Fluent Essays

You are an employee at a full service bookkeeping and auditing firm called Accounting Solutions. You have met with a new client, Jessi Jones, who needs some assistance with her first month of accounting records and financial statements.The client gives you the following information. Use this template to complete the accounting cycle for the month of April for Jessi’s Creative Design. Additional information is located on the Comprehensive Problem Instructions. comprehensive_problem_template_part_1_update__1_.xlsx course_project_instruction_sheet__2_.docx practice_activity.xlsx Unformatted Attachment Preview Use this worksheet as REFERENCE ONLY. There is nothing to complete or change, but you will need to know what accoun to be added, and by the end of Part 2 of the problem, all accounts will have been used at least once. Assets 100 110 120 130 140 150 155 100 Cash Accounts Receivable Supplies Prepaid Photo Subscriptions Prepaid Advertising Equipment Accumulated Depreciation-Equipment Liabilities 200 210 200 Accounts Payable Unearned Revenue eed to know what accounts are used in Jessis Creative Design business. No new accounts will need Stockholderss Equity 300 300 Common Stock 310 Dividends 320 Retained Earnings Revenue 400 400 Service Revenue Expense 500 510 520 530 500 Advertising Expense Supplies Expense Photo Expense Depreciation Expense Jessis Creative Design T-Account Ledger Cash Bal. 100 0 Bal. Bal. Bal. Accounts Receivable 110 0 Bal. Equipment 0 150 Accumulated Depreciation-Equipment 155 Bal. Bal. Bal. Commom Stock Bal. Bal. 300 0 Retained Earnings Bal. Bal. 320 s Receivable 110 Supplies Bal. 120 0 Bal. Bal. Bal. preciation-Equipment 155 0 Prepaid Photo Subscription Prepaid Avdertising 140 0 Bal. Service Revenue 23 Bal. Earnings 320 0 Dividends 0 Bal. 310 Depreciation Expense Bal. 24 Bal. Bal. 4 Prepaid Photo Subscriptions 130 0 Bal. Advertising Expense 0 500 Bal. Service Revenue Bal. 400 0 Bal. Depreciation Expense 0 Bal. Supplies Expense 0 510 Photo Expense 0 520 Bal. 530 Bal. Bal. Accounts Payable 200 Bal. 0 Bal. Unearned Revenue Bal. Bal. 210 0 PART 1 Prepare the journal entries for the month of April for Jessis Creative Design. Journal Date Accounts Post. Ref Debit Credit PART 1 Prepare the unadjusted trial balance for Jessis Creative Design. Jessis Creative Design Unadjusted Trial Balance April 30, 20XX Account 100 110 120 130 140 150 200 210 300 310 400 500 Cash Accounts Receivable Supplies Prepaid Photo Subscriptions Prepaid Advertising Equipment Accounts Payable Unearned Revenue Common Stock Dividends Service Revenue Advertising Expense Debit Credit Financial Accounting I Comprehensive Problem PART 1 Journalizing Entries, Posting to the Ledger, and Preparing the Unadjusted Trial Balance You are an employee at a full service bookkeeping and auditing firm called Accounting Solutions. You have just started doing general bookkeeping services for clients when your manager introduces you to your new client, Jessi Jones. Jessi is graduating this quarter with a degree in digital design. She requests help setting up and keeping the books for her new company, Jessi’s Creative Design. Jessi will hire a CPA to file all tax forms and apply with the IRS for a tax ID number. You will keep the books and send them to the CPA and Jessi monthly. Jessi has already created a chart of accounts, numbering her account categories as follows: Assets 100 Liabilities 200 Stockholder’s equity 300 revenue 400 expense 500. Review the chart of accounts tab in the template and familiarize yourself with the accounts to be used in this problem. Next, Jessi numbered the accounts within the categories, being sure to leave numbers open for possible future needs to add accounts. You will not need to add new accounts for this problem. After Jessi’s Creative Design’s first month of operations Jessi delivers to you a stack of invoices, check stubs, receipts and her first VISA-Business bill. You must decipher these in order to enter them into the accounts. After sorting through the source documents, you have made a list of transactions for the first month, April. Required for Part 1 of the Comprehensive Problem, you will complete the following tasks: 1. Journalize the April transactions in a journal. 2. Post the journal entries to the T-accounts. 3. Create an Unadjusted Trial Balance List of April Transactions April 1. Jessi invested $15,000 in the company, resulting in her receipt of Common Stock. April 2. Jessi purchased from Best Buy a computer and printer/ fax/ copier and monitor and software for $4000 on account. She procured a 12-month, no interest credit arrangement and will make monthly payments to Best Buy. You decide this will all be categorized as equipment, since it’s going to be used for a number of periods in the business. April 3. Jessi set up a credit account with an office supply store for supplies, and purchased supplies including printer paper, CDs, and ink for the printer for $200 on account. Jessi gave you the bill but she does not have to make a payment until the end of the month. April 4. Jessi purchased a comfortable desk chair from a department store for $325, paying cash. You decide this will be classified as equipment. April 7. Jessi decided to develop a logo