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Elf Village Productions 50 Sheet Legal Pad Building Blocks of Accounting .. A Financial Perspective Page 1 Welcome Welcome to the world's first ePractice case, an individualized, internet generated and and graded case study that focuses on the analytically portion of the accounting cycle All sheets have been locked to protect the "HELP" messages built into this case. Enter the required data into the yellow filled cells on the General Journal, Worksheet and Financial Statement sheets. Unless limited by your instructor you have unlimited attempts and only the highest score is counted. Step 1 The Chart of Accounts includes all of the accounts that you can use to solve your case. You may want to print the chart of accounts and use it as an easy reference guide. Step 2 Journalize the First 29 Transactions Step 5 Step 6 Using your unique transactions record the corresponding general journal entry, rounding to two decimal places, Round(value,2). Step 3 Completed adjusting entries 30-39 Use the information in the Adjusted Trial Balance columns of the Worksheet. Step 4 Complete the Bank Reconciliation a Information will be displayed after required Journal Entries are correct b. The ending balance of the bank statement and the book statement must be the same Completed adjusting entries 40-42 Complete the Worksheet verifying that the Net income is the same in the Income Statement and in the Balance Sheet columns. If you have questions See FAQ 05. Step 7 Using the Worksheet as a reference, prepare the Income Statement, Statement of Changes in Retained Earnings and the Balance Sheet. Step 8 Check your work by Creating General Ledger using a Pivot Table Note: This non-graded step will help you verify your work 3 4 5 6 7 8 9 10 11 12 13 45 16 17 18 19 20 21 Transaction 01, 02, 03, 04, 05, 06, 07, 08, 09, Description of transaction June 1: Hudson Bloom invested $112,378.00 cash and computer equipment with a fair market value of $36,110.00 in his new business, Byte of Accounting. June 1: Check # 5000 was used to purchased office equipment costing $598.00 from Office Express. The invoice number was 87417. June 1: Check # 5001 was used to purchased computer equipment costing $10,120.00 from The invoice number was 20117. June 2: Check # 5002 was used to make a down payment of $34,000.00 on additional computer equipment that was purchased from Royce Computers, invoice number 76542. The full price of the computer was $170,000.00. A five-year note was executed by Byte for the balance. June 4: Additional office equipment costing $300.00 was purchased on credit from Discount Computer Corporation. The invoice number was 98432. June 8: Unsatisfactory office equipment costing $60.00 from invoice number 98432 was returned to Discount Computer for credit to be applied against the outstanding balance owed by Byte. June 10: Check # 5003 was used to make a $26,000.00 payment reducing the principal owed on the June 2 purchase of computer equipment from Royce Computers. June 14: Check # 5004 was used to purchase a one-year insurance policy covering its computer equipment for $5,976.00 from Seth's Insurance. The effective date of the policy was June 16 and the invoice number was 2387, June 16: A check in the amount of $6,500.00 was received for services performed for Pitman Pictures. June 16: Byte purchased a building and the land it is on for $143,000.00 to house its repair facilities and to 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, June 16: Byte purchased a building and the land it is on for $143,000.00 to house its repair facilities and to store computer equipment. The lot on which the building is located is valued at $23,000.00. The balance of the cost is to be allocated to the building. Check # 5005 was used to make the down payment of $14,300.00. A thirty year mortgage with an inital payement due on August 1st, was established for the balance. June 17: Check # 5006 for$7,200.00 was paid for rent of the office space for June, July, August and September. June 17: Received invoice number 26354 in the amount of $375.00 from the local newspaper for advertising. June 21: Billed various miscellaneous local customers $4,400.00 for consulting services performed. June 21: Check # 5008 was used to purchase a fax machine for the office from Office Machines Express for $800.00. The invoice number was 975-328. June 21: Accounts payable in the amount of $240.00 were paid with Check # 5007. June 22: Check # 5010 was used to pay the advertising bill that was received on June 17. June 22: Received a bill for $1,165.00 from Computer Parts and Repair Co. for repairs to the computer equipment. The invoice number was 43254. June 22: Check # 5009 was used to pay salaries of $835.00 to equipment operators for the week ending June 18. Ignore payroll taxes. June 23: Cash in the amount of $3,525.00 was received on billings. June 23: Purchased office supplies for $655.00 from Staples on account. The invoice