Background Information Cinder Blackburn has long been successful at repairing electronic devices, big or small, and decided to finally make a business out of it. In November 2020, she started her own business called Cinder's Repair Shop. The shop is located in an industrial warehouse complex in San Jose where Cinder rents a small workspace within one of the bigger warehouses. Cinder has had success so far completing many projects for clients (enough to work 30 hours a week), receiving inquiries from potential new customers, and even generating a profit in the first month. Below are the financial statements for the company's first month of operations. Cinder Repair Shop Cinder Repair Shop Income Statement Statement of Retained Earnings For the Month Ended November 30, 2020 For the Month Ended November 30, 2020 Revenues Beginning retained earnings $ Repair fees earned S 1,250 Interest earned Add: Net income Total revenue Less: Dividends Ending retained earnings 800 750 75 675 $ 2,050 $ Expenses Rent expense Salaries expense Utilities expense Total expenses 850 400 50 1,300 Net income $ 750 Cinder Repair Shop Balance Sheet November 30, 2020 Assets Cash Accounts receivable Supplies Equipment Total assets $ 1,440 400 900 6,000 8,740 $ Cinder has had success so far completing many projects for clients (enough to work 30 hours a week), receiving inquiries from potential new customers, and even generating a profit in the first month. Below are the financial statements for the company's first month of operations. Gintar per Shoe Cedar perhap Imam For the Month Ended November 20, 2020 Sunt of Red Earnings For the Month Ended bar 10, 2020 Reparere 2250 Inging and caring 5 dutcom 750 $ 2,000 Endine banda Rese Swers 40 300 Tata 1. Cinderen her M NO 5 Ch $MO Siap 500 Total 5 5 e| T 225 ES B.IS Tamil Towe For the first month, Cinder had a friend assist her with her accounting. That friend has since found a full- time job and is no longer able to assist her, so she has turned to you. She knows that you are greatly enjoying your accounting class and thinks you will be able to assist her. You feel confident that you are up to the task and agree to go through the financial information, prepare the necessary journal entries, prepare the financial statements, and ready the books for the upcoming new year. Chart of Accounts Here is Cinder's chart of accounts as (prepared by the previous accountant). After some research you determine this to be sufficient for the company at this point. Acct. No. Account Name 101 Cash 104 Accounts receivable 110 Prepaid insurance 115 Supplies 140 Equipment 141 Accumulated depreciation equipment 201 Accounts payable 203 Salaries payable 205 Unearned revenue 240 Interest payable 250 Loan payable 301 Common stock 302 Retained earnings 305 Dividends 350 Income summary Acct. No. Account Name 401 Repair fees earned 405 Interest earned 601 Salaries expense 610 Rent expense 611 Utilities expense 615 Insurance expense 620 Delivery expense 640 Supplies expense 650 Advertising expense 660 Depreciation expense 690 Interest expense Financial Information The following information was provided to you from Cinder in an email. It is important to note that since Cinder is not an accountant, she does not know exactly what information you need to prepare the financial statements. Therefore, it is your responsibility to use your knowledge of financial accounting to determine the relevant accounting information. 2: 4: Dec. 1: I invested $500 cash and $1,580 of supplies into the business. 1: Purchased a 12-month business insurance policy valued at $1,625 but I received a new customer discount and only had to pay $1,200! Coverage begins immediately. Took out small business loan of $5,000 from Commonwealth Bank. 3: Paid landlord $875 for December rent on business space for repair shop. Customer Kai Kingsman brought in an old droid for repair. I started work immediately and it took me two weeks to complete the repair. I provided Kai an invoice for $10,900 on December 18h when he came into pick up the repaired droid. 5: Paid my roommate $375 for the December rent on my rented room in the Phoenix apartment building. 6: Purchased $380 of supplies with cash from Circuits 'R' Us. 8: I paid my outstanding November Accounts Payable balance. 14: Customer Sasha Chang dropped off her portscreen for repair along with a cash prepayment of $50. 15: Paid assistant's salary of $1,200. I have one worker, Iko, and she is amazing! I pay her every two weeks on Friday. 16: Purchased $440 of supplies on account from Not Your Mother's Technology Warehouse. 18: Complete Sasha Chang's repair. Total repair charge was $75. Sasha paid the remaining balance when she came to pickup the portscreen on December 18. 