I retrieved the question from BUA510 - MB46-SP19

Accounting form a Manager's Perspective

a)You just received a sizable amount of money ($100,000) from an inheritance. You decided to use the money to start up your own business. Using the $100,000 demonstrate the full accounting cycle for your first year in business.Single EXCEL filethat contains a worksheet for each of the following (total of 9 worksheets should be included in your EXCEL file):

1.Journal transactions to represent the transactions provided below.

2.General ledger accounts (T accounts) showing the details of each of your journal transactions noted above

3.Pre-adjusted trial balance, adjustments and adjusted trial balance

4.Income statement

5.Statement of retained earnings

6.Balance sheet

7.Closing entries

8.Post-closing trial balance

9.Financial Ratio Analysis

Year-end transactions are listed on page 2.

1 - You are starting your own business opening a guitar shop.You purchase 100,000 shares of $1 par value stock (i.e. $100,000 value) to raise initial cash/capital.

2 - Company purchased land valued at $10,000 and a building store front valued at $5,000.The purchase is paid with $3,000 cash and a long term Note Payable for $12,000.

3 - You purchase office equipment on credit for $1,000

4 - You invest 6 of your personal guitars as inventory to sell in exchange for additional shares of common stock.The guitars are valued at $18,000.

5 - The company paid $2,000 cash salary to the Sales Assistant for hours worked.

6 - The company prepaid their insurance for the next 24 months for a value of $2,400 (i.e. $100 per month).

7 - The company provided guitar lessons to a client and collected $5,000 on credit.

8- The company provided guitar lessons to a client and collected $500 cash.

9 - The company paid $500 cash to settle a portion of the Accounts Payable due for the office equipment purchased on credit

10 - The company pays cash for a machine to build guitars.The machine cost is $2,400 and has a useful life of 2 years.The machine has a salvage value of zero.

11 - The company prepays $1,200 cash for utilities for the next 12 months.

12 - The company collects $1,200 cash advance payment from a customer for 12 months of guitar lessons

13 - The company pays a cash dividend of $1,000 to common stock holders

14 -It is the end of the first year and the company wants to make an adjusting entry to reflect the first year's insurance premium.

15 - One year after prepaying $1,200 for 12 months of utilities the company wants to make an adjusting entry to reflect 1 year's use of utilities.

16 - The company needs to book one year's worth of depreciation expense for the guitar building machine.

17 - The company wants to make an adjusting entry to reflect revenue earned for the first year of guitar lessons provided to the customer who prepaid $1,200 for 12 months of lessons