Details of this Paper

Accounting 1 - Comprehensive Problem

Description

solution


Question

Financial Accounting I Comprehensive Problem;PART 1;After your last final this quarter you meet a student with whom you graduated high school. You get to talking and find she is graduating this quarter in digital design. When she finds out you have just finished Financial Accounting I she asks if you will help set up and keep the books for her new company, Jessi?s Creative Design. Accounting was not included as part of Jessi?s program and she really needs some help. You did very well in Financial Accounting I and agree to get her started. 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 monthly send them to the CPA.;Steps in the process;1. Jessi creates a chart of accounts, numbering her account categories-assets 100, liabilities 200, stockholders? equity 300, revenue 400, and expense 500. Review the chart of accounts tab and familiarize yourself with the accounts to be used in this problem.;2. Next, Jessi numbers 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.;3. After Jessi?s Creative Design?s first month of operations your friend 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 make a list of transactions for the first month, April. For Part 1 of the Comprehensive Problem, you will complete the following tasks;Enter the transactions into the journal. Post the transactions to the T accounts. Prepare an unadjusted trial balance.;April 1. Jessi invested $10,000 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 $3500 on account. She got a 12 month no interest credit arrangement and will make monthly payments to Best Buy. You decide this will all be equipment.;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 month end.;April 4. Jessi purchased a comfortable desk chair from a department store for $250, paying cash. You decide this will be equipment.;April 7. Jessi?s CPA gave her some tax advice so she 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 $500 cash for the advertising. You decide this will be expensed in the current month. (Since this is advertising that will all be expensed in the account to use?);April 8. Jessi negotiated a business transaction with a local Mexican Restaurant just opening. She will work on a logo, menu, and flyers for the restaurant. The restaurant owner paid $200 down 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.;April 12. Jessi designed a CD cover for a friend who is a drummer in a local band. She was paid $400 cash for her work.;April 14. Jessi designed some Point Of Sale material for a local coop market. She billed them for $500 for her work.;April 22. Jessi set up accounts to purchase stock photos for artwork and subscriptions $200. This is a prepaid asset until Jessi uses the photos. (Hint: This transaction will use the two following accounts: Cash and Prepaid Subscriptions. You decide how they will be affected.);April 23. Jessi designed and set up a website, email account, etc for herself. She paid $240 to register everything and will expense $20 per month against this amount. (Hint: Jessi is paying for advertising for a full year today, but will only ?use up? $20 of that amount each month-the $20 figure is related to one of the adjusting entries below, and will not be used in this transaction. It?s extra information right now.);April 24. Jessi wrote a check to herself to cover her rent and car insurance. $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 rent and car insurance 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, $292. (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 for this company so she billed them for 15 hours at $75 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.);PART 2;Month End Adjusting Entries;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;Journalize the adjusting entries. Post the adjusting entries to the T accounts. Prepare an adjusted trial balance.;Remember, the date of ALL of the adjusting entries will be the last day of the current month, April 30th.;a. The depreciation on the equipment is $104.;b. The supplies on hand at the end of the month are $150.;c. The balance in the subscriptions web site is $175. (Hint: Of the $200 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?- this isn?t apparent based on other learned information this term, so I?m giving you this one.);d. The monthly amount for 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 $240 for these services, now she has used up one month worth. What is the entry that adjusts the books for this?);e. Jessi determined she performed $1,000 worth of work for the Mexican restaurant. (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.);PART 3;Financial Statements and Closing Process;Now that the adjusting entries have been completed, posted, and an adjusted trial balance has been completed it is time to prepare the financial statements and go through the closing process. For Part 3 of the Comprehensive Problem, you will complete the following tasks;Prepare the Income Statement, Statement of Retained Earnings, and Balance Sheet for April. Prepare the closing entries. Post the closing entries to the t-accounts. Prepare a post-closing trial balance.

 

Paper#81781 | Written in 18-Jul-2015

Price : $37
SiteLock