $6) 60.00 12/20: 20 boxes purchased at $6.10
Cash 60.00 12/30: 25 boxes purchased at $6.05
15-Dec 8 $ 6.00 $ 48.00 2 $ 6.00 $ 12.00 Purchased inventory Sales – selling price, $8.50 a box
12/15: 8 boxes
20-Dec 20 $ 6.10 $ 122.00 2 $ 6.00 $ 12.00 15-Dec Cash (8 x $8.50) 68.00 12/24: 18 boxes
20 $ 6.10 $ 122.00 Merchandise Sales Revenue 68.00
22 $ 134.00 Record sale of inventory
24-Dec 2 $ 6.00 $ 12.00 15-Dec Cost of Goods Sold (8 X $6) 48.00
16 $ 6.10 $ 97.60 4 $ 6.10 $ 24.40 Merchandise Inventory 48.00
18 $ 109.60 Recorded the cost of goods sold
30-Dec 25 $ 6.05 $ 151.25 4 $ 6.10 $ 24.40 20-Dec Merchandise Inventory (20 x $6.10 ) 122.00
25 $ 6.05 $ 151.25 Cash 122.00
29 $ 175.65
Net Inventory 55 $ 333.25 26 $ 157.60 29 $ 175.65 24-Dec Cash (18 x 8.50) 153.00
Merchandise Sales Revenue 153.00
Record sale of inventory
24-Dec Cost of Goods Sold (2 x $6)+(16 x $6.10) 109.60
Merchandise Inventory 109.60
Recorded the cost of goods sold
30-Dec Merchandise Inventory (25 x $6.05) 151.25
Cash 151.25

T-Accounts – autofill

date Cash date date Notes Payable date Business License exp Common Stock
1-Oct $ $ – 0 3-Oct 10-Oct $ – 0 $ 1-Oct
3-Oct $ – 0 $ – 0 13-Oct
$ – 0 7-Oct $ – 0 $ – 0 $ – 0 $ – 0 $ – 0 $ – 0
$ – 0 10-Oct $ – 0 $ – 0 $ – 0
$ – 0 11-Oct
$ – 0 13-Oct
$ – 0 14-Oct
$ – 0 31-Oct
31-Oct $ – 0
$ – 0 5-Nov
8-Nov $ – 0
$ – 0 10-Nov
18-Nov $ – 0
$ – 0 15-Nov
$ – 0 20-Nov Accounts Rec.
$ – 0 20-Nov 31-Oct – 0
$ – 0 22-Nov – 0 8-Nov
30-Nov $ – 0 – 0 18-Nov
$ – 0 1-Dec 30-Nov – 0
$ – 0 5-Dec – 0 8-Dec
$ – 0 7-Dec 31-Dec – 0
8-Dec $ – 0
$ – 0 10-Dec $ – 0 $ – 0
$ – 0 13-Dec $ – 0
$ – 0 15-Dec
15-Dec $ – 0
$ – 0 20-Dec
$ – 0 20-Dec
24-Dec $ – 0
$ – 0 30-Dec
31-Dec $ – 0
$ – 0 $ – 0
$ – 0
Misc. expense Baking equipment Advertising expense
11-Oct $ – 0 13-Oct $ – 0 13-Oct $ – 0
$ – 0 $ – 0 $ – 0 $ – 0 $ – 0 $ – 0
$ – 0 $ – 0 $ – 0
Baking supplies Office supplies Rent expense
1-Oct $ – 0 14-Oct $ – 0 7-Oct $ – 0
15-Nov $ – 0 22-Nov $ – 0 15-Nov $ – 0
11-Dec $ – 0 15-Dec $ – 0
$ – 0 $ – 0 $ – 0 $ – 0 $ – 0 $ – 0
$ – 0 $ – 0 $ – 0
Prepaid rent Prepaid insurance Bakery Sales
7-Oct $ – 0 31-Oct $ – 0 $ – 0 31-Oct
$ – 0 30-Nov
$ – 0 31-Dec
$ – 0 $ – 0 $ – 0 $ – 0 $ – 0 $ – 0
$ – 0 $ – 0 $ – 0
Accounts payable Salary and wages expense Salaries and wages payable
$ – 0 1-Oct 31-Oct $ – 0 $ – 0 31-Oct
$ – 0 31-Oct 15-Nov $ – 0 5-Nov $ – 0
10-Nov $ – 0 30-Nov $ – 0 $ – 0 15-Nov
$ – 0 15-Nov 15-Dec $ – 0 20-Nov $ – 0
20-Nov $ – 0 31-Dec $ – 0 $ – 0 30-Nov
$ – 0 30-Nov 5-Dec $ – 0
10-Dec $ – 0 $ – 0 $ – 0 $ – 0 15-Dec
$ – 0 11-Dec $ – 0 20-Dec $ – 0
13-Dec $ – 0 $ – 0 31-Dec
$ – 0 $ – 0
$ – 0
$ – 0 $ – 0
$ – 0
Telephone expense Dividends COGS
30-Oct $ – 0 1-Dec $ – 0 15-Dec $ – 0
30-Nov $ – 0 $ – 0 $ – 0 24-Dec $ – 0
$ – 0 $ – 0 $ – 0 $ – 0 $ – 0
$ – 0 $ – 0
Merchandise Sales Revenue Merch. Inv. FIFO
$ – 0 15-Dec 7-Dec $ – 0
$ – 0 24-Dec $ – 0 15-Dec
20-Dec $ – 0
$ – 0 $ – 0 $ – 0 24-Dec
$ – 0 30-Dec $ – 0
$ – 0 $ – 0
$ – 0

