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.
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:
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.
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.
|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|
|Accumulated Depreciation (contra asset)||106|
|Business License Expense||502|
|Repairs and Maintenance||504|
|Baking Supplies Expense|
|Business License Expense|
|Office Supplies Expense|
|Cost of Goods Sold|
|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.|
|20-Mar||Repairs and maintenance expense||95.00|
|Total||155,865.83||155,865.83||If Red, this means your debits and credits do not equal. Be sure to review for errors.|
|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|
|$ 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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February 28, 2023
February 28, 2023