The Week 1 Assignment includes exercises to reinforce the learning objectives for week 1, including matching vocabulary, understanding the accounting elements of assets, liabilities, and owner's equity, and demonstrating transaction analysis and completion of basic financial statements. The instructions for completing each exercise can be found in each of the exercise tabs. The Grade Rubric tab identifies how the assignment will be scored and will be completed by your instructor.

ASSIGNMENT INSTRUCTIONS Your week 1 assignment includes exercises to reinforce the learning objectives for week 1, including the vocabulary introduced this week, the accounting elements, transaction analysis, and basic financial statements. IF YOU OPEN THE FILE AND BEGIN WORKING WITHOUT SAVING YOU MAY LOSE YOUR WORK! Excel files are embedded web pages, and your work may be lost if you do not SAVE the file first! Be sure to review the handouts that are included in tabs here and in the Learning Activities folder. You may want to print them out to use as a handy reference! There are four different exercises on four different tabs this week. You can see the value of each exercise in the Grade Rubric tab. I will complete this when I grade your assignment. The instructions for each assignment can be found on the exercise tabs. The Grade Rubric tab identifies how the assignment will be scored and will be completed by your instructor. Each week a new handout will be included as a tab in the assignment file to help you complete the assignment. All of the handouts for the week can also be found in the Learning Activities folder for that week. Be sure to submit the entire file in the assignment upload area! Please do not try to save and send the tabs separately! Please do not send zipped files! es for week 1, nsaction analysis, YOU MAY may be lost if earning Activities n see the value e your assignment. he Grade Rubric your instructor. to help you not try to save AC 107 GRADING RUBRIC WEEK 1 This wil be completed by your instructor when your assignment is graded. Total Points Available Student Score Vocabulary 11.5 23 terms @ 1/2 point each Accounting Elements 12.5 25 items @ 1/2 point each Identify Accounts 20 40 items @ 1/2 point each Financial Statements 16 Income statement @ 1 point each = 6 points Statement of owner's equity @ 1point each = 3points Balance sheet @ 1 point each = 7 points. Points 60.0 Total points earned will be added and then rounded to the nearest 1/10th point. 0.0 Tammy's Tresses Chart of Accounts ASSETS 101 122 141 145 161 171 Cash Accounts Receivable Supplies Prepaid Insurance Computer Equipment Hair Dressing Equipment LIABILITIES 202 Accounts Payable 219 Wages Payable OWNER'S EQUITY 301 Tammy, Capital 305 Tammy, Drawing REVENUE 401 Styling Revenue 405 Permanents Revenue 407 Coloring Revenue 411 Manicure Revenue EXPENSES 511 Wages Expense 521 Rent Expense 523 Supplies Expense 525 Telephone Expense 535 Insurance Expense Please note that the revenue and expense categories are actually sub-categories of owner's equity, but we will consider them to be categories of their own. INCOME STATEMENT STATEMENT OF OWNER'S EQUITY All Revenue Accounts Styling Revenue Permanents Revenue Coloring Revenue Manicure Revenue All Expense Accounts Wages Expense Rent Expense Supplies Expense Telephone Expense Insurance Expense BALANCE SHEET All Asset Accounts All OE Accounts Tammy, Capital Tammy, Drawing Cash Accounts Receivable Supplies Prepaid Insurance Computer Equipment Hair Dressing Eqpmt All Liability Accounts Accounts Payable Wages Payable One Owner's Eq Acct Tammy, Capital Tammy's Tresses - Basic Financial Statement Format Tammy's Tresses Income Statement Month ended June 30, 20xx Revenue Styling Revenue Premanents Revenue Coloring Revenue Manicure Revenue Total Revenue xxx xxx xxx xxx Expenses Wages