Accounting Practices Project In this project, you and a team will illustrate the complete accounting cycle for one period. Teams: Facts we know: 1 Transactions in April 2019: Complete on Page 1 of the Journal April 1: The following assets were received from Millie Leo: Cash, $17,000; Accounts Receivable, $4,500; Supplies, $1,900; Office Equipment $12,000

April 1: Paid 3 months up front to rent on an office, $3,000

April 2: Paid Premiums on property and casualty insurance policies for the year, $2,400

April 4: Received cash from clients as an advance payment for services to be provided in the future, $9,000

April 5: Purchased Additional Office Equipment on account from Office Station Co. for $4,000

April 6: paid cash for a newspaper advertisement, $80

April 10: Received cash from clients on account, $2,500

April 12: Paid Office Station Co. for part of the debt incurred on April 5, $1,500 Complete on Page 2 of the journal April 14: Paid receptionist for two weeks salary, $900

April 17: Recorded Cash from cash clients for fees earned, $7,250

April 18: Paid cash for supplies, $700

April 20: Recorded services provided to clients on account, $2,500

April 24: Recorded cash received from services provided to clients, $7,000

April 26: Paid Receptionist for two weeks salary $900

April 27: Received cash from clients on account, $3.500

April 29: Paid telephone bill for April $90 April 30: Paid Electricity Bill for April, $140 Complete on Page 3 of the Journal

April 30: Recorded cash from cash clients for fees earned for the period April 25-30, $3,500

April 30: Recorded Services provided on account for the remainder of April, $1,500

April 30: Millie Withdrew $15,000 for personal use Step 1: Analyzing and recording transactions The first step in the accounting cycle is to analyze and record transactions in the journal using the double-entry accounting system.

Carefully read the description of the transaction to determine whether an asset, liability, owners equity, revenue, expense, or drawing account is affected. For each account affected by the transaction, determine whether the account increases or decreases. Determine whether each increase or decrease should be recorded as a debit or a credit following the rules of debit and credit shown in chapter 2. Record the transaction as a journal entry.

The companys chart of accounts is useful in determining which accounts are affected by each transaction. (These are the ONLY accounts you can use.)

Millie Consulting Chart of Account

11 Cash

31 Millie Leo, Capital

12 Accounts Receivable

32 Millie Leo, Drawing

14 Supplies

41 Fees earned

15 Prepaid Rent

51 Salary Expense

16 Prepaid Insurance

52 Rent Expense

18 Office Equipment

53 Supplies Expense

19 Accumulated Depreciation

54 Depreciation Expense

21 Accounts Payable

55 Insurance Expenses

22 Salaries Payable

58 Utilities Expense

23 Unearned Fees

59 Advertising Expense

Step 2: Posting Transactions to the Ledger Periodically, the transactions recorded in the journal are posted to the accounts in the ledger. The debits and credits for each journal entry are posted to the accounts in the order in which they occur in the journal. Journal entries are posted to the accounts using the following four steps: The date is entered in the Date column of the account. The Amount is entered into the Debit or Credit column of the account. The journal page number is entered in the posting Reference Column. The Account number is entered in the posting Reference (Post. Ref.) Column in the journal entry.

Step 3. Preparing an Unadjusted Trial Balance An unadjusted trial balance is prepared to determine whether any errors have been made in posting the debits and credits to the ledger. The unadjusted trial balance does not provide complete proof of the accuracy of the ledger. It indicates only that the debits and the credits are equal. This proof is of value, because errors often affect the equality of debits and credits. If the two totals of a trial balance are not equal an error has occurred.

Step 4 & 6: Assembling and Analyzing Adjustment Data (Skip Step 5) Before the financial statements can be prepared, the accounts must be updated. The four types of accounts that normally require adjustment include prepaid expenses, unearned revenue, accrued revenue, and accrued expenses. In addition, depreciation expense must be recorded for fixed assets other than land. The following data have been assembled on April 30, 2019 for analysis of adjustments for Millie Consulting, please Journalize and post these adjusting entries. Complete the journal entries on page 4 of the journal (The adjusting journal entries tab) Insurance expired during April is $200 Supplies on Hand on April 30 are $1,200 Depreciation of office equipment for April is $267 Accrued receptionist salary on April 30 is $120 Rent expired during April is $1,000 Services paid for but still to be provided on April 30 are valued at $2,500

Step 7: Preparing an Adjusted Trial Balance After the adjustments have been journalized and posted, an adjusted trial balance is prepared to verify the equality of the total of the debit and credit balances. This is the last step before preparing the financial statements. If the adjusted trial balance does not balance, an error has occurred and must be found and corrected.

Step 8: Preparing the Financial Statements The most important outcome of the accounting cycle is the financial statements. The income statement is prepared first, followed by the statement of owners equity and then the balance sheet. The statements can be prepared directly from the adjusted trial balance or the ledger. The net income or net loss shown on the income statement is reported on the statement of owners equity along with any additional investments by the owner and any withdrawals. The ending owners capital is reported on the balance sheet and is added with total liabilities to equal total assets.

Step 9: Journalizing and posting the closing entries As described in chapter four, closing entries are required at the end of an accounting period. Please complete the closing entries in the journal and post the closing entries to the correct accounts. Complete the journal entries on page 5 of the journal (the closing journal entries tab). Step 10: Preparing a Post-Closing Trial Balance A post-closing trial balance is prepared after the closing entries have been posted. The purpose of the post-closing trial balance is to verify that the ledger is in the balance at the beginning of the next period. The accounts and amounts in the post-closing trial balance should agree exactly with the amounts listed on the balance sheet at the end of the period