Adjusting Entries

A Company
Adjusting Journal Entries
20XX
Date Accounts Debit Credit
31-Dec Depreciation Expense
Accumulated Depreciation
<== Interest adjustment goes here
<== Interest adjustment goes here
<== Insurance adjustment goes here
<== Insurance adjustment goes here
<== Baking supplies adjustment goes here
<== Baking supplies adjustment goes here
<== Office supplies adjustment goes here
<== Office supplies adjustment goes here
– 0 – 0 <== Do the debits equal the credits? (they should)

Trial Balance

A Company
Trial Balance
20xx
Unadjusted trial balance Adjusting entries Adjusted trial balance
Account Debit Credit Debit Credit Debit Credit
Cash – 0
Baking Supplies – 0
Merchandise Inventory
Prepaid Rent
Prepaid Insurance – 0
Baking Equipment
Accumulated Depreciation – 0
Office Supplies – 0
Accounts Receivable
Notes Payable
Interest Payable – 0
Accounts Payable
Wages Payable
Common Stock
Dividends
Bakery Sales
Merchandise Sales
Baking Supplies Expense – 0
Rent Expense
Interest Expense – 0
Insurance Expense – 0
Depreciation Expense – 0
Misc. Expense
Office Supplies Expense – 0
Business License Expense
Advertising Expense
Wages Expense
Telephone Expense
COGS
Retained Earnings
Total: – 0 – 0 – 0 – 0 – 0 – 0
Do these two columns tie to the debits and credits on the adjusting entries tab?
Debits should equal credits Debits should equal credits
Debits should equal credits
`

Income Statement

A Company
Income Statement
For Qtr. Ending 12/31/20XX
Revenues
Total Revenues – 0
<== Don't forget the COGS!
Gross Profit – 0
Operating Expenses:
Baking Supplies Expense – 0
Total Operating Expenses: – 0
Net Income – 0

Statement of Stockholder Equity

A Company
Statement of Stockholder's Equity
For Qtr. Ending 12/31/20xx
Common Stock Retained Earnings Total
Beginning Balances, September 30 0 0 0
Issued Common Stock
Net Income
Dividends Make sure your dividends are negative so the formula subtracts them
Ending Balances, December 31: – 0 – 0 – 0

Balance Sheet

A Company
Balance Sheet
As of December 31, 20XX
Assets Liabilities and Owners' Equity
Current Assets: Current Liabilities:
Total Current Liabilities – 0
Long Term Liabilities:
Total Current Assets – 0 Total Long Term Liabilities: – 0
Total Liabilities: – 0
Shareholder's Equity:
Non-Current Assets:
Microsoft: show number as negative as the total formula will subtract it for you. Total Equity – 0
Baking Equipment (Net) – 0
Total Assets: – 0 Total Liabilities & Equity – 0 <== Do the debits equal the credits? (they should)

Closing Entries

A Company
Closing Entries
Qtr ending 12/31/20xx
Date Accounts Debit Credit Note** We are closing out the same accounts that are listed on the income statement
31-Dec Bakery Sales
Merchandise Sales
Retained Earnings
31-Dec Retained Earnings
Baking Supplies Expense
Rent Expense
Wages Expense
Misc Expense
Business License Expense
Office Expense
Depreciation Expense
Insurance Expense
Advertising Expense
Interest Expense
Telephone Expense
COGS
31-Dec Retained Earnings
Dividends

Post-Closing Trial Balance

A Company
Post-Closing Trial Balance
Qtr. Ending 12/31/20xx
Unadjusted Trial Balance
Account Debit Credit
Cash Note** These are the same accounts that are listed on the balance sheet
Baking Supplies

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