Expense Rent expense Supplies Expense Insurance Expense Total Expenses xxx xxx xxx xxx xxx xxx Net Income xxx Tammy's Tresses Statement of Owner's Equity Month ended June 30, 20xx Tammy, Capital June 1, 20xx Additional investements in June Net Income for June Less: Withdrawals for June Increase in Capital Tammy, Capital June 30, 20xx xxx xxx xxx xxx xxx xxx Tammy's Tresses Balance Sheet As of June 30, 20xx Assets Cash Accounts Receivable Supplie Prepaid Insurance Computer Equipment Hair Dressing Equipment Total Assets xxx xxx xxx xxx xxx xxx Liabilities Accounts Payable Wages Payable Total Liabilities xxx xxx xxx xxx Owner's Equity Tammy, Capital xxx Total Liabilities and Owner's Equity xxx WEEK 1 VOCABULARY MATCHING IN THE BOX PROVIDED NEXT TO EACH VOCABULARY TERM RECORD THE LETTER OF ITS DEFINITION Term 1. Account A. 2. Accounts Payable B. 3. Accounts Receivable C. 4. Accounting Equation D. 5. Assets E. 6. Balance Sheet F. 7. Business Entity Concept G. 8. Corporation H. 9. Expenses I. 10. GAAP J. 11. Income Statement K. 12. Liabilities L. 13. Manufacturing Business M. 14. Merchandising Business N. 15. Net Income (Profit) O. 16. Owner's Name, Drawing P. 17. Owner's Equity (Capital) Q. 18. Partnership R. 19. Revenue S. 20. Sarbanes-Oxley Act T. 21. Service Business U. 22. Sole Proprietorship V. 23. Statement of Owner's Equity W. WEEK 1 VOCABULARY MATCHING XT TO EACH VOCABULARY TERM RECORD THE LETTER OF ITS DEFINITION Definition Three fundamental elements: Assets = Liabilities + Owner's Equity Reports assets, liabilities, and owner's equity on a specific date. Confirms that the accounting equation is in balance. Concept that non-business assets and liabilities are not included in the business records. The costs of doing business. Costs incurred for the purpose of earning revenue. Withdrawals by the owner that reduce capital by withdrawing cash or other assets for personal use. A business that makes a product to sell. A record where we collect information that is similar. For example, all increases and decreases in the bank balance are recorded in the Cash account. Ownership structure in which more than one person owns the business. An act passed by Congress to help improve reporting practices of public companies. Unwritten promise to pay a supplier for purchases or services received. A type of ownership structure in which stockholders own the business. Generally Accepted Accounting Principles. Procedures and guidelines developed by FASB to be followed in the accounting and reporting process. Reports revenue, expenses, and net income or net loss. A business that buys products to sell. Amount the business charges its customers for services or products sold. A business that earns revenue by providing a service rather than a product. Excess of total revenues over total expenses. Revenues are greater than expenses. Ownership structure in which only one person owns the business. The category where we record amounts owed by a business to another business or individual (Debts). Reports beginning capital, plus net income, less withdrawals to compute ending capital for an accounting period Amount owed to a business by its customers for the sale of goods or services. The amount by which business assets are greater than liabilities. Items owned by the business that will provide future benefits. ACCOUNTING ELEMENTS Click on the CLASSIFICATION box next to the account name, then click on the arrow to see the dropdown list and identify each of the accounts as an asset, liablity, owner's equity, revenue or expense account. Then click on the FINANCIAL STATEMENT box next to the account to see the dropdown list and identify the statement where this account is reported. The chart of account handout this is available in the weekly Learning Activities folder and also as a tab in this assignment file is