and other advertising materials for her car and customers. She had them printed and had her car painted with the new logo. Jessi paid $300 cash for the advertising. You decide this will be expensed in the current month. (Hint: Since this is advertising that will all be expensed in the current month, what is the correct account to use?) April 8. Jessi negotiated a business transaction with a local restaurant who is just opening. She has contracted with them to work on a logo, menu, and flyers for the restaurant. The restaurant owner made a $200 cash down payment to Jessi to be used against the first month’s bill. Jessi will bill the customer monthly based on her hours worked on the account. (Hint: Jessi hasn’t done any work yet, she has only agreed to do work in the future for the restaurant. This means she has an obligation to either do the work, or give the money back.) April 9. Jessi designed a flyer for a local bakery and was paid cash of $150 for her work. April 12. Jessi designed a CD cover for a friend who is a drummer in a local band. She was paid $800 cash for her work. April 14. Jessi designed some Point Of Sale material for a local coop market. She sent them an invoice for $600 for her work due on the last day of the month. April 22. Jessi set up a subscription account to purchase stock photos for artwork to be used in her design work for $300. This is a prepaid asset until Jessi uses the photos. (Hint: This transaction will use the two following accounts: Cash and Prepaid Photo Subscriptions. You decide how they will be affected.) April 23. Jessi designed and set up a website, email account, etc. for herself. She paid $480 to register everything and will expense $40 per month against this amount. (Hint: Jessi is paying for advertising for a full year today, but will only “use up” $40 of that amount each month-the $40 figure is related to one of the adjusting entries in Part 2, and will not be used in this transaction. It’s extra information right now.) April 24. Jessi wrote a check to herself to cover personal living expenses in the amount of $1,200. (Remember, when the stockholder’s receive money from the business, it is called a dividend. Jessi doesn’t get to call her personal costs business expenses- that would be a violation of the business entity concept.) April 30. Jessi made her first monthly payment on the computer to Best Buy in the amount of $352. (Hint: This is one of the previous charges she made, which she is now paying on account.) April 30. Jessi made a payment for supplies to the supply store of $75. (Hint: This is one of the previous charges she made, and she is now making a payment on account.) April 30. Jessi received a check from the local coop market for $250 in partial payment of the invoice sent to them on April 14th. April 30. Jessi worked on a business card and logo for a local quilting shop. She did not finish the work and there will be more work completed for this company in the next month so she billed them for 15 hours of work completed now at $85 per hour. (This is a new client who has not paid her in advance. Treat this as a new billing to a customer for services performed.) 2. Post the transactions to the T accounts. 3. Prepare an unadjusted trial balance. PART 2 Month End Adjusting Entries, Financial Statements and the Closing Process Jessi is anxious to find out if she has earned any profit the first month of her operations. You have to adjust the accounts to bring them up to date before you can prepare the financial statements. For Part 2 of the Comprehensive Problem, you will complete the following tasks: 1. Journalize the adjusting entries. April 30. The depreciation on the equipment is $110. April 30. The supplies remaining on hand at the end of the month total $140. April 30. The balance in the photo subscriptions web site is $245. (Hint: Of the $300 that she had in the PPD Subscriptions account, how much has now been used up? The expense account to use here is called “Photo Expenses.”) April 30. The monthly amount for advertising via the web site and email account must be expensed. (Hint: Refer to the original entry above for the amount per month to be expensed- remember, she originally paid $480 for one year worth of these services, now she has used up one month worth. What is the entry that adjusts the books for this?) April 30. Jessi determined she performed $1,200 worth of work for the restaurant. She has already received some of the cash on the 8th of the month. Now she needs to invoice the restaurant for the remainder and record the revenue earned. (Hint: Refer to the entry for clues about what she needs to do in the entry for the restaurant- they have already paid her some of this. This entry will affect THREE accounts.) 2. Post the adjusting entries to the T accounts. 3. Prepare an adjusted trial balance. 4. Create the financial statements in proper form. a. Prepare the income statement using the single-step method. b. Prepare the statement of retained earnings. c. Prepare the balance sheet in account form. 5. Journalize the closing entries. 6. Post the closing entries to the T accounts. 