Company Accounting Workbook Use accepted accounting principles to follow and record your business transactions for a three-month period from the first step of the accounting cycle through the reporting process. You will build on your work from Milestones One and Two to complete your workbook using the Company Accounting Workbook Template (linked in the What to Submit section), 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 ledger balances and adjust revenue and expense accounts, as necessary, to ensure that revenues and expenses are reported in the appropriate period under the accrual accounting method. The adjusted trial balance will be used to prepare the income statement the 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 1. Record Financial Data: Use accepted accounting principles to accurately capture business transactions for October, November, and December using the data provided in the accounting data appendix (inked in the Supporting Materials section). You will need to address the following: A. Accuracy: Prepare entries that are accurate in that they fully reflect the appropriate information B. Completeness: Prepare entries that are complete for each month, including transferring posted entries to accounts C. Inventory Valuation: Prepare entries for the month of December to reflect the new line of products offered by the company, which Includes using the data from the "Inventory Valuation" tab of the company accounting workbook 2. Accrual Basis: Apply the accrual basis of accounting and prepare adjusting entries to ensure accurate accounting for expenses that lack transactions in the current period, A Unadjusted Trial Balance: Prepare the unadjusted trial balance portion of the Trial Balance" tab of the company accounting workbook ensuring that the total debits and credits match B. Adjusting Entries: Prepare the "Adjusting Entries' tab of the company accounting workbook that trial balance on the "Trial Balance tab, ensuring that the debit and credit totais match Prepare the unadjusted trial balance portion of the "Trial Balance" tab of the company accounting workbook. ensuring that the total debits and credits match. B. Adjusting Entries: Prepare the 'Adjusting Entries" tab of the company accounting workbook. C. Adjusted Trial Balance: Prepare the adjusted trial balance on the Trial Balance" tab, ensuring that the debit and credit totaks match 3. Financial Statements: Create financial statements using appropriate methods based on accepted accounting principles. Be sure to prepare these financial statements in the order listed, as there are important interdependencies among them, A. Income Statement: Prepare the income statement using the adjusted trial balance. B. Statement of Owner's Equity: Prepare the statement of owner's equity using the adjusted trial balance. C. Balance Sheet: Prepare the balance sheet using the adjusted trial balance. D. Closing Entries: Complete the "Closing Entries" tab of the company accounting workbook by closing all temporary income statement amounts to create closing entries. E. Post-Closing Trial Balance: Prepare the "Post-Closing Trial Balance" tab of the company accounting workbook in preparation for the next accounting period Summary Report After you have completed 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. 4. Summary: Write a summary of what the financial statements indicate about the company's financial health and performance. A. Purpose: What kind of information would these financial statements provide to various aspects of the business? B. Analysis: What is the company's cash position, its net income as a percentage of sales, and its current liabilities to current assets position What to Submit o Liability Accounts Equity Accounts Art Act Auct 101 Notes Payable 102 Accounts Payable 103 Wages Payable 104 Interest Payable 105 106 107 108 201 common stock 202 Dividendi 203 Cost of Goods Sold 201 101 102 100 Asset Accounts 4 5 Cash Baking Supplies Prepaid Rent Prepaid Insurance 9 Baking Equipment 10 Office Supplies 11 Accounts Receivable 12 Accumulated Depreciation 1 Merchandise Inventory 14 15 15 17 18 19 20 21 22 23 109 Revenue Accounts Bakery Sales Merchandise Sales Aucto 401 402 Expense Accounts Acet Baking Supplies Expense Rent Expense Insurance Expense Misc. Expense Business License Expense Advertising Expense Wages Expense 501 502 503 50 505 506 507 25 26 Chart of Accounts October Journal November Journal Entre December Journal 1. The following events occurred in October: October 1: The business owner used $25,000 from their personal savings account to buy common stock in their company October 1: Purchased $8,500 worth of baking supplies from vendor, on account October 3: The company borrowed $10,000 in cash, in exchange for a two year, 6% note payable. Interest and the principal are repayable at maturity. October 7: Entered into a lease agreement for bakery space. The agreement is for one year. The rent is $1,500 per month the last month's rent payment of $1,500 is required at the time of the lease agreement. The payment was made in cash. Lease period is effective October 1 of this year through September 30 of the next. October 10: Paid $375 to the county for a business license. October 11: Purchased