an excellent resource to use to check your answers! ACCOUNT Cash Rent Expense Accounts Payable Accounts Receivable Service Fees Revenue Office Equipment Supplies Wages Expense Wages Payable Prepaid Insurance John Smith, Drawing John Smith, Capital Asset Liability Owner's Equity Revenue Expense Income Statement Statement of Owner's Equity Balance Sheet CLASSIFICATION FINANCIAL STATEMENT The Capital account appears on two statements. Identify both of them. IDENTIFYING AFFECTED ACCOUNTS. Every business transaction will affect at least two accounts in the financial records. This week each one will affect TWO and ONY TWO accounts. For each of the transactions below please identify the names of the two accounts affected and select "Increase" or "Decrease" to show the effect this transaction will have on the balance of each account. PLEASE NOTE: EACH OF THESE TRANSACTIONS IS EXPLAINED ON PP. 24 - 30 OF THE TEXT. This is the chart of accounts that John Sullivan uses in his business: Chart of Accounts Assets Cash Office Equipment Accounts Receivable Revenues Service Revenue Expenses Rent Expense Telephone Expense Wages Expense Liabilities Accounts Payable Owners Equity John Sullivan, Capital John Sullivan, Drawing Review each of these transactions, identify the two accounts affected and decide whether each one is increased or decreased. To make your selections click on the box where your answer will be, then click on the down arrow next to the field and select your answer. ACCOUNT NAME (a) Invested cash in the business, $27,500. (b) Bought Office Equipment on Account (c) Bought Office Equipment for Cash INCREASE/DECREASE (d) Paid Cash on account to supplier in transaction (b), $2,300. (e) Received cash from a client for professional services, $1,500. (f) Paid office rent for February, $600. (g) Paid February phone bill, $64. (h) Withdrew cash for personal use, $1,000 (i) Performed services for clients on account, $750. (j) Paid wages to part-time employee, $1200. PREPARING THE FINANCIAL STATEMENTS After completing the accounting equation chart for John Smith's business the following account balances were calculated. Using those balances complete the financial statements below. ASSETS Cash Office Equipment Accounts Receivable $ 22,000 9,100 400 LIABILITIES Accounts Payable $ 8,500 OWNER'S EQUITY John Smith, Drawing $ John Smith, Capital 1,000 ? REVENUE Service Revenue $ 6,000 EXPENSES Rent Expense $ Telephone Expense Wages Expense 600 200 1,200 In these financial statements the account names have been given to you. Please input the balance of each account and calculate the subtotals and totals in each box in the statements below. SMITH'S SERVICES Income Statement Month ended March 31, 20xx REVENUE Service Revenue EXPENSES Rent Expense Telephone Expense Wages Expense Total Expenses NET INCOME SMITH'S SERVICES Statement of Owner's Equity Month ended March 31, 20xx Jon Wallace, Capital March 1, 20xx Investments during March Total Investment Add: Net Income for March Less: Withdrawals for March Net Increase in Capital Jon Wallace, Capital March 31, 20xx SMITH'S SERVICES Balance Sheet As of March 31, 20xx ASSETS Cash Office Equipment Accounts Receivable Total Assets LIABILITIES Accounts Payable OWNER'S EQUITY Jon Sullivan, Capital TOTAL LIABILITIES + OWNER'S EQUITY 0.00 $ 20,000 20,000 3,000 Total revenues - total expenses = Net Income The beginning balance is zero because the business was opened on March 1 Net income was calculated in the income statement above How much did his Capital increase in March from Net Income less Withdrawals? The beginning balance + investments + the net increase in Capital = ending balance on March 31. The ending balance of John Sullivan, Capital was calculated in the statement of owner's equity above. The accounting equation tells us that Total Assets = Total