Scenario: You were recently hired by a $35 million manufacturing company ($35 million in sales) as the company staff accountant. The controller (your boss) has asked you to explain several accounting practices to the two existing members of the accounting staff.

Note: The previous months financial statements (prepared just before you were hired) were incorrect. The Controller did not catch the errors before the incorrect financials were presented to the President. The Controller has become heavily involved in company operations (hoping to become the Chief Operating Officer) and does not have the time to carry out all the accounting responsibilities. It became clear last month that the company needed to hire an accountant with a four-year accounting degree (you).

Required: Prepare a clearly written set of instructions for areas the controller wants you to explain. The controller has provided some baseline information for you to incorporate into your instructions. You will be evaluated on how clear and complete the instructions are presented. The goal is for the accounting staff to fully understand the accounting (how and why) after reading your instructions.

Retained Earnings Statement (use the same financial information tied to your closing entries instruction manual)

• Explain what the retained earnings statement calculates.
• Explain why dividends are only included in the retained earnings statement.

Note: One of the errors in last months financials was the double counting of dividends (included in the retained earnings statement as well as the stockholders equity section).

1. Closing entries $ $ Nashville Nets Inc. Adjusted Trial Balance December 31, 2018 Debit Credit 1,000,000 9,000,000 25,000,000 2,400,000 105,350,000 1,250,000 41,950,000 14,150,000 3,340,000 120,000 50,000 21,580,000 Common Stock, Par $ 0.10 APIC (Additional Paid in Capital in Excess of Par) Retained Earnings Dividends Paid Sales Sales Discounts Cost of Goods Sold (COGS) Selling Expenses Administrative Expenses Rent Revenue Loss on sale of equipment Income Tax Expense $ $ $ $ $