Monopoly Instructions & Requirements ACC 2430 Fall 2020 Introduction: We are playing Monopoly and using your new accounting skills to "do the accounting" for your Monopoly company. Entries will be initially recorded on the Accounting Spreadsheet (like chapter 1) and then, after class, you will complete your accounting recordkeeping like we did in chapter 2 through 4. You may assume that your business began on January 1, 2020 and that you are preparing the financial statements and analysis for the first month of operations. Rules of Play: 1. If you land on a property you must purchase it. It is considered a purchase of land. 2. For each property you purchase, you must buy at least two houses at the time you purchase the land. (You can purchase more houses/hotels if you wish). This does not include the railroads and utilities as you cannot buy houses for them. 3. Additional houses/hotels on any of your properties can only be purchased at the beginning of your turn. I. No more than four houses per property can be purchased and you must buy four houses before you can buy a hotel (ive. buying a fifth house is basically buying a hotel). Purchases of railroads or utilities are considered a purchase of stock in that railroad/utility company and should be recorded in the Long-term Investments accounts. 5. When your competitors land on your properties, you earn rent revenue. When you land on your competitors' properties, you pay rent expense. This is the same whether it is a regular property or railroad/utility. . The prices for the land and houses are listed on the property sheet. Also, you can see what the rent income/expense is for each property based on the number of houses owned on that property. 8. For the railroads and utilities, the rent income/expense is based on the number on the dice roll. . When you land on Community Chest and/or Chance, contact me and I will draw a card for you that will result in either Community Chest/ Chance Expense (if you are required to pay cash as a result of the card], or Community Chest/Chance Revenue (if you receive cash as a result of a card you draw or someone else draws). 10. If you are sent to jail, you pay a $500 Legal Expense and continue as normal. 11. If you land on the space for paying some type of tax, pay the amount listed on the space and call this Tax Expense. 12. Every time you pass GO, your earn $1,000 in Go Revenue. 13. There is no "free parking" jackpot on the board. Duties During Class: There are three duties to perform during the Monopoly game: 1. Roll the dice and move the token. 2. Make notes on your Property Sheet regarding who has purchased what properties. 3. Record your entries into your spreadsheet noting a specific description for each transaction. After Class: 1. Record on the spreadsheet any beginning entries or additional entries (adjusting entries] that were not recorded while playing the game. 2. Record your entries in the journal, post them to the ledger, prepare an adjusted trial balance, prepare financial statements, journalize & post the closing entries, and prepare a post-closing trial balance. Beginning of the Month Transactions (starting your new business): 1. The business borrowed $50,000 from a local bank. The loan has an annual interest rate of 12%. No principal on debt will be paid back until five years from now. Interest will be paid in the month following (in arrears)- 2. You (the owner) invested $60,000 cash into the business by purchasing common stock. 3. Before you start rolling the dice, each person pick two properties to go ahead and buy. As part of this purchase, go ahead and purchase at least two houses. Refer to the property sheet for amounts. Some More Entries After We Have Completed the Game1. The business purchased $4,000 of office supplies on credit. 2. The business purchased insurance of $4,800 on credit that covers the entire year. 3. The business purchased Belmont Drive for a total of $1,500 (land=$500 and two houses=$1,000) 4. Paid for half of the insurance purchased in #12 above. 5. A customer (renter) paid you $2,000 for rent for February 2020 (next month's rent). 6. You earned January rent income totaling $10,000 from customers (renters) that will pay you in February 2020. 7. The stockholders_ withdrew a $5,000 dividend from the business. End of the Month Adjusting Entries: 1. Record interest owed, but not paid, for the month on the loan to the bank. This interest will be paid in February 2020. 2. At the end of the month, $3,000 of office supplies remain. This remainder will be used next month. 3. Record the expense associated with the insurance that has been used up. 4. Record depreciation expense on the houses/hotels purchased in the first month. Assume the useful life of the houses/hotels is 5 years, so depreciation expense will be calculated with the following formula: (Cost of houses & hotels/useful life). Make sure you only record one month of depreciation and not an entire year. Note: Land is not subject to depreciation. Round all entries to the nearest dollar. 5. After you have completed your financial statements, you will go back and record the closing entry on your spreadsheet. Required: 1. Enter your transactions into your Excel spreadsheet that you downloaded from Blackboard and calculate the ending balances for each of your accounts (like in Chapter 1). Be sure to include a Transaction Description column. Make sure you have also entered in both the beginning of the month and end of the month entries that are provided on the previous page. If needed, round all entries to the nearest dollar. 2. Record the entries in the journal. For the date column, use the number that corresponds to the accounting spreadsheet. 3. Post the entries to the ledger, including all the beginning of month and end of month entries. Completing the posting reference is optional. 4. Prepare an adjusted trial balance. Note, you do not need to prepare the unadjusted trial balance. 5. Prepare financial statements by using formulas to calculate your ending balances and link the ending balances to the financial statements. Make sure your financial statements are presented in the proper format, correctly dated, and look professional. Use your name as the company name for your business. Use the adjusted trial balance to prepare (in Excel) the: Single step income statement (the "simple" income statement, not the multistep income statement). b. Statement of changes in stockholder's equity Classified balance sheet. Make sure you use good form. Be consistent with spacing, fonts, dollars/cents, etc. 6. Go back to your spreadsheet, journal and ledger and record/post your closing entries. 7. Prepare your post-closing trial balance. Upload to Blackboard your Excel file which will include: a. Transactions Spreadsheet b. Journal C. Ledger d. Adjusted trial balance e. Income statement Statement of changes in stockholder's equity Balance sheet (classified) Post-closing trial balance 2