Financial Accounting Project

This project is a review of the accounting cycle.

The requirements are bolded at the beginning and through the text. Please download and print this file and write your solution in spaces provided for each requirement. You will obtain maximum of 6 marks if your answers are correct, well-written, and easy to read. You must print this file and write the answers on the spaces provided for you. I only accept hard copy of your hand written solution. If two works are identical, both will get zero, because its impossible for two persons to do identical works unless one copies from the other.

DUE DATE: Nov 10 at school (you will have F2F Test-2 on that day)

Let us start: I list several transactions for a small restaurant in its first two months of work. You are required to journalize all the transactions, post to T-account, prepare trial balance, make adjustments, prepare adjusted trial balance, close temporary accounts, and prepare post-closing trial balance. At the end, you are also required to prepare Income Statement, Statement of RE, and Balance Sheet for the business. We assume that owners of the restaurant have registered the business as a corporation.

Requirement-1: Journalize the following transactions.

Note: You do not need to consider any account for Interest payable and wages payable, as those are being paid on schedule.

Jan 1, 2019: Owners invested $180,000 in the business account.

Jan 1: They purchased an active restaurant for $300,000; paid $50,000 down payment and the rest on a 10year loan (N/P). They were scheduled for monthly payments of $4,000 from which $2,100 goes against the principal of the loan and $1,900 as interest. Payments are due end of each month. To make it easy, let assume that from $300,000 of the purchase cost, $200,000 is considered as equipment and $100,000 as furniture.

Jan 2: They paid $3,000 for the rent of Jan.

Jan 2: They prepaid $4,800 for one year insurance.

Jan 2: They purchased $40,000 equipment; $10,000 in cash and the rest on account (A/P).

Jan 3: They purchased $20,000 of inventory in cash.

Jan 3: They purchased $ 2,000 supplies in cash.

Jan 8: They had total sales of $30,000 during the first week. 80% of the sales was in cash and 20% on credit card (CC/R). Those sales cost them using $5,000 of the inventory.

Jan 10: They paid $2,000 of the A/P.

Jan 12: They purchased $4,000 inventory on account (A/P).

Jan 15: They had $30,000 sales in the second week; 70% in cash, 10% on customers account (A/R), and 20% on credit card (CC/R). Those sales cost them using $6,000 of the inventory.

Jan 15: They paid $10,000 for employees wages.

Jan 16: They received $3,000 from credit card companies (regarding the CC/R).

Jan 23: They had $30,000 sales; 80% in cash, 10% on customers account (A/R), and 10% on credit card (CC/R). Those sales cost them using $6,000 of the inventory.

Jan 24: They paid $4,000 of the A/P.

Jan 25: They purchased $6,000 inventory on account.

Jan 29: They paid $7,000 wages.

Jan 29: They received $2,000 from customers who were billed before.

Jan 29: They received $4,000 from credit card companies.

Jan 29: They had $24,000 sales; 70% in cash, 10% on customers account (A/R), and 20% on credit card (CC/R). Those sales cost them using $4,000 of the inventory.

Jan 29: They paid $4,000 for their loan (N/P). Remember only $2,100 of payments goes against the principal of the loan

and $1,900 as interest.

Feb 1: They paid $3,000 for rent.

Feb 2: Distributed $30,000 dividends to the owners.

Feb 3: They received $2,000 from credit card companies.

Feb 3: They purchased $25,000 inventory; $2,000 in cash and the rest on account.

Feb 7: They had $21,000 sales; 70% in cash, 10% on customers account (A/R), and 20% on credit card (CC/R). Those sales cost them using $3,500 of the inventory.

Feb 8: They received a utility bill of $500 which was due in three weeks. (U/P).

Feb 9: They received $3,000 from the customers who were billed before.

Feb 10: They paid $3,000 for A/P.

Feb 14: They had $18,000 sales; 60% in cash, 20% on customers account (A/R), and 20% on credit card (CC/R). Those sales cost them using $3,000 of the inventory.

Feb 14: They paid $6,000 for wages.

Feb 15: Owners invested additional $50,000 in the business.

Feb 16: They purchased $3,000 inventory in cash.

Feb 23: They had sales of $20,000; $12,000 in cash and the rest on customers account. Those sales cost them using $3,000 of the inventory.

Feb 24: They paid $500 for the utility bill dated Feb 8.

Feb 25: They paid $2,000 for A/P.

Feb 29: They had $48,000 sales; 70% in cash, 10% on customers account (A/R), and 20% on credit card (CC/R). Those sales cost them using $8,000 of the inventory.

Feb 29: Distributed $30,000 dividends to owners.

Feb 29: They paid $4,000 for their loan (N/P). Remember only $2,100 of payments goes against the principal of the loan and $1,900 as interest.

Feb 29: They purchased $2,000 supplies on account.

Requirement-2: Post from journal to T-Accounts (make the T-accounts in scrap paper and do not submit them with your work)

Requirement-3: Prepare a trial balance for the end of Feb.

Requirement-4: Journalize the adjustments for the following cases:

a. Two months of the insurance has expired.

b. Only $500 of supplies are left.

c. Equipment in the restaurant depreciated $500 per month. Furniture in restaurant depreciated $300 per month.

Requirement-5: Update those accounts that have been adjusted.

Requirement-6: Prepare an adjusted trial balance.

Requirement-7: Prepare Income Statement, RE Statement, and Balance Sheet.

Requirement-8: Journalize the closing of temporary accounts based on the recent adjusted trial balance. Then prepare a post-closing trial balance.

Note: You may need to use the following accounts: Cash, Common Stocks, A/P, A/R, CC/R. N/P, U/P, ACC-DEP Equipment, ACC-DEP Furniture, Inventory, Supplies, PP-Insurance, Dividends, RE, and the following expenses: Rent Exp, Supply Exp, Insurance Exp, Interest-Exp, Wages Exp, CGS, Utility Exp, Dep-Exp Equipment, Dep-Exp Furniture. Feel free to add any account, if needed.

Please consider 15% tax in your income statement.

Answer please as soon as possible!!