21: I was interviewed by the local paper for a piece regarding new businesses in the area. Usually, the paper charges $85 to an ad but this article will run free of charge and be a great source of advertising! 22: Customer Dr. Erland prepaid $4,000 for a Med- Droid he plans to deliver on January 31 for repair. 10th. 22: Customer Dr. Erland prepaid $4,000 for a Med- Droid he plans to deliver on January 3rd for repair. 23: Met with Government Advisor Torin Korr to discuss future potential work regarding installing a recording/reporting system for the local government. The potential worth of this contract could be as much as $45,000. The government will decide in the new year whether or not to move forward with the project. 26: Received Kai Kingsman's complete cash payment for December 18th billed work. 27: I took money out of $1,000 for myself. 31: Received the December utility bill. It is for $95. I will pay it next month since it is not due until January Adjusting Entry Information At the end of December, the following information is determined: ..One month of the business insurance coverage has expired. h. At the end of December, $880 of the supplies have been used. Iko is paid every two weeks on Friday. Since December 31" fell on a Thursday, the majority of her biweekly pay ($1,080) is unrecorded at December 31 4. The equipment is expected to last 5 years and is expected to have no residual value. Depreciation is recorded at the end of the year. Cinder had completed a repair job worth $3,000 at the end of the month but hadn't had a chance to bill customer Linh Adri for it yet. The loan from Commonwealth Bank carries an annual interest rate of 9%. Requirements 1.) Using the guidelines for accrual-basis accounting, identify the December events that represent financial transactions. 2.) Using the accrual basis of accounting, journalize the December transactions. 3.) Post the journal entries to general ledger accounts. T- accounts may be substituted for the general ledger accounts. Tip-the Retained Earnings balance (account 302) should be $o. 4.) Prepare the unadjusted trial balance at December 31. 5.) Journalize the adjusting entries. Show your calculations where necessary (like items a, d & f) and round to whole numbers. 6.) Post the adjusting entries. 7.) Prepare an adjusted trial balance at December 31. 8.) Prepare an income statement, a statement of retained earnings, and a balance sheet for the business for the two-month period ending December 31, 2020. 9.) Journalize the closing entries at December 31, 2020. 10.) Post the closing entries. 11.) Prepare a post-closing trial balance at December 31. 12.) Prepare your typed responses to the questions on page 6. Typed Responses Please provide your responses to the following prompts. Your responses should be typed, in complete sentences and free of spelling or grammatical errors. Use MLA format when citing any sources. Address your responses directly to the owner, Cinder, remembering that she has no accounting or business training (meaning define and explain any accounting terms or concepts)! 1.) List one positive item you noticed after preparing and reviewing Cinder's financial statements. Tip -the positive item can be for November, December or the two-month period. Excellent responses will use external, credible sources to support their point. 2.) Identify at least two concerns you have after preparing and reviewing Cinder's financial statements. Tip -remember to review November's financial statements as well for any changes in December that concern you. Excellent responses will use external, credible sources to support their concerns. 3.) Provide Cinder with at least one business recommendation to strengthen her new business. Excellent responses will use external, credible sources to support their concerns. Provide Cinder with at least one accounting recommendation to help her new business. Excellent responses will use external, credible sources to support their concerns. 