Describe the system of accounting standards and principles to utilize these in the preparation and communication of relevant financial information.

Identify the objectives and procedures of internal control for use in guiding financial transaction processes.

Assignment Description and Instructions

In this case you are presented with the companys financial records for the period and are required to execute the steps in the financial accounting cycle. The steps firstly includes analysing each business transaction to determine the accounts to be debited or credited then recoding these transactions in the general journal. Having recorded the transactions in the general journal, the entries are next to be posted to their respective accounts in the general ledger. The balances on each general ledger accounts are to be used to extract a trial balance from which the company financial accounts are to be prepared and it is at this point the financial accounting cycle ends for the current period.

Students are expected to work in a collaborative space where they will discuss the case questions and prepare the groups response.

Case:

A few years ago, Sam Gig founded Gig n Spin Consultancy Services. Sam is aware that you and your group members are pursuing an accounting course while in college and therefore has approached the team for advice. He wishes to know how much net income his business earned during the past year in order to decide whether to keep the company going. His accounting records consist a trial balance and some additional notes required to make adjustments to the financial statements. The company unadjusted trial balance for the year ended December 31^st, 2015 was shown as follows:

Gig n Spin Consultancy Services

Trial Balance

December 31^st 2015

	DR	CR
Cash	120,000
Accounts receivable	65,000
Supplies	25,000
Lease Hold Improvement	100,000
Accumulated depreciation - Leasehold Improvement		40,000
Furniture and Fixtures	500,000
Accumulated depreciation - Furniture and Fittings		300,000
Accounts payable		25,000
Salary Payable
Unearned service revenue		18,500
Sam Gig, Capital		223,200
Sam Gig, Withdrawal	148,000
Service revenue		398,800
Salary expense	39,000
Supplies Expense
Rent Expense
Depreciation expense -Leasehold Improvement
Depreciation expense - Furniture and Fixtures
Advertising expense	8,500
	1,005,500	1,005,500

Data presented for the adjusting entries include the following:

Rent expense of $100,000 paid for the year was debited to Sam Gigs withdrawal account as a result of an oversight on the part of the Data Entry Clerk and this remained unadjusted as at year end.

The company paid $13,000 on account for a credit purchase made earlier in the year but this entry was not recorded at year end.

Supplies on hand at year end, $15,000.

Depreciation on Leasehold improvement, $20,000.

Depreciation on Furniture and Fixtures, $100,000.

Salaries owed but not yet paid, $12,000.

Accrued service revenue, $18,000.

$14,000 of the unearned service revenue has been earned.

Requirements:

Explain why adjusting entries are required.

Prepare the adjusting journal entries at December 3st, 2015 in the general journal.

Open the ledger accounts in T-account form with their unadjusted balances then post the adjusting entries to the affected accounts, then balance off each account.

Prepare the income statement, the statement of owners equity and balance sheet as at December 31^st, 2015.

Advice Sam Gig if he should continue the business given the companys financial performance.