a cash register for $250 (deemed to be not material enough to qualify as depreciable equipment). October 13: The owner has baking equipment, including an oven and mixer, which they have been using for their home-based business and will now start using in the bakery. You estimate that the equipment is currently worth $5,000, and you transfer the equipment into the business in exchange for additional common stock. The equipment has a five-year useful life. October 13: Paid $200 for business cards and flyers to use for advertising. October 14: Paid $300 for office supplies. October 15: Hired a part-time helper to be paid $12 per hour. One pay period is the first of the month through the fifteenth, and the other is the sixteenth through the end of the month. Paydays are the twentieth for the first pay period and the fifth of the following month for the second pay nerind, (Ne entry required on this date--for informational purposes only.) October 14: Paid $300 for office supplies. October 15: Hired a part-time helper to be paid $12 per hour. One pay period is the first of the month through the fifteenth, and the other is the sixteenth through the end of the month. Paydays are the twentieth for the first pay period and the fifth of the following month for the second pay period. (No entry required on this date--for informational purposes only.) October 30: Received telephone bill for October in amount of $75. Payment is due on November 10. October 31: Paid $1,200 for a 12-month insurance policy. Policy effective dates are November 1 through October 31. October 31: Accrued wages earned for employee for period of October 16 through October 31. (See Wage Calculation Data table at the end of this document.) October 31: Total October bakery sales were $15,000 ($5,000 of these sales on accounts receivable). 2. The following events occurred in November: November 5: Paid employee for period ending October 31. November 8: Received payments from customers toward accounts receivable in amount of $3,800. November 10: Paid October telephone bill. November 15: Purchased additional baking supplies in amount of $5,000 from vendor, on account. November 15: Accrued wages earned for employee from period of November 1 through November 15. (See Wage Calculation Data table at the end of this document.) November 15: Paid rent on bakery space. November 18: Received payments from customers toward accounts receivable in amount of $1,000. November 20: Paid $8,500 toward baking supplies vendor payable. November 20: Paid employee for period ending November 15. November 22: Purchased $300 in office supplies. November 30: Received telephone bill for November in amount of $75. Payment is due on December 10. November 30: Accrued wages earned for employee for period of November 16 through November 30. (See Wage Calculation Data table at the end of this document.) November 30: November bakery sales total was $20,000 ($7,500 of this total on accounts receivable). December 8: Received payments from customers toward accounts receivable in amount of $4,000. December 10: Paid November telephone bill. December 11: Purchased baking supplies in amount of $7,000 from vendor on account. December 13: Paid on supplies vendor account in amount of $5,000. December 15: Accrued employee wages for period of December 1 through December 15. December 15: Paid rent on bakery space $1,500. December 15: Recorded merchandise sales transaction. See the "Inventory Valuation" tab for details. December 15: Recorded impact of sales transaction on COGS and the inventory asset. See the "Inventory Valuation" tab for details. December 20: Paid employee for period ending December 15, December 20: Purchased merchandise inventory for resale to customers. See the "Inventory Valuation" tab for details. December 24: Recorded sales of merchandise to customers. See the "Inventory Valuation" tab for details. December 24: Recorded impact of sales transaction on COGS and the inventory asset. See the "Inventory Valuation" tab for details. December 30: Purchased merchandise inventory for resale to customers. See the "Inventory Valuation" tab for details. December 31: Accrued employee wages for period of December 16 through December 31. D. Focus ha December 24: Recorded impact of sales transaction on COGS and the inventory asset. See the "Inventory Valuation" tab for details. December 30: Purchased merchandise inventory for resale to customers. See the "Inventory Valuation" tab for details. December 31: Accrued employee wages for period of December 16 through December 31. December 31: Total December bakery sales were $25,000 ($6,000 of these sales on accounts receivable) 4. On December 31, the following adjustments must be made: Depreciation of baking equipment transferred to company on October 13. Assume half month of depreciation in October using the straight-line method. Accrue interest for note payable. Assume a full month of interest for October. (6% annual interest on $10,000 loan) Record insurance used for the year. Actual baking supplies on hand as of December 31 are $1,100. Office supplies on hand as of December 31 are $50. . . Wage Calculation Data Month Hours Rate 12 10 40 12 31-Oct 15-Nov 30-Nov 15-Dec Pay 120 480 420 456 480 35 12 12 38 31-Dec 40 12 