Introduction To Financial Accounting Class Project Instructions

You will be given a set of transactions for a company, Whitesides Electronic Warehouse, from January 1, 2017 through December 31, 2017. Please do all work in Microsoft Excel (or equivalent).

Project Part 1

This portion of the project will be due at the beginning of class on October 25, 2018. The first part of your project must be submitted on Blackboard before the start of class as a Microsoft Excel file ONLY. Any format other than Microsoft Excel for example, Numbers for Mac - will NOT be accepted.

1. Prepare the journal entries for each transaction shown and adjusting entries needed. For transactions such as depreciation, amortization of prepaid expenses, etc., they can be done once at the end of the year instead of monthly (it is up to your preference) (30 points)

2. Prepare the T-accounts for all accounts that are affected by the transactions. T-accounts should note the account name, account number youve assigned it, and each journal entry should be referenced to its transaction number. (20 points)

3. Prepare a chart of accounts, with account numbers and categories for all accounts. Use the example format on page 51 of your textbook to prepare your chart of accounts. Hint prepare it after youve done your journal entries/T-accounts and determined which accounts are needed. (10 points)

4. Prepare a trial balance as of December 31, 2017. The trial balance should show unadjusted balances, adjusting journal entries, adjusted balances, the closing journal entry, and the post-closing trial balance. The trial balance should be in columnar format, broken out into debit and credit columns for each category similar to the format shown in Exhibit 3.8 (add columns for the Closing Entry and Post-Closing trial balance). (40 points)

Project Part 2

This portion of the project will be due at the beginning of class on December 4, 2018.

1. Submit an electronic copy of your corrected project part 1 on Blackboard in the same method as previously submitted.

2. Submit in hard copy form at the beginning of class the financial statements and ratio analysis below. They should look like something you would give a client. Make sure the formatting is correct and that your printed project looks presentable.

a. Prepare a full set of financial statements for Whitesides Electronics Warehouse using the trial balance prepared in Part 1 this means a Balance Sheet as of December 31, 2017, as well as an Income Statement, Statement of Stockholders Equity and Statement of Cash Flows for the year ended December 31, 2017. (15 points each 60 points total)

b. Prepare the following ratios based on WHEWs final balances, and prepare brief comments on what these ratios mean: (many of the ratios are covered in Chapter 5, which is not covered until the end of the semester. If you are trying to finish this early, you may need to visit Chapter 5 early) (4 points each 40 points total)

c. Return on Equity

d. Debt to Equity

e. Current Ratio

f. Quick Ratio

g. Net Operating Profit Margin

h. Gross Profit Margin

i. Operating Cash flow to Current Liabilities Ratio

j. Accounts Receivable Turnover

k. Inventory Turnover l. Times interest earned

Introduction To Financial Accounting Class Project - Transactions Whitesides Electronic Warehouse

Whitesides Electronic Warehouse (WHEW) was established to sell electronics merchandise to retailers and consumers. The company began business on November 1, 2016. Beginning Account Balances as of January 1, 2017 are as follows:

Inventory $15,000

Cash $5,000

Accounts Receivable $17,000

Retained Earnings $17,500

Accounts Payable $19,500

The following

(1) January 2

(2) January 31

(3) January 31 (4) January 31 (5) February 1 (6) March 1 (7) March 15

(8) March 28 (9) May 30

(10) June 1

transactions took place during the year ended December 31, 2017:

(1) January 2- New investors contributed $225,000 cash to help in launching WHEW in exchange for 75,000 shares of stock

(2) January 31- WHEW obtained a $70,000 cash loan from Easy Bank. The note has a 6% annual interest rate and requires monthly interest-only payments (0.5% per month) on the first day of every month beginning on February 1, 2017. The loan is due to be paid in full in three years.

(3) January 31- WHEW rented a building for $2,500 per month on a seven-year rental contract. Rent is due on the 1st of every month beginning on February 1

(4) January 31- WHEW hired two employees. He will pay his two employees $5,500 each on July 1, 2017, October 1, 2017, and January 1, 2018

(5) February 1- Made its first monthly interest payment to Easy Bank for the $70,000 loan it obtained in transaction (2) Dont forget the rest of the months!

(6) March 1- WHEW hires 2 additional workers earning $600 per month each on the 15th of the month beginning on March 15, 2017

(7) March 15- WHEW purchased a general insurance plan that will cover the company for two years from April 1, 2017 through March 30, 2019. The policy cost $84,420 for the entire policy period. WHEW paid for the policy in cash

(8) March 28- WHEW purchased laptops, cellphones, video games, computer accessories, etc. totaling $255,000 from various manufacturers on account

(9) May 30- WHEW purchased shelving, racks, a forklift, a delivery truck, and other equipment on account for $50,400. This equipment is expected to be usable for 7 years

(10) June 1- Sold 18,000 of computers in inventory to Budget Computers on account. These computers were sold for $300 each, and they cost $225 each

(11) June 15- Sent a check totaling $125,000 to a vendor as partial payment for the inventory purchased in transaction (8)

(12) July 7- Sold 800 computer scanners to MicroWarehouse for $45 each on account. WHEW had previously purchased these items for $22 each. WHEW also sold 2,650 HDMI cables to Fried Electronics for $7 each in cash. They cost WHEW $4.50 each.

(13) August 1- WHEW paid $4,600 cash for radio advertisements to run through the next six months from August 1, 2017 through January 30, 2018

(14) August 28-Collected the entire amount outstanding from Budget Computers on the sale made in transaction (10)

(15) September 8- Paid a $4,000 dividend to shareholders

(16) October 3- Paid the remainder of the amount due for the inventory purchased in transaction (8), and paid for the equipment purchased in transaction (9)

(17) October 15- Received a credit card bill which included $42,000 of inventory purchases, $750 of travel expenses, and $85 of office supplies. This bill is due on November 15, 2017.

(18) October 31- Billed Wallys Mart for $47,000 of computer parts sold and shipped to them on that day. The cost of these items to WHEW was $32,650.

(19) November 3- WHEW signed a contract with a computer parts retailer to provide 6,000 3-button mice on the 15th of every month for 6 months beginning on November 15th. WHEW collected the total sales price for all six months worth of mice when the contract was signed, for a total of $540,000. The mice cost $8.50 each.

(20) November 15- Paid credit card bill from transaction (17)

(21) December 15- Received a bill for accounting services for $2,550. This bill will be paid on January 15, 2018

(22) December 30- Paid January 2018s rent payment two days early

(23) December 31- Sold the delivery truck purchased in transaction (9) at a loss of $6,100. The truck had cost $25,200 and WHEW received $17,000 of cash.

(24) December 31- WHEW issued stock to retire $30,000 of the bank loan from Easy Bank in Transaction (2)

(25) December 31- WHEW sends an order to a vendor for the purchase of $55,000 of inventory. The goods will be sent to WHEW on January 10, 2018.