Students are required to submit the following information to receive full credit on this

project:

a. Profit and Loss - exported to Excel - before your closing entries

b. Balance Sheet - exported to Excel

c. Statement of Retained Earnings (you need to create it separately in Excel)

d. Journal entries (export into Excel)

e. Profit and Loss after closing entries. You should show a balance of 0.

f. Disclosures, ratios and explanation (can be added to the Excel spreadsheet)

The Corporation performs adjusting entries monthly. Closing entries are performed annually on

December 31. During December the following transactions occurred:

Dec. 1

Issued 10,000 shares of capital stock to Aaron Hillman and other investors in exchange for a

total of $45,000 cash.

Dec. 1

Paid $14,400 to Boothe Realty for 12 months rent paid in advance. (Use the Asset account:

Prepaid Rent for the entire amount).

Dec. 2

Purchased office equipment and furnishings from Edwards Corp. for $12,000 (use the account

Office Equipment and Furnishings). Paid $4,000 in cash with the balance due on a Note Payable

(principal and interest due in 6 months).

Dec. 4

Purchased office supplies on Account from Trackers for $1,400. Payment is due in 20 days.

These supplies are expected to last for several months.

Dec. 5

Purchased a 12 month business Malpractice Insurance Policy for $1,200 from the Cruise

Agency (use the Asset account Unexpired Malpractice Insurance for the entire amount).

Dec. 10 Received $3,000 cash from the Sweet & Fancy Cupcakes in West Reading as advance payment

for services to be provided. (Use the Liability account: Unearned Accounting Fees.)

Dec. 16 Paid employee salaries for the first two weeks of December, $1,200.

Dec. 16 Earned $6,000 in fees for Accounting services provided in the first two weeks of December.

$3,500 was received in cash and the remainder was billed to AAI's customers on Account (due in 10

days.)

Dec. 24 Paid the amount due to Trackers on account from the Dec. 4

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purchase.

Dec. 26 Received amount due on account from the December 16

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billing.

Dec. 27 AAI was named, along with Cruise Agency, as a co-defendant in a $5,000 lawsuit filed on

behalf of Ellie Perry. Perry believes she was not properly represented by Aaron Hillman and is suing for

damages. The extent of the Corporation's legal and financial responsibility, if any, can not be

determined at this time. (Note: this event does not need a journal entry at this time, but may require

disclosure in the notes accompanying the financial statements.

Dec. 30 Received a bill for internet & phone services for the month of December from Sprint in the

amount of $350. The amount is due on January 15, 2015.

Dec. 30 Declared a cash dividend of $.20 (20 cents) per share, payable on January 15, 2015.

Dec. 31 Earned $10,000 in fees for accounting services provided for the second two weeks of

December. $6,000 was received in cash and the remainder was billed to AAI's customers on Account

(due in 12 days.)

Data for Adjusting entries

a.

The advance payment for rent on December 1 covered a period of 12 months.

b.

The Insurance Policy is for 12 months.

c.

The annual interest rate on the Note Payable to Edwards Corp. is 9%.

d.

The Office Equipment and Furnishings are being depreciated by the straight-line method for a

period of 5 years.

e.

Office Supplies on hand on December 31 are estimated at $750.

f.

During December, AAI earned $1,200 of the accounting fees paid in advance by Sweet &

Fancy Cupcakes December 10

th

.

g.

Salaries earned by employees since last payroll are $1,300. The Salaries will be paid on 1/3/19.

h.

The Accountant estimates that the amount of Income Tax Payable will be $3,000. These taxes

will be paid in 2019.