Company Accounting Workbook Use accepted accounting principles to follow and record your business transactions for a three-month period from the first step of the accounting cycle through the reporting process. You will build on your work from Milestones One and Two to complete your workbook using the Company Accounting Workbook Template (linked in the What to Submit section), 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 ledger balances and adjust revenue and expense accounts, as necessary, to ensure that revenues and expenses are reported in the appropriate period under the accrual accounting method. The adjusted trial balance will be used to prepare the income statement the 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 1. Record Financial Data: Use accepted accounting principles to accurately capture business transactions for October, November, and December using the data provided in the accounting data appendix (inked in the Supporting Materials section). You will need to address the following: A. Accuracy: Prepare entries that are accurate in that they fully reflect the appropriate information B. Completeness: Prepare entries that are complete for each month, including transferring posted entries to accounts C. Inventory Valuation: Prepare entries for the month of December to reflect the new line of products offered by the company, which Includes using the data from the "Inventory Valuation" tab of the company accounting workbook 2. Accrual Basis: Apply the accrual basis of accounting and prepare adjusting entries to ensure accurate accounting for expenses that lack transactions in the current period, A Unadjusted Trial Balance: Prepare the unadjusted trial balance portion of the Trial Balance" tab of the company accounting workbook ensuring that the total debits and credits match B. Adjusting Entries: Prepare the "Adjusting Entries' tab of the company accounting workbook that trial balance on the "Trial Balance tab, ensuring that the debit and credit totais match Prepare the unadjusted trial balance portion of the "Trial Balance" tab of the company accounting workbook. ensuring that the total debits and credits match. B. Adjusting Entries: Prepare the 'Adjusting Entries" tab of the company accounting workbook. C. Adjusted Trial Balance: Prepare the adjusted trial balance on the Trial Balance" tab, ensuring that the debit and credit totaks match 3. Financial Statements: Create financial statements using appropriate methods based on accepted accounting principles. Be sure to prepare these financial statements in the order listed, as there are important interdependencies among them, A. Income Statement: Prepare the income statement using the adjusted trial balance. B. Statement of Owner's Equity: Prepare the statement of owner's equity using the adjusted trial balance. C. Balance Sheet: Prepare the balance sheet using the adjusted trial balance. D. Closing Entries: Complete the "Closing Entries" tab of the company accounting workbook by closing all temporary income statement amounts to create closing entries. E. Post-Closing Trial Balance: Prepare the "Post-Closing Trial Balance" tab of the company accounting workbook in preparation for the next accounting period Summary Report After you have completed 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. 4. Summary: Write a summary of what the financial statements indicate about the company's financial health and performance. A. Purpose: What kind of information would these financial statements provide to various aspects of the business? B. Analysis: What is the company's cash position, its net income as a percentage of sales, and its current liabilities to current assets position What to Submit o Liability Accounts Equity Accounts Art Act Auct 101 Notes Payable 102 Accounts Payable 103 Wages Payable 104 Interest Payable 105 106 107 108 201 common stock 202 Dividendi 203 Cost of Goods Sold 201 101 102 100 Asset Accounts 4 5 Cash Baking Supplies Prepaid Rent Prepaid Insurance 9 Baking Equipment 10 Office Supplies 11 Accounts Receivable 12 Accumulated Depreciation 1 Merchandise Inventory 14 15 15 17 18 19 20 21 22 23 109 Revenue Accounts Bakery Sales Merchandise Sales Aucto 401 402 Expense Accounts Acet Baking Supplies Expense Rent Expense Insurance Expense Misc. Expense Business License Expense Advertising Expense Wages Expense 501 502 503 50 505 506 507 25 26 Chart of Accounts October Journal November Journal Entre December Journal 1. The following events occurred in October: October 1: The business owner used $25,000 from their personal savings account to buy common stock in their company October 1: Purchased $8,500 worth of baking supplies from vendor, on account October 3: The company borrowed $10,000 in cash, in exchange for a two year, 6% note payable. Interest and the principal are repayable at maturity. October 7: Entered into a lease agreement for bakery space. The agreement is for one year. The rent is $1,500 per month the last month's rent payment of $1,500 is required at the time of the lease agreement. The payment was made in cash. Lease period is effective October 1 of this year through September 30 of the next. October 10: Paid $375 to the county for a business license. October 11: Purchased