II. Summary Report After you have finished preparing all the financial statements, analyze the statements and write a short report summarizing your findings. Use the template provided in the What to Submit section to complete your report. There is also a Final Project Walkthrough video available in Supporting Materials that will provide guidance for completing your template. In addition to the financial statement results, the owners have requested that you provide them with additional information as further growth is anticipated. They would like more input from you to support the best possible decisions for the business. In addition, the owners are requesting that you provide them with some suggestions on simple internal controls they can integrate to ensure protection of company assets, and accuracy in the company's financial data. The owners are also considering acquiring more long-term/fixed assets, such as vehicles, equipment, buildings, and so on. They would like your input on the different options available for depreciation of these costs. Adding sales of product is also a consideration for expansion. The owners want to know what accounting considerations will be involved with this change. 3. Summary: Write a summary of what the financial statements indicate about the company's financial health and performance. A. Purpose: Discuss the accounting process and the resulting financial statements as they relate to meeting the informational needs of the user. B. Process: Explain the process used to produce accurate account balances and financial statements from the individual transaction data. i. Consider what is being communicated through each of the financial statements you prepared (income statement, statement of equity and balance sheet) and how this information will be used in business decision making and planning. C. Analysis: Explain the company's cash position, its net income as a percentage of sales, and its current liabilities to current assets position. D. Results: Discuss the results regarding profitability of the first month of operations. i. Consider how well the company is positioned to meet current liabilities. ii. Be sure to include the percentage of revenues that result in profit/net income and the current ratio when discussing profitability and liquidity based on the recorded month's results. iii. Consider key points in your observations of results: is the company operating profitably (what percent of revenues result in profit/net income)? How well-poised are they to meet liabilities (discuss liquidity and current ratio)? E. Recommendations: Recommend a simple system of controls that can be implemented to ensure protection of company assets and the and integrity of their financial data ac thay anticipate fu thor prour F G H A B C E 3 4 5 Cash Asset Accounts Liability Accounts Equity Accounts Acct # Acct # Acct # 101 Notes Payable 6 Accounts Receivable 7 Prepaid Rent 8 Office Furniture 9 Office Supplies 10 Accumulated Depreciation (contra asset) 102 Accounts Payable 103 Wages Payable 201 Owner's Capital 202 Owner Draws 203 301 302 104 105 106 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Revenue Accounts Acct # 401 Service Revenue Expense Accounts Acct # Rent expense 501 Business License Expense Insurance Expense Advertising Expense Wages Expense Utilities Expense Depreciation Expense 502 503 Repairs and Maintenance 504 506 507 508 509 4 5 6 Cash 7 Notes payable Accounts 8 (To record borrow of bank loan) 9 Business License 10 Cash Debit 125,000.00 Credit 125,000.00 250.00 250.00 11 (To record business license taken) 12 Rent Expense 13 Prepaid Rent 14 Cash 15 (To record rent expenses and prepaid rent) 16 Office Furniture 17 Cash 18 Owners Capital 950.00 950.00 1,900.00 2,750.00 15,000.00 17,750.00 19 (To record furniture and cash contributed) 20 Cash 650.00 21 Service Revenue 650.00 22 (To record service revenue earned) 23 Advertising expense 24 Accounts Payable 500.00 500.00 25 (To record advertising expense incurred) 26 Accounts Receivable 1,725.00 27 Service Revenue 1,725.00 28 (To record service revenue earned on account) 29 Insurance Expense 750.00 30 Cash 750.00 31 (To record Insurance expence incurred) 32 Utilities expense 33 Accounts Payable 135.00 135.00 34 (To record utilities expenses incurred) 33 Accounts Payable 34 (To record utilities expenses incurred) 135.00 35 Repairs and Maitenance 36 cash 95.00 95.00 37 (To record repair expenses) 38 Owner Draws 39 Cash 500.00 500.00 40 (To record amount withdrawn for personal use) 41 Office Supplies 215.00 42 Cash 