7. Prepare a post closing trial balance. Module 2 Demonstration Problem The following are the transactions for Smith Construction for the month of June. The balances from May have been inser During June the following transactions occurred: 1-Jun Smith sold $5000 of common stock to his brother for cash 5-Jun Smith purchased supplies for $500 on account 7-Jun Performed work on an addition and received $20,000 in cash 10-Jun Paid $1200 cash for tools 14-Jun Built a deck for $15,000 and sent a bill to the customer 18-Jun Paid off the accounts payable balance 22-Jun Installed a garage door and opener for $5000 cash 24-Jun Billed a customer $800 for a bid 26-Jun Received $18000 from a customer on account 28-Jun Had a delivery truck repaired $1,000 30-Jun Paid rent of $1000 30-Jun Paid salaries of $7,000 30-Jun Paid $2500 in dividends Requirements: 1 Journalize the transactions (explanations are not necessary). Date June Accounts 1 5 7 10 14 18 22 24 26 28 Cash Common Stock Supplies Accounts Payable Cash Service Revenue Tools Cash Accounts Receivable Service Revenue Accounts Payable Cash Cash Service Revenue Accounts Receivable Service Revenue Cash Accounts Receivable Repair Expense Post Ref. 10 30 14 20 10 40 18 10 12 40 20 10 10 40 12 40 10 12 54 Cash 30 Rent Expense Cash 30 Salary Expense Cash Dividends 30 Cash 2 Post the transactions to the T accounts. Use cell formulas when coping from the journal to the ledger. Use f Cash Bal. 1 7 22 26 13,440 5,000 20,000 5,000 18,000 Bal. 47,240 Supplies Bal. 5 Bal. 10 18 28 30 30 30 10 1,200 1,500 1,000 1,000 7,000 2,500 Accounts Receivable Bal. 3,280 26 14 15,000 24 800 Bal. 1,080 12 18,000 Accounts Payable 18 14 Equipment Bal. 24,000 16 Tools 10 Bal. 50 Rent Expense Bal. 1,000 30 1,000 Bal. 2,000 52 Repair Expense 28 Bal. 1,000 500 1,500 Salary Expense Bal. 3,780 30 7,000 Bal. 10,780 3 10 52 10 50 10 32 10 Prepare a trial balance for Smith Construction as of June 30. Use cell formulas when copying from the ledge Smith Construction Trial Balance 30-Jun Account Debit Credit 10 12 14 16 18 20 30 32 40 50 52 54 Cash Accounts Receivable Supplies Equipment Tools Accounts Payable Common Stock Dividends Service Revenue Salary Expense Rent Expense Repair Expense 47,240 1,080 1,500 24,000 1,200 0 41,000 3,900 51,700 10,780 2,000 1,000 92,700 92,700 <---Final note: the total there are errors in your item from the other an entered a debit balance t-accounts. If those are to see if there is an erro nces from May have been inserted in the T accounts. Debit Credit 5,000 Cash was received, so increase with a debit. Common stock was issued, so increase with 5,000 500 Supplies were purchased so increase with a debit. Paid for by charging, so increase liabil 500 20,000 Cash received so increase with a debit, reason cash was received was due work being co 20,000 1,200 Tools purchased so increase with a debit. Paid for with cash so decrease with a credit. 1,200 15,000 Work performed and billed out to customers, so increase accounts receivable with a deb 15,000 1,500 5,000 800 18,000 1,000 Paid off obligations in full- look to the t-account below. Beginning balance of 1000 + pur 1,500 Decrease accounts payable with a debit, decrease cash with a credit. Cash received so increase with a debit, reason cash was received was due work being co 5,000 Work performed and billed out to customers, so increase accounts receivable with a deb 800 Cash receiveded so increase with a debit. Customer is paying off their prior charges, so r 18,000 Increase repair expense with a debit, decrease cash with a credit. 1,000 1,000 Increase rent expense with a debit, decrease cash with a credit. 1,000 7,000 Increase salary expense with a debit, decrease cash with a credit. 7,000 2,500 Increase dividends with a debit, decrease cash with a credit. 2,500 78,500 78,500 he journal to the ledger. Use formulas when balancing the ledgers Accounts Payable 1,500 Bal. 5 20 1,000 500 Bal. 0 Tools 18 Service Revenue 54 Bal. 1 Bal. 30 36,000 5,000 41,000 Common Stock 1,200 1,200 Repair Expense 1,000 1,000 Bal. 7 14 22 24 Bal. 40 10,900 20,000 15,000 5,000 800 51,700 Dividends Bal. 1,400 30 2,500 Bal. 3,900 when copying from the ledger to the trial balance. 32 For the first transaction, note the color c These illustrate the posting process. Onc preparation for completion of the Unadj Cor Cash and Common Stock, note the color coding of the balances from the T-accounts to the trial balance here. This is where the balances come from. <---Final note: the total debits and credits MUST balance in the trial balance otherwise there are errors in your work. To begin the error correction process, subtract one item from the other and see if that figure looks familiar. Check to be sure you havent entered a debit balance as a credit or vice versa. Also check your math on your t-accounts. If those arent in error, trace your posts from the journal to the t-accounts to see if there is an error in posting. eceived was due work being completed so increase service revenue with a credit. eginning balance of 1000 + purchase on account of 500 on the 8th = 1500 owed. eceived was due work being completed so increase service revenue with a credit. rst transaction, note the color coded items in the Cash and Common Stock accounts. strate the posting process. Once complete, calculate the balances of all T-accounts in ... Purchase answer to see full attachment