Flix City FlixCity & Gaming Summary of Adjustments Gaming for July 2016 Adjustment No: Adjustment Descriptions 1 of the deposits received in advance, $650 worth of Gaming services were performed on 47/16 2 of the deposits received in advance, $480 worth of Gaming services were performed on 15/7/16 3 of the deposits received in advance, $155 worth of Gaming services were performed on 27/7/16 Recognise the interest for July on the CBA loan at 4.5% p.a. of the closing June Loan Payable balance 5 Recognise the depreciation for July on the Equipment assets - $2,525.00 per month 6 Recognise the depreciation for July on the Building - $250.00 per month 7 Recognise the expired advertising expense for the month of July Recognise the expired insurance expense for the month of July Receive a electricity bill amounting to $635 for the month of July * treat the expired expense as a full month for July (i.e do not calculate days expired, just the full month) 8 Additional information: 1. As previously noted, each monthly repayment paid to the CBA is made up of both principal and interest components. This interest component must be calculated and accrued in the Interest Payable account at the end of each month. The interest rate that CBA charges Nicholas is 4.5% p.a. of the outstanding loan at the end of the last period (i.e. June). Nicholas now needs to prepare and post the adjusting entries to the T-Accounts, which will then allow him to prepare the Adjusted Trial Balance. Task requirements: 1. Using the summary of adjustments that Nicholas has produced, prepare the required adjusting entries in Excel worksheet 'Adjusting'. Narrations are required. - You need to prepare the adjusting entries in the prescribed order so that your feedback will function properly (i.e. the adjustment numbers must correspond to the Journal Reference numbers). Do not leave blank lines between your journal entries; Your description (i.e. the narration) and account choice for each journal will not be corrected; Take care with your journal entries. If you select the incorrect accounts for your adjusting journals, then your T-Accounts will be wrong when you attempt to post your entries to them and your 10- Column Worksheet will not accept incorrect $values. 2. After the adjusting entries have been prepared, post the adjusting entries to the T-Accounts in Excel worksheet 'T-Accounts': Post the journals in same order as instructed for the feedback to function properly; You must ensure that each T-Account is balanced (i.e. you will need to amend the totals for the T- Accounts to which you have posted the adjusting entries). 3. Complete the second 2 columns of the 10-column worksheet in Excel worksheet July Worksheet', for the adjusting entries and then generate the Adjusted Trial Balance using columns 5 and 6: The worksheet has been set up to accept only the correct values in the correct positions within the worksheet. It is important to ensure all your entries are correct prior to proceed to the 10-Column worksheet. Nicholas now has an Unadjusted Trial Balance, which delivers useful, but incomplete & Gaming information. What it does present, is a summary of the FlixCity accounts and the transactions for the month of July. It provides Nicholas with a snapshot of his progress in paying down his bank loan, in addition to the balance between his assets & liabilities. It also gives him a vague idea about the status of his cash flow, although this will be impacted by some of the accrual-based transactions that have been processed throughout the month, but not yet accounted for. One of the primary reasons Nicholas enrolled in the accounting classes, was to be able to produce the financial statements that the Commonwealth Bank now requires of him. Whilst the Unadjusted Trial Balance is a good start, it will not be sufficiently accurate for the Bank Manager. The other major reason Nicholas wanted to learn to manage his own accounts was to monitor the performance of each business effectively. The Unadjusted Trial Balance has shown that FlixCity & Gaming is making healthy profits, which is what he suspected throughout the previous financial year. Nicholas knows, however that this report does not show the complete picture of Flixcity's performance for July. There are a number of steps Nicholas needs to take, such as the end of month adjustments, before he can rely on the information he has compiled for any decisions he may need to make. These adjustments will ensure that Nicholas is accounting for prepayments and accruals, and will ensure the reports he produces will more accurately reflect the reality of FlixCity & Gaming's performance. He has compiled a list of adjustments that need to be posted to the General Ledger, which are presented below: FlixCity & Gaming Summary of Adjustments for July 2016 Adjustment Adjustment Descriptions of the deposits received in advance, $650 worth of Gaming services were performed on 4/7/16 of the deposits received in advance, $480 worth of Gaming services were performed on 15/7/16 of the deposits received in advance, $155 worth of Gaming services were performed on 27/7/16 Recognise the interest for July on the CBA loan at 4.5% p.a. of the closing June Loan Payable balance Recognise the depreciation for July on the Equipment assets - $2,525.00 per month. Recognise the depreciation for July on the Building - $250.00 per month. Recognise the expired advertising expense for the month of July Recognise the expired insurance expense for the month of July Receive a electricity bill amounting to $635 for the month of July * treat the expired expense as a full month for July (i.e do not calculate days expired, just the full month) Additional information: 1. As previously noted, each monthly repayment paid to the CBA is made up of both principal and interest components. This interest component must be calculated and accrued in the Interest Payable account at the end of each month. The interest rate that CBA charges Nicholas is 4.5% p.a. of the outstanding loan at the end of the last period (.e. June). Nicholas now needs to prepare and post the adjusting entries to the T-Accounts, which will then allow him to prepare the Adjusted Trial Balance. Flix City Gaming No: 1 2 3 4 5 6 7 8 9 