number was 65498. FAQ Welcome Chart of Accounts Transactions General Journal W 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 -5 6 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, B June 28: Billed $5,385.00 to miscellaneous customers for services performed to June 25. June 29: Cash in the amount of $5,101.00 was received for billings. June 29: Paid the bill received on June 22, from Computer Parts and Repairs Co with Check # 5011. June 29: June 25. Check # 5012 was used to pay salaries of $835.00 to equipment operators for the week ending Ignore payroll taxes. June 30: Received a bill for the amount of $965.00 from O & G Oil and Gas Co. The invoice number was 784537. June 30: Check # 5013 was used to pay for airline tickets of $1,600.00 to send the kids to Grandma Ellen for the July 4th holiday. Adjusting Entries - Round to two decimal places. The rent payment made on June 17 was for June, July, August and September. Expense the amount associated with one month's rent. A physical inventory showed that only $270.00 worth of office supplies remained on hand as of June 30. The annual interest rate on the mortgage payable was 9.25 percent. Interest expense for one-half month should be computed because the building and land were purchased and the liability incurred on June 16. Record a journal entry to reflect that one half month's insurance has expired. A review of Byte's job worksheets show that there are unbilled revenues in the amount of $9,000 for the period of June 28-30. FAQ Welcome General Journal Chart of Accounts Transactions B 9 10 1 2 3 4 "5 6 "7 78 79 30 31 32 83 184 185 86 87 88 89 90 32, 33, 34, 35, 36, 37, 38, The fixed assets have estimated useful lives as follows: Building-31.5 years Computer Equipment - 5.0 years Office Equipment - 7.0 years Use the straight-line method of depreciation. Management has decided that assets purchased during a month are treated as if purchased on the first day of the month. The building's scrap value is $500. The office equipment has a scrap value of $350. The computer equipment has no scrap value. Calculate the depreciation for one month. A review of the payroll records show that unpaid salaries in the amount of $501.00 are owed by Byte for three days, June 28-30. Ignore payroll taxes. The note payable to Royce Computers (transactions 04 and 07) is a five-year note, with interest at the rate of 12 percent annually. Interest expense should be computed based on a 360 day year. [IMPORTANT NOTE: The original note on the computer equipment purchased on June 2 was $136,000.00. On June 10, eight days later, $26,000.00 was repaid. Interest expense must be calculated on the $136,000.00 for eight days. In addition, interest expense on the $110,000.00 balance of the loan ($136,000.00 less $26,000.00 $110,000.00) must be calculated for the 20 days remaining in the month of June.] Closing Entries Close the revenue accounts. Close the expense accounts. Close the income summary account. Close the withdrawals account. 1 23 456 7 8 19 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 Transaction 01 Jun 01 02 03 04 05 06 07 Date Ready FAQ Account A Byte of Accounting General Journal Note: You can only enter data into the yellow filled cells. Welcome Name Cash Chart of Accounts Description Transactions Debit Credit General Journal Account 7 Number Name A 1110 Cash 9 1120 Accounts Receivable 10 1130 Prepaid Insurance 11 1140 Prepaid Rent 12 1150 Office Supplies 13 1211 Office Equip 14 15 16 17 18 19 20 21 22 22 25 20 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 1212 Accum Depr Office Equip 1311 Computer Equip 1312 Accum Depr Computer Equ 1411 Building Cost 1412 Accum Depr Buting 1510 Land 2101 Accounts Payable 2102 Advanced Payments 2103 Interest Payable 2105 Galanes Payable 2201 Mongage Payable 2202 Notes Payable 3100 Hudson Bloom, Captal 3300 Hudson Boom Withdrawal 4100 Computer & Consulting Revenue 5010 Rent Expense 6020 Salary Expense 5030 Advertising Expense 6040 Repairs & Maint Expense 5050 O & Gas Expense 5080 Supples Expense 5000 Interest Expense 6100 insurance Expense 5110 Depreciation Expense Total NET INCOME Balance Unadjusted Trial Balance 0.00 0,00 0,00 0,00 0.00 0.00 0.00 0.00 0.00 0.00 0,00 0.00 0.00 0,00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0,00 0.00 0,00 0.00 0,00 0,00 0,00 0,00 0.00 0.00 10.00 0,00 0,00 0,00 0.001 0.00 0.00 0,00 0.00 ese 10.00 0.00 9.09 0.09 0.00 0.00 0.00 0.00 0,00 0.00 0,00 0.001 0.00 0.00 0.00 0,00 0.00 Adjusting Entes Cre Deb 0.00 0,00 9,00 0,00 0,00 6,00 0.00 0.09 0.00 0,00 19.09 6.00 9.09 0.00 9.00 0.00 0.00 0,00 0.00 0.00 10.00 0.00 0.00 0001 0.00 0.00 0,00 0.00 0.00 0.00 0,00 0,00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.09 0,00 29/09 0.00 6.00 9.00 6.00 19.00 0.00 0.09 0.00 DO 00 $9.99! 0.001 19.09 0.00 10.09 0,09 6.00 0.00 10.00 0.00 0.00 0,00 6.00 0.00 0.00 0.00 0,00 0.00 0.00 Adjusted Trial Balance Cr Debt Income Statement Det Cred KO Bence Sheet Debik Statement Changes in Owner's Equity