4.) Grading Rubric ecial Statements & Workpapere: Submission reflects accurate values, impeccable format is shown, and no errors are present Responses: Student responses follow requirements detailed in project handout. External sources, such as textbooks, credible ites, newspaper articles, (3-5 external sources) will be cited as independent support of responses. Responses will be well-written, to follow, and written at the appropriate level. Student responses will show a deep understanding of the class material through cation of class concepts. Critical thinking will be demonstrated through the student's observations of and recommendations for the Background Information Cinder Blackburn has long been successful at repairing electronic devices, big or small, and decided to finally make a business out of it. In November 2020, she started her own business called Cinder's Repair Shop. The shop is located in an industrial warehouse complex in San Jose where Cinder rents a small workspace within one of the bigger warehouses. Cinder has had success so far completing many projects for clients (enough to work 30 hours a week), receiving inquiries from potential new customers, and even generating a profit in the first month. Below are the financial statements for the company's first month of operations. Cinder Repair Shop Cinder Repair Shop Income Statement Statement of Retained Earnings For the Month Ended November 30, 2020 For the Month Ended November 30, 2020 Revenues Beginning retained earnings $ Repair fees earned S 1,250 Interest earned Add: Net income Total revenue Less: Dividends Ending retained earnings 800 750 75 675 $ 2,050 $ Expenses Rent expense Salaries expense Utilities expense Total expenses 850 400 50 1,300 Net income $ 750 Cinder Repair Shop Balance Sheet November 30, 2020 Assets Cash Accounts receivable Supplies Equipment Total assets $ 1,440 400 900 6,000 8,740 $ Cinder has had success so far completing many projects for clients (enough to work 30 hours a week), receiving inquiries from potential new customers, and even generating a profit in the first month. Below are the financial statements for the company's first month of operations. Gintar per Shoe Cedar perhap Imam For the Month Ended November 20, 2020 Sunt of Red Earnings For the Month Ended bar 10, 2020 Reparere 2250 Inging and caring 5 dutcom 750 $ 2,000 Endine banda Rese Swers 40 300 Tata 1. Cinderen her M NO 5 Ch $MO Siap 500 Total 5 5 e| T 225 ES B.IS Tamil Towe For the first month, Cinder had a friend assist her with her accounting. That friend has since found a full- time job and is no longer able to assist her, so she has turned to you. She knows that you are greatly enjoying your accounting class and thinks you will be able to assist her. You feel confident that you are up to the task and agree to go through the financial information, prepare the necessary journal entries, prepare the financial statements, and ready the books for the upcoming new year. Chart of Accounts Here is Cinder's chart of accounts as (prepared by the previous accountant). After some research you determine this to be sufficient for the company at this point. Acct. No. Account Name 101 Cash 104 Accounts receivable 110 Prepaid insurance 115 Supplies 140 Equipment 141 Accumulated depreciation equipment 201 Accounts payable 203 Salaries payable 205 Unearned revenue 240 Interest payable 250 Loan payable 301 Common stock 302 Retained earnings 305 Dividends 350 Income summary Acct. No. Account Name 401 Repair fees earned 405 Interest earned 601 Salaries expense 610 Rent expense 611 Utilities expense 615 Insurance expense 620 Delivery expense 640 Supplies expense 650 Advertising expense 660 Depreciation expense 690 Interest expense Financial Information The following information was provided to you from Cinder in an email. It is important to note that since Cinder is not an accountant, she does not know exactly what information you need to prepare the financial statements. Therefore, it is your responsibility to use your knowledge of financial accounting to determine the relevant accounting information. 2: 4: Dec. 1: I invested $500 cash and $1,580 of supplies into the business. 1: Purchased a 12-month business insurance policy valued at $1,625 but I received a new customer discount and only had to pay $1,200! Coverage begins immediately. Took out small business loan of $5,000 from Commonwealth Bank. 3: Paid landlord $875 for December rent on business space for repair shop. Customer Kai Kingsman brought in an old droid for repair. I started work immediately and it took me two weeks to complete the repair. I provided Kai an invoice for $10,900 on December 18h when he came into pick up the repaired droid. 5: Paid my roommate $375 for the December rent on my rented room in the Phoenix apartment building. 6: Purchased $380 of supplies with cash from Circuits 'R' Us. 8: I paid my outstanding November Accounts Payable balance. 14: Customer Sasha Chang dropped off her portscreen for repair along with a cash prepayment of $50. 15: Paid assistant's salary of $1,200. I have one worker, Iko, and she is amazing! I pay her every two weeks on Friday. 16: Purchased $440 of supplies on account from Not Your Mother's Technology Warehouse. 18: Complete Sasha Chang's repair. Total repair charge was $75. Sasha paid the remaining balance when she came to pickup the portscreen on December 18. 