215.00 43 (To record supplies purchased) 44 Cash 45 Service Revenue 350.00 350.00 46 (To record service revenue earned) 47 Accounts payable 48 cash 500.00 500.00 49 (To record payment made on account) 50 Cash 1,725.00 51 Accounts receivable 1,725.00 52 (To record collection of receivables) 53 Salaries Expense 54 Salaries Payable 275.00 275.00 55 (To record adjusting entry for accrued salries expense) 56 Accounts Receivable 3,500.00 57 Service Revenue 3,500.00 58 59 Depreciation Expense 45.83 60 Accumulated Deprication 45.83 61 (To record depreciation expense) 62 Total 155,865.83 155,865.83 If Red, this means your debits and credits do not 1 Liabilities 2 3 Notes Payable 4 $ 125,000.00 1-Mar 5 6 7 8 9 10 11 5 $ 125,000.00 12 $ 125,000.00 13 14 Accounts Payable 15 $ 500.00 $ 500.00 Equity Owner's Capital Revenue Service Revenue $ 17,750.00 5-Mar $ 650.00 $ 1,725.00 6-Mar 10-Mar $ 350.00 25-Mar $ 3,500.00 31-Mar S $ 17,750.00 $ $ 6,225.00 $ 17,750.00 $ 6,225.00 $ 135.00 8-Mar 20-Mar 22-Mar S 16 17 18 19 20 21 22 $ 500.00 $ 23 $ 635.00 135.00 24 25 Wages Payable 26 $ 275.00 31-Mar 27 28 29 Owner Draws 500.00 Expenses Rent Expense 2-Mar $ 950.00 $ 950.00 $ $ 950.00 Business License Expense 1-Mar $ 250.00 S 500.00 $ $ 500.00 Posting to the ledger/t accounts Don't overthink it! You are just posting each debit and credit from the journal entries to the account you identified in the entry. These accounts are set to calculate your balances for you. $ 250.00 $ $ 250.00 Insurance Expense 15-Mar $ 750.00 A B 1 Trial Balance 2 3 As of 03/31/20XX 4 5 Unadjusted trial balance Account Debit Credit 6 Cash 7 Accounts Receivable 8 Prepaid Rent 138,515.00 3,500.00 950.00 9 Office Furniture 2,750.00 10 Office Supplies 215.00 11 Accumulated Depreciation (45.83) 12 Notes Payable 125,000.00 13 Accounts Payable 135.00 14 Wages Payable 275.00 15 Owner's Capital 16 Owner Draws 17 Service Revenue 17,750.00 500.00 6,225.00 18 Rent Expense 950.00 19 Business License Expense 250.00 20 Depreciation Expense 45.83 21 Insurance Expense 750.00 22 Repairs and Maintenance Expense 95.00 23 Advertising Expense 500.00 24 Wages Expense 275.00 25 Utilities Expense 135.00 27 Total: 149,385.00 149,385.00 12345678 5 Revenues A A Company Income Statement For Month ending 3/31/20XX Total Revenues 9 10 Operating Expenses: B D $ 6,225.00 $ 6,225.00 11 Rent Expense $ 950.00 12 Business License Expense $ 250.00 13 Depreciation Expense $ 45.83 14 Insurance Expense $ 750.00 15 Repairs and Maitenance Expense $ 95.00 16 Advertising Expense $ 500.00 17 Wages Expense $ 275.00 18 Utilities Expense $ 135.00 19 20 Total Operating Expenses: 3,000.83 21 22 Net Income 23 3,224.17 1 2 3 4 5 6 7 8 9 10 11 12 13 Beginning Capital on 3/01/20XX Increases to capital Company Name Statement of Owner's Equity Period Ending 03/31/20XX Net income/loss: Decreases to capital Owner Contributions Subtotal: Owner Draws 14 Ending Equity as of 03/31/20XX 15 16 17 18 $ $ $ 3,224.17 $ 17,750.00 $ 20,974.17 500.00 20,474.17 1 2 3 4 5 Assets 6 Current Assets: 7 Cash 8 Accounts Receivable 9 Office Supplies 10 Prepaid Rent 11 A Company Balance Sheet As of March 31, 20XX Liabilities and Owners' Equity Current Liabilities: 138,515.00 Utilities payable 3,500.00 215.00 950.00 Wages Payable Total Current Liabilities 12 Total Current Assets 143,180.00 13 14 15 16 17 18 19 Non-Current Assets: 20 Office Furniture 135.00 275.00 410.00 Long Term Liabilities: Total Long Term Liabilities: 125,000.00 Total Liabilities: 125,410.00 Owner's Equity Common Stock retained earnigs 2,704.00 Total Equity 17,750.00 2724 21 20,474.00 22 Total Non Current/Fixed Assets 2,704.00 23 24 Total Assets: 145,884.00 Total Liabilities & Equity 145,884.00 2 3 4 5 6 B A Company Closing Entries Month ending 03/31/20XX 7 Revenue Accounts 8 Income Summary 9 Close revenues 10 11 Income Summary 12 Business License 13 Rent Expense 14 Advertising 15 Insurance 16 Utility 17 Maitenance 18 Wages 19 Dep Expense C D E Debit Credit 6,225.00 6,225.00 3,951.00 250.00 1,900.00 500.00 750.00 135.00 95.00 275.00 45.83 20 Close Expenses 21 22 Capital 2,274.00 23 24 Close Income Summary 2,274.00 25 26 27 28 Close Owner Draws 29 7 Revenue 8 Income Summary 9 Close revenues 10 11 Income Summary 12 Business License 13 Rent Expense 14 Advertising 15 Insurance 16 Utility 17 Maitenance 18 Wages 19 Dep Expense 20 Close Expenses 21 22 Capital B C 23 25 26 27 222222338 29 30 31 22 24 Close Income Summary 28 Close Owner Draws 6,225.00 6,225.00 D E 3,951.00 250.00 1,900.00 500.00 750.00 135.00 95.00 275.00 45.83 2,274.00 2,274.00 22,544.00 2,355.83