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06155200: Graded Project Instructions & Worksheets 1 Lesson 1: Business, Accounting, and You PROJECT GOAL The goal of this graded project is to create the following financial statements for J & L Accounting, Inc.: ???? Balance sheet ???? Income statement ???? Statement of retained earnings ???? Post-closing trial balance The financial statements must be created in one Microsoft Word document (.doc or .docx file). Alternatively, an Excel workbook may be used (.xls or .xlsx file). The Word or Excel file will be uploaded for grading. INSTRUCTIONS At the end of the project, you'll be given instructions for creating and uploading the financial statements in a Word or Excel file for grading. Graded Project Instructions Note: The formatting of financial statements is important. They follow Generally Accepted Accounting Principles (GAAP), which creates a uniformity of financial statements for analyzing. This allows for an easier comparison, as all businesses follow GAAP. Therefore, the financial statements should be created exactly the same way shown or referenced in the textbook. Failure to do so will result in a loss of points. The project references "debits equaling credits." This is a fundamental principle of accounting that can't be violated and if so is not acceptable under any circumstance. Debits not equaling credits allows for "cooking of the books," which is presenting false information. It also allows for embezzlement, which is theft by management or employees. If debits don't equal credits, the cause may be a lack of understanding of accounting principles, such as those presented in the textbook and assigned homework problems, or a lack of focus and concentration when making journal entries, posting to ledger accounts, or completing math. Rememberinstructors are available to help you with material you may be struggling with. Mistakes of the lack-of-focus variety are best corrected by going back over the work until the error is found. The accounting equation must balance on the balance sheet. This is another fundamental principle of accounting that can't be violated and if so is completely unacceptable. When the equation doesn't balance and the numbers are "fudged," this is easily detectable by someone who knows accounting. If your debits equal your credits and you understand which general ledger accounts belong on which financial statements, then the accounting equation should balance. It's really all about understanding the concepts and applying that understanding. The following financial statements are provided from the prior accounting period for J & L Accounting, Inc.: a) Post-closing trial balance b) Balance sheet c) Income statement d) Statement of retained earnings 2 Graded Project 3 J & L Accounting, Inc. Post-Closing Trial Balance December 31, 2012 BALANCE ACCOUNT TITLE DEBIT CREDIT Cash, Business Checking 20,500.00 Accounts Receivable Prepaid Rent Vehicles 48,000.00 Accumulated Depreciation, Vehicles 12,000.00 Equipment 3,600.00 Accumulated Depreciation, Equipment 600.00 Accounts Payable Common Stock 38,000.00 Retained Earnings 21,500.00 Dividends Service Revenue Advertising Expense Rent Expense Office Supplies Expense Telephone Expense Utilities Expense Depreciation Expense TOTALS 72,100.00 72,100.00 J & L Accounting, Inc. Balance Sheet As of December 31, 2012 ASSETS Cash, Business Checking 20,500.00 Accounts Receivable 0.00 Prepaid Rent 0.00 Vehicles 48,000.00 Less: Accumulated Depreciation, Vehicles 12,000.00 36,000.00 Equipment 3,600.00 Less: Accumulated Depreciation, Equipment 600.00 3,000.00 TOTAL ASSETS 59,500.00 LIABILITIES Accounts Payable 0.00 TOTAL LIABILITIES 0.00 STOCKHOLDERS' EQUITY Common Stock 38,000.00 Retained Earnings 21,500.00 TOTAL STOCKHOLDERS' EQUITY 59,500.00 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 59,500.00 Business, 4 Accounting, and You Graded Project 5 J & L Accounting, Inc. Income Statement For the Month Ending December 31, 2012 REVENUES Service Revenue 10,275.00 EXPENSES Advertising Expense 2,300.00 Rent Expense 1,000.00 Office Supplies Expense 300.00 Telephone Expense 750.00 Utilities Expense 3,200.00 Depreciation Expense 1,100.00 TOTAL EXPENSES 8,650.00 NET INCOME 1,625.00 J & L Accounting, Inc. Statement of Retained Earnings For the Month Ending December 31, 2012 Retained Earnings, December 1, 2012 19,875.00 Add: Net Income 1,625.00 Subtotal 21,500.00 Less: Dividends 0.00 Retained Earnings, December 31, 2012 21,500.00