21: I was interviewed by the local paper for a piece regarding new businesses in the area. Usually, the paper charges $85 to an ad but this article will run free of charge and be a great source of advertising! 22: Customer Dr. Erland prepaid $4,000 for a Med- Droid he plans to deliver on January 31 for repair. 10th. 22: Customer Dr. Erland prepaid $4,000 for a Med- Droid he plans to deliver on January 3rd for repair. 23: Met with Government Advisor Torin Korr to discuss future potential work regarding installing a recording/reporting system for the local government. The potential worth of this contract could be as much as $45,000. The government will decide in the new year whether or not to move forward with the project. 26: Received Kai Kingsman's complete cash payment for December 18th billed work. 27: I took money out of $1,000 for myself. 31: Received the December utility bill. It is for $95. I will pay it next month since it is not due until January Adjusting Entry Information At the end of December, the following information is determined: ..One month of the business insurance coverage has expired. h. At the end of December, $880 of the supplies have been used. Iko is paid every two weeks on Friday. Since December 31" fell on a Thursday, the majority of her biweekly pay ($1,080) is unrecorded at December 31 4. The equipment is expected to last 5 years and is expected to have no residual value. Depreciation is recorded at the end of the year. Cinder had completed a repair job worth $3,000 at the end of the month but hadn't had a chance to bill customer Linh Adri for it yet. The loan from Commonwealth Bank carries an annual interest rate of 9%. Requirements 1.) Using the guidelines for accrual-basis accounting, identify the December events that represent financial transactions. 2.) Using the accrual basis of accounting, journalize the December transactions. 3.) Post the journal entries to general ledger accounts. T- accounts may be substituted for the general ledger accounts. Tip-the Retained Earnings balance (account 302) should be $o. 4.) Prepare the unadjusted trial balance at December 31. 5.) Journalize the adjusting entries. Show your calculations where necessary (like items a, d & f) and round to whole numbers. 6.) Post the adjusting entries. 7.) Prepare an adjusted trial balance at December 31. 8.) Prepare an income statement, a statement of retained earnings, and a balance sheet for the business for the two-month period ending December 31, 2020. 9.) Journalize the closing entries at December 31, 2020. 10.) Post the closing entries. 11.) Prepare a post-closing trial balance at December 31. 12.) Prepare your typed responses to the questions on page 6. Typed Responses Please provide your responses to the following prompts. Your responses should be typed, in complete sentences and free of spelling or grammatical errors. Use MLA format when citing any sources. Address your responses directly to the owner, Cinder, remembering that she has no accounting or business training (meaning define and explain any accounting terms or concepts)! 1.) List one positive item you noticed after preparing and reviewing Cinder's financial statements. Tip -the positive item can be for November, December or the two-month period. Excellent responses will use external, credible sources to support their point. 2.) Identify at least two concerns you have after preparing and reviewing Cinder's financial statements. Tip -remember to review November's financial statements as well for any changes in December that concern you. Excellent responses will use external, credible sources to support their concerns. 3.) Provide Cinder with at least one business recommendation to strengthen her new business. Excellent responses will use external, credible sources to support their concerns. Provide Cinder with at least one accounting recommendation to help her new business. Excellent responses will use external, credible sources to support their concerns. 4.) Grading Rubric ecial Statements & Workpapere: Submission reflects accurate values, impeccable format is shown, and no errors are present Responses: Student responses follow requirements detailed in project handout. External sources, such as textbooks, credible ites, newspaper articles, (3-5 external sources) will be cited as independent support of responses. Responses will be well-written, to follow, and written at the appropriate level. Student responses will show a deep understanding of the class material through cation of class concepts. Critical thinking will be demonstrated through the student's observations of and recommendations for the