a cash register for $250 (deemed to be not material enough to qualify as depreciable equipment). October 13: The owner has baking equipment, including an oven and mixer, which they have been using for their home-based business and will now start using in the bakery. You estimate that the equipment is currently worth $5,000, and you transfer the equipment into the business in exchange for additional common stock. The equipment has a five-year useful life. October 13: Paid $200 for business cards and flyers to use for advertising. October 14: Paid $300 for office supplies. October 15: Hired a part-time helper to be paid $12 per hour. One pay period is the first of the month through the fifteenth, and the other is the sixteenth through the end of the month. Paydays are the twentieth for the first pay period and the fifth of the following month for the second pay nerind, (Ne entry required on this date--for informational purposes only.) October 14: Paid $300 for office supplies. October 15: Hired a part-time helper to be paid $12 per hour. One pay period is the first of the month through the fifteenth, and the other is the sixteenth through the end of the month. Paydays are the twentieth for the first pay period and the fifth of the following month for the second pay period. (No entry required on this date--for informational purposes only.) October 30: Received telephone bill for October in amount of $75. Payment is due on November 10. October 31: Paid $1,200 for a 12-month insurance policy. Policy effective dates are November 1 through October 31. October 31: Accrued wages earned for employee for period of October 16 through October 31. (See Wage Calculation Data table at the end of this document.) October 31: Total October bakery sales were $15,000 ($5,000 of these sales on accounts receivable). 2. The following events occurred in November: November 5: Paid employee for period ending October 31. November 8: Received payments from customers toward accounts receivable in amount of $3,800. November 10: Paid October telephone bill. November 15: Purchased additional baking supplies in amount of $5,000 from vendor, on account. November 15: Accrued wages earned for employee from period of November 1 through November 15. (See Wage Calculation Data table at the end of this document.) November 15: Paid rent on bakery space. November 18: Received payments from customers toward accounts receivable in amount of $1,000. November 20: Paid $8,500 toward baking supplies vendor payable. November 20: Paid employee for period ending November 15. November 22: Purchased $300 in office supplies. November 30: Received telephone bill for November in amount of $75. Payment is due on December 10. November 30: Accrued wages earned for employee for period of November 16 through November 30. (See Wage Calculation Data table at the end of this document.) November 30: November bakery sales total was $20,000 ($7,500 of this total on accounts receivable). December 8: Received payments from customers toward accounts receivable in amount of $4,000. December 10: Paid November telephone bill. December 11: Purchased baking supplies in amount of $7,000 from vendor on account. December 13: Paid on supplies vendor account in amount of $5,000. December 15: Accrued employee wages for period of December 1 through December 15. December 15: Paid rent on bakery space $1,500. December 15: Recorded merchandise sales transaction. See the "Inventory Valuation" tab for details. December 15: Recorded impact of sales transaction on COGS and the inventory asset. See the "Inventory Valuation" tab for details. December 20: Paid employee for period ending December 15, December 20: Purchased merchandise inventory for resale to customers. See the "Inventory Valuation" tab for details. December 24: Recorded sales of merchandise to customers. See the "Inventory Valuation" tab for details. December 24: Recorded impact of sales transaction on COGS and the inventory asset. See the "Inventory Valuation" tab for details. December 30: Purchased merchandise inventory for resale to customers. See the "Inventory Valuation" tab for details. December 31: Accrued employee wages for period of December 16 through December 31. D. Focus ha December 24: Recorded impact of sales transaction on COGS and the inventory asset. See the "Inventory Valuation" tab for details. December 30: Purchased merchandise inventory for resale to customers. See the "Inventory Valuation" tab for details. December 31: Accrued employee wages for period of December 16 through December 31. December 31: Total December bakery sales were $25,000 ($6,000 of these sales on accounts receivable) 4. On December 31, the following adjustments must be made: Depreciation of baking equipment transferred to company on October 13. Assume half month of depreciation in October using the straight-line method. Accrue interest for note payable. Assume a full month of interest for October. (6% annual interest on $10,000 loan) Record insurance used for the year. Actual baking supplies on hand as of December 31 are $1,100. Office supplies on hand as of December 31 are $50. . . Wage Calculation Data Month Hours Rate 12 10 40 12 31-Oct 15-Nov 30-Nov 15-Dec Pay 120 480 420 456 480 35 12 12 38 31-Dec 40 12