ompetencies In this project, you will demonstrate your mastery of the following competencies: Record and present financial information by applying the appropriate framework and guidelines of accounting for business transactions Determine asset accounts and their disclosure in the financial statements Determine liability and equity accounts and their disclosure in the financial statements Scenario You were recently hired as an entry$-$level bookkeeper for a service business that recently opened. This is the first month in operation for the business and your first task is to record business transactions for their first month using the source documents and transaction data the owner will provide to you. Because this is a small business that does not use computerized accounting, you will apply the accounting cycle in Excel to record transactions and generate financial reporting results for the owner. Directions ICompany Accounting Workbook Use accepted accounting principles to follow and record your business transactions for a one$-$month period from the first step of the accounting cycle through the reporting process. You will build on the workbook you created in Milestones One and Two, or you may start over with the blank Company Accounting Workbook Template $($linked below in the What to Submit section$),$ incorporating instructor feedback where applicable. After you complete your workbook, you will prepare a summary report of your work. Your completed accounting workbook will consist of journal entries for each transaction and postings of transactions to account ledgers. You will develop a trial balance from the ledger balances, and use these balances to prepare the income statement, statement of owner's equity, and the balance sheet. After the preparation of the financial statements, closing entries will be entered to transfer earnings to equity and prepare temporary accounts for the new accounting period. Use the instructions below to complete your workbook. Specifically, you must address the following rubric criteria: $1$Record Financial Data: Use accepted accounting principles to accurately capture business transactions for the month using the data provided in the accounting data appendix $($linked in the Supporting Materials section$).$ You will need to address the following: AAccuracy: Prepare entries that are accurate in that they fully reflect the appropriate information. BCompleteness: Prepare entries that are complete for the month, including transferring posted entries to T accounts. CUnadjusted Trial Balance: Prepare the unadjusted trial balance portion of the Trial Balance tab of the company accounting workbook, ensuring that the total debits and credits match. $2$Financial Statements: Create financial statements using appropriate methods based on accepted accounting principles. Be sure to prepare these financial statements in the order listed, as there are important interdependencies among them. Finalize the process by closing temporary accounts. AIncome Statement: Prepare the income statement using the adjusted trial balance. BStatement of Owners Equity: Prepare the statement of owners equity using the adjusted trial balance. CBalance Sheet Assets: Prepare the balance sheet asset entries using the adjusted trial balance. DBalance Sheet Liabilities: Prepare the balance sheet liabilities entries using the adjusted trial balance. EClosing Entries: Complete the Closing Entries tab of the company accounting workbook by closing all temporary income statement amounts to create closing entries. IISummary 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 companys financial health and performance. APurpose: Discuss the accounting process and the resulting financial statements as they relate to meeting the informational needs of the user. BProcess: Explain the process used to produce accurate account balances and financial statements from the individual transaction data. iConsider 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. CAnalysis: Explain the companys cash position, its net income as a percentage of sales, and its current liabilities to current assets position. DResults: Discuss the results regarding profitability of the first month of operations. iConsider how well the company is positioned to meet current liabilities. iiBe 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 months results. iiiConsider 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$)?$ ERecommendations: Recommend a simple system of controls that can be implemented to ensure protection of company assets and the accuracy and integrity of their financial data as they anticipate further growth. iConsider additional controls that will support the potential for adding merchandise and additional assets with business growth$/$expansion$.$ FAsset Valuation: Discuss the treatment of current and long$-$term assets on the balance sheet. iDiscuss at least two different methods of depreciation. Consider how the methods of depreciation will be determined. iiDiscuss how LIFO, FIFO, and average methods will differ and provide examples of types of applicable merchandising. iiiConsider how accounting will change with the addition of merchandise inventory.This chart of accounts should help you identify the appropriate accounts to record to as you are analyzing and journaling transactions for this workbook. There is nothing to complete on this page; this is simply a resource for you.Asset AccountsLiability AccountsEquity AccountsAcct #Acct #Acct # Cash $101$ Notes Payable $201$ Owner's Capital $301$ Accounts Receivable $102$ Accounts Payable $202$ Owner Draws $302$ Prepaid Rent $103$ Wages Payable $203$Prepaid Insurance $104$Office Supplies $105$Vehicle $106$Accumulated Depreciation $($contra asset$)107$Revenue AccountsAcct #Service Revenue $401$Expense AccountsAcct #Rent expense $501$Business License Expense $502$Telephone expense $503$Repairs and Maintenance $504$Advertising Expense $506$Wages Expense $507$Summary Report: Financial Statements $1[$Note: To complete this template, replace the bracketed text with your own content. Remove this note before you submit your report.$]$ Summary Report: Financial Statements $[$Your Name$]$ Southern New Hampshire University $$ Summary Report: Financial Statements $2$ Introduction $[$In this section, include the purpose of the report. Describe the kind of information these financial statements provide to various aspects of the business.$]$ Process $[$In this section you will discuss the process you used to generate accurate financial statement results for the business owner from the list of business transactions provided. Explain 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.$]$ Financial Statement Analysis $[$This section should center on your analysis of the financial performance of the company based on the statements you prepared. Discuss key points on 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$)?.]$ Internal Controls $[$Provide suggestions for a simple system of internal controls to assist the owners in protecting assets and ensuring accuracy in financial data. Consider additional controls that will support the potential for adding merchandise and additional assets with business growth$/$expansion$.]$ Looking to the Future $[$In response to the owners request for additional information and support for future growth, discuss accounting considerations associated with the acquisition of additional long term$/$fixed assets, and the addition of merchandise inventory. How will the company account for the costs of long$-$term assets? How will the method of depreciation be determined? $($Expand on $2$ different methods of depreciation to demonstrate ideal application$).$ How does accounting change with the addition of merchandise inventory? How will it be determined which inventory costing method to apply? $($Discuss how the FIFO, LIFO, and Average methods differ and provide examples of the types of merchandising scenarios that would be ideally applicable in each case.$)]$