Flix City FlixCity & Gaming Summary of Adjustments Gaming for July 2016 Adjustment No: Adjustment Descriptions 1 of the deposits received in advance, $650 worth of Gaming services were performed on 47/16 2 of the deposits received in advance, $480 worth of Gaming services were performed on 15/7/16 3 of the deposits received in advance, $155 worth of Gaming services were performed on 27/7/16 Recognise the interest for July on the CBA loan at 4.5% p.a. of the closing June Loan Payable balance 5 Recognise the depreciation for July on the Equipment assets - $2,525.00 per month 6 Recognise the depreciation for July on the Building - $250.00 per month 7 Recognise the expired advertising expense for the month of July Recognise the expired insurance expense for the month of July Receive a electricity bill amounting to $635 for the month of July * treat the expired expense as a full month for July (i.e do not calculate days expired, just the full month) 8 Additional information: 1. As previously noted, each monthly repayment paid to the CBA is made up of both principal and interest components. This interest component must be calculated and accrued in the Interest Payable account at the end of each month. The interest rate that CBA charges Nicholas is 4.5% p.a. of the outstanding loan at the end of the last period (i.e. June). Nicholas now needs to prepare and post the adjusting entries to the T-Accounts, which will then allow him to prepare the Adjusted Trial Balance. Task requirements: 1. Using the summary of adjustments that Nicholas has produced, prepare the required adjusting entries in Excel worksheet 'Adjusting'. Narrations are required. - You need to prepare the adjusting entries in the prescribed order so that your feedback will function properly (i.e. the adjustment numbers must correspond to the Journal Reference numbers). Do not leave blank lines between your journal entries; Your description (i.e. the narration) and account choice for each journal will not be corrected; Take care with your journal entries. If you select the incorrect accounts for your adjusting journals, then your T-Accounts will be wrong when you attempt to post your entries to them and your 10- Column Worksheet will not accept incorrect $values. 2. After the adjusting entries have been prepared, post the adjusting entries to the T-Accounts in Excel worksheet 'T-Accounts': Post the journals in same order as instructed for the feedback to function properly; You must ensure that each T-Account is balanced (i.e. you will need to amend the totals for the T- Accounts to which you have posted the adjusting entries). 3. Complete the second 2 columns of the 10-column worksheet in Excel worksheet July Worksheet', for the adjusting entries and then generate the Adjusted Trial Balance using columns 5 and 6: The worksheet has been set up to accept only the correct values in the correct positions within the worksheet. It is important to ensure all your entries are correct prior to proceed to the 10-Column worksheet. Nicholas now has an Unadjusted Trial Balance, which delivers useful, but incomplete & Gaming information. What it does present, is a summary of the FlixCity accounts and the transactions for the month of July. It provides Nicholas with a snapshot of his progress in paying down his bank loan, in addition to the balance between his assets & liabilities. It also gives him a vague idea about the status of his cash flow, although this will be impacted by some of the accrual-based transactions that have been processed throughout the month, but not yet accounted for. One of the primary reasons Nicholas enrolled in the accounting classes, was to be able to produce the financial statements that the Commonwealth Bank now requires of him. Whilst the Unadjusted Trial Balance is a good start, it will not be sufficiently accurate for the Bank Manager. The other major reason Nicholas wanted to learn to manage his own accounts was to monitor the performance of each business effectively. The Unadjusted Trial Balance has shown that FlixCity & Gaming is making healthy profits, which is what he suspected throughout the previous financial year. Nicholas knows, however that this report does not show the complete picture of Flixcity's performance for July. There are a number of steps Nicholas needs to take, such as the end of month adjustments, before he can rely on the information he has compiled for any decisions he may need to make. These adjustments will ensure that Nicholas is accounting for prepayments and accruals, and will ensure the reports he produces will more accurately reflect the reality of FlixCity & Gaming's performance. He has compiled a list of adjustments that need to be posted to the General Ledger, which are presented below: FlixCity & Gaming Summary of Adjustments for July 2016 Adjustment Adjustment Descriptions of the deposits received in advance, $650 worth of Gaming services were performed on 4/7/16 of the deposits received in advance, $480 worth of Gaming services were performed on 15/7/16 of the deposits received in advance, $155 worth of Gaming services were performed on 27/7/16 Recognise the interest for July on the CBA loan at 4.5% p.a. of the closing June Loan Payable balance Recognise the depreciation for July on the Equipment assets - $2,525.00 per month. Recognise the depreciation for July on the Building - $250.00 per month. Recognise the expired advertising expense for the month of July Recognise the expired insurance expense for the month of July Receive a electricity bill amounting to $635 for the month of July * treat the expired expense as a full month for July (i.e do not calculate days expired, just the full month) Additional information: 1. As previously noted, each monthly repayment paid to the CBA is made up of both principal and interest components. This interest component must be calculated and accrued in the Interest Payable account at the end of each month. The interest rate that CBA charges Nicholas is 4.5% p.a. of the outstanding loan at the end of the last period (.e. June). Nicholas now needs to prepare and post the adjusting entries to the T-Accounts, which will then allow him to prepare the Adjusted Trial Balance. Flix City Gaming No: 1 2 3 4 5 6 7 8 9