Problem :

Instructions :

Build an Excel spreadsheet using the accounting equation (Assets = Liabilities + Shareholders' Equity). Remember that each transaction has an equal effect on both the left-hand side and the right-hand side of the equation, or an offsetting effect (both positive and negative) on the same side of the equation.

1. Select the 'Answer' tab and locate 'Requirement 2'.

2) Format the worksheet. Label cell H4 "Trans". You will put transaction dates (1 30) corresponding to the transactions in the cells in column H. Row 3 will contain the elements of the accounting equation. Enter "Assets" in cell K3. Enter '= in cell N3 (note the " '" before the "=". This tells Excel to consider the equal sign text). Resize column N in order to match the size of the = sign by dragging the right edge of the column to the left. Enter "Liabilities + Shareholders' equity" in cell P3. Enter "Type of SE Transaction" (abbreviation for shareholders' equity) in cell U3. Now you will have a spreadsheet organized around the elements of the accounting equation: "Assets = Liabilities + Shareholders' equity" and, for all transactions impacting shareholders' equity, you will be able to enter the type (common shares, revenue, expenses or dividends). This will be important for later when you construct the financial statements (Exhibit 2-2, page 65).

3) Continue formatting. In cells 14 through M4, enter the asset account titles that the transactions deal with. 14: Cash; J4: AR (an abbreviation for accounts receivable); K4: Computers & AD (an abbreviation for accumulated depreciation); L4: Supplies; M4: Land. In cells 04 through T4, enter the liability and shareholders' equity account titles that the company's transactions deals with. 04: AP (an abbreviation for accounts payable); P4: NP (an abbreviation for note payable); Q4: SP (an abbreviation for salaries payable); R4: IP (an abbreviation for interest payable); S4: CShares (an abbreviation for common shares); and T4: RE (abbreviation for retained eamings; this is where all transactions impacting revenue, expenses and dividends will go for now).

4) Before entering the transactions, sum each column from I through M and 0 through T in row 21. For example, the formula in cell 121 should be "=sum(15:120)", in cell J21 the formula should be "=sum(J5:J20)", and so on for each of the columns: I, J, K, L, M, 0, P, Q, R, S and T. In cell H21, enter "Bal". This will allow you to keep a running sum of the accounts as you enter each transaction. For now, it will be a "0," but this will change as you enter the transactions.

5) In cell H22, enter "Totals". In cell 122, enter "=sum(I21:M21)." In cell 022, enter "=sum(021:T21)." Excel allows you to keep a running sum of the column totals on each side of the equation. You should find that the running sum of the column totals on the left-hand side of the equation always equals the running sum of the column totals on the right-hand side so the accounting equation is always in balance.

6) Highlight cells 15 through T22. On a PC, right click on your selection and select "Format Cells". On a Mac, select "Format' then click "cells". Under the "number" tab, change the number format from "General" to "Accounting". In the same dialogue box, select the symbol dropdown menu and change "8" to "none' and reduce the number of decimal places to 0. Select "OK' to close the dialogue box and save your settings.

7) As a final formatting step, highlight cells 14 to T4 and select "bottom border' icon in the toolbar at the top of the spreadsheet (note that you might have to select this option using the small arrow beside the icon). Highlight Cells 121 to T21 and select 'top border' icon from the same menu.

8) Enter the opening balances given in the problem in row 5.

9) Beginning in row 6, enter the transactions given in the problem. Use multiple rows as necessary.

10) Using Exhibit 2-2 on page 65 as a guide, construct the financial statements for Requirements 3, 4 and 5. Place each requirement in under its corresponding section under the "Answer" tab.

PAGE 65 :

Exhibit 2.2 :

The following amounts summarize the financial position of Little Teal Dog Inc. on May 31, 2020: Cash + Accounts Receivable 1300 Assets Computers + Supplies + Land = (net) 0 130 15600 Liabilities Accounts Note + Payable Payable 10400 0 + Salaries Payable 0 Shareholders' Equity Common Retained Shares Earnings 5200 4810 Interest Payable 0 Balance 3380 During June 2020, the business completed these transactions: June 1: Received cash of $11700 and issued common shares. June 1: Bought two computers for a total of $10400 by paying $2600 down and signing a note payable for the rest. Interest of 5% to be paid with the note payable on June 1, 2021. The computers are expected to last 5 years. June 5: Performed services for a client and received cash of $11700. June 9: Paid $5850 on accounts payable. June 13: Purchased supplies on account, $5200. June 20: Collected cash from a customer on account, $650. June 23: Consulted on the design of a business report, and billed the client for services rendered, $9100. June 25: Declared and paid a cash dividend of $1820. June 30: Recorded the following business expenses for the month: paid office rent, $1300; paid advertising, $1170. June 30: Accrued $4290 in employee salaries. Employees are paid on the first day of each month. June 30: A count revealed that $2080 worth of supplies are still on hand. Other Information: 1) In the past, Little Teal Dog Inc. has used the following accounts on their income statement: Revenue, Depreciation Expense, Supplies Expense, Interest Expense, Rent Expense, Salaries Expense, Advertising Expense, and Supplies Expense. They use the Dividends account to record dividends. Not all accounts have been used each period. Required: 1) Create all necessary journal entries for the month of June 2020. Place your answer under "Requirement 1" in the "Answer" tab. Note that the dates have been pre-populated. Ensure your journal entries match the appropriate date. Explanations are not required. 2) Analyze the effects of the above transactions on the accounting equation. Place your answer under "Requirement 2" in the "Answer" tab. 3) Prepare the Income Statement for the month ended June 30, 2020. List expenses in decreasing order by amount. Place your answer under "Requirement 3" in the "Answer" tab. 4) Prepare the Statement of Retained Earnings for the month ended June 30, 2020. Place your answer under "Requirement 4 in the "Answer tab." 5) Prepare the Balance Sheet at June 30, 2020. Place your answer under "Requirement 5" in the "Answer" tab. 6) Using the method outlined in the textbook, journalize the necessary closing entries for the month ended June 30, 2020. Place your answer under "Requirement 6" in the "Answer" tab. Exhibit 2-2 Financial Statements of Tara Inc. B D 1 $ 10,000 2 3 4 5 6 7 8 Tara Inc. Income Statement For the Month Ended April 30, 2020 Revenues Service revenue ($7,000 + $3,000) Expenses Salary expense Rent expense Utilities expense Total expenses Net income $ 1,200 1.100 400 2,700 $ 7,300 9 10 B D 1 2 3 Tara Inc. Statement of Retained Earnings For the Month Ended April 30, 2020 Retained earnings, April 1, 2020 Add: Net income for the month Subtotal Less: Dividends declared Retained earnings, April 30, 2020 4 $ 0 7,300 7,300 (2.100) $ 5,200 5 6 7 B D E 1 2 Tara Inc. Balance Sheet As at April 30, 2020 Assets Cash Accounts receivable Office supplies Land 3 4 5 6 7 Liabilities $33,300 Accounts payable $ 1,800 2,000 Shareholders' Equity 3,700 Common shares 50,000 18,000 Retained earnings 5,200 Total shareholders' equity 55,200 $ 57,000 Total liabilities and $ 57,000 shareholders' equity 8 Total assets 9