Liabilities + Owner's Equity. Tammy's Tresses - Basic Financial Statement Format Tammy's Tresses Income Statement Month ended June 30, 20xx Revenue Styling Revenue Premanents Revenue Coloring Revenue Manicure Revenue Total Revenue xxx xxx xxx xxx Expenses Wages Expense Rent expense Supplies Expense Insurance Expense Total Expenses xxx xxx xxx xxx xxx xxx Net Income xxx Tammy's Tresses Statement of Owner's Equity Month ended June 30, 20xx Tammy, Capital June 1, 20xx Additional investements in June Net Income for June Less: Withdrawals for June Increase in Capital Tammy, Capital June 30, 20xx xxx xxx xxx xxx xxx xxx Tammy's Tresses Balance Sheet As of June 30, 20xx Assets Cash Accounts Receivable Supplie Prepaid Insurance Computer Equipment Hair Dressing Equipment Total Assets xxx xxx xxx xxx xxx xxx Liabilities Accounts Payable Wages Payable Total Liabilities xxx xxx xxx xxx Owner's Equity Tammy, Capital xxx Total Liabilities and Owner's Equity xxx Tammy's Tresses Chart of Accounts ASSETS 101 122 141 145 161 171 LIABILITIES OWNER'S EQUITY Cash 202 Accounts Payable 301 Tammy, Capital Accounts Receivable 219 Wages Payable 305 Tammy, Drawing Supplies Prepaid Insurance Computer Equipment Hair Dressing Equipment REVENUE 401 Styling Revenue 405 Permanents Revenue 407 Coloring Revenue 411 Manicure Revenue EXPENSES 511 Wages Expense 521 Rent Expense 523 Supplies Expense 525 Telephone Expense 535 Insurance Expense Please note that the revenue and expense categories are actually sub-categories of owner's equity, but we will consider them to be categories of their own. INCOME STATEMENT All Revenue Accounts Styling Revenue Permanents Revenue Coloring Revenue Manicure Revenue All Expense Accounts Wages Expense Rent Expense Supplies Expense Telephone Expense Insurance Expense STATEMENT OF OWNER'S EQUITY All OE Accounts Tammy, Capital Tammy, Drawing BALANCE SHEET All Asset Accounts Cash Accounts Receivable Supplies Prepaid Insurance Computer Equipment Hair Dressing Eqpmt All Liability Accounts Accounts Payable Wages Payable One Owner's Eq Acct Tammy, Capital WEEK 1 - THE ACCOUNTING EQUATION CHART Jon Wallace started a business. During March, the first month of business, the following occurred. Show the effect of each transaction on the accounting equation. Assets = Liabilities + Owner's Equity Chart of Accounts Assets Cash Office Equipment Accounts Receivable Liabilities (a) Invested cash in the business, $30,000. Accounts Payable (b) Bought office equipment on account, $4,500. (c) Bought office equipment for cash, $1,600. Owners Equity (d) Paid cash on account to supplier in transaction (b), $2,000. Jon Wallace, Capital (e) Performed services and received cash, $3,000 Jon Wallace, Drawing (f) Paid rent for March, $1,000. (g) Paid March telephone bill, $68. (h) Jon Wallace withdrew cash for personal use, $800. (i) Performed services for clients on account, $900. (j) Paid wages to part time employee, $500. (k) Received cash for services performed on account in transaction (i), $500. Revenues Service Revenue Expenses Rent Expense Telephone Expense Wages Expense Jon Wallace Company INPUT THE TRANSACTION AMOUNTS ON THE ROWS IDENTIFIED AS (a), (b), (c), etc. INPUT THE NEW BALANCE ON THE "bal" ROW FOLLOWING THE TRANSACTION. REMEMBER - DRAWING AND EXPENSES ARE REDUCTIONS OF THE OWNER'S EQUITY SECTION ASSETS (items owned) = CASH + OFF EQ + A/R Mar. 1 0 0 0 LIABILITIES (amts owed) A/P = 0 + OWNER'S EQUITY (owner's investment) (earnings) J. WALLACE J.WALLACE + CAPITAL - DRAWING + REVENUE - EXPENSES + 0 - 0 + 0 - (a) bal - + - - + - (b) bal (c) bal = + - + - = + - + - = + - + - = + - + - = + - + - = + - + - (d) bal (e) bal (f) bal (g) bal (h) bal 0 Jon Wallace Company INPUT THE TRANSACTION AMOUNTS ON THE ROWS IDENTIFIED AS (a), (b), (c), etc. INPUT THE NEW BALANCE ON THE "bal" ROW FOLLOWING THE TRANSACTION. REMEMBER - DRAWING AND EXPENSES ARE REDUCTIONS OF THE OWNER'S EQUITY SECTION ASSETS (items owned) = CASH + OFF EQ + A/R LIABILITIES (amts owed) A/P + OWNER'S EQUITY (owner's investment) (earnings) J. WALLACE J.WALLACE + CAPITAL - DRAWING + REVENUE - EXPENSES (I) bal = + - + - = + - + - bal = + - + - bal 3/31 = + - + - (j) bal (k) + CASH + OFF. EQ. + ACCTS REC. = TOTAL ASSETS + TOTAL LIAB. + CAPITAL Jon Wallace Company INPUT THE TRANSACTION AMOUNTS ON THE ROWS IDENTIFIED AS (a), (b), (c), etc. INPUT THE NEW BALANCE ON THE "bal" ROW FOLLOWING THE TRANSACTION. REMEMBER - DRAWING AND EXPENSES ARE REDUCTIONS OF THE OWNER'S EQUITY SECTION ASSETS (items owned) = CASH + OFF EQ + A/R LIABILITIES (amts owed) A/P + OWNER'S EQUITY (owner's investment) (earnings) J. WALLACE J.WALLACE + CAPITAL - DRAWING + REVENUE - EXPENSES - DRAWING + REVENUE - EXPENSES TOTAL LIAB. + OWNER'S EQ. = If total assets do not equal the total of liabilities + owner's equity, then you have an error! DESCRIPTION The first two transactions have been completed for you as an example! This is the explanation of the first two entries. You do not have to provide an explanation for your answers! (a) When the owner makes an investment we have to increase Cash and Jon Wallace, Capital. Tbe capital account reports the equity, the amount that belongs to the business free and clear, just like our down payment in the discussion question this week. (b) Purchased Office Equipment on account. Now we have $4500 more Office Equipment so we need to increase that account balance by $4500. We also now OWE $4500 more, so we increase Accounts Payable. DESCRIPTION The first two transactions have been completed for you as an example! DESCRIPTION The first two transactions have been completed for you as an example! Jon Wallace Company INPUT THE TRANSACTION AMOUNTS ON THE ROWS IDENTIFIED AS (a), (b), (c), etc. INPUT THE NEW BALANCE ON THE "bal" ROW FOLLOWING THE TRANSACTION. REMEMBER - DRAWING AND EXPENSES ARE REDUCTIONS OF THE OWNER'S EQUITY SECTION ASSETS (items owned) CASH Mar. 1 0 (a) 30,000 bal 30,000 = OFF EQ + A/R 0 0 LIABILITIES (amts owed) A/P = 0 + OWNER'S EQUITY (owner's investment) (earnings) J. WALLACE J.WALLACE + CAPITAL - DRAWING + REVENUE - EXPENSES + 0 - 0 + 0 - 0 30,000 = (b) 4,500 bal 4,500 (c) -1,600 1,600 bal 28,400 6,100 (d) -2,000 bal 26,400 (e) 3,000 bal 29,400 (f) -1,000 bal 28,400 (g) -68 bal 28,332 (h) -800 bal 27,532 + 30,000 - + - + - + - + - + - + - + - 4,500 = 4,500 = -2,000 = 2,500 3,000 = + - + 3,000 1000 = + - + - 1000 68 = + - + - + - 800 = + - 800 1068 (I) 900 bal 900 (j) -500 bal 27,032 (k) 500 -500 bal 27,532 bal 3/31 27,532 900 = + - + 3,900 500 6,100 = + - + - 400 = + - + - 400 = 2,500 + + CASH $ 27,532 + OFF. EQ. $ 6,100 + ACCTS REC. $ 400 $ 34,032 $ 2,500 = TOTAL ASSETS + TOTAL LIAB. + CAPITAL - 800 + 30,000 - DRAWING (800) + REVENUE 3,900 - EXPENSES TOTAL LIAB. + OWNER'S EQ. = 30,000 (1,568) $ 34,032 If total assets do not equal the total of liabilities + owner's equity, then you have an error! 3900 - 1568 1568 DESCRIPTION The first two transactions have been completed for you as an example! This is the explanation of the first two entries. You do not have to provide an explanation for your answers! (a) When the owner makes an investment we have to increase Cash and Jon Wallace, Capital. Tbe capital account reports the equity, the amount that belongs to the business free and clear, just like our down payment in the discussion question this week. (b) Purchased Office Equipment on account. Now we have Service Revenue $4500 more Office Equipment so we need to increase that account balance by $4500. We also now OWE $4500 more, so Rent Expense Telephone Exp we increase Accounts Payable. Service Revenue Wages Expense FINANCIAL STATEMENTS Jon Wallace Company Income Statement Month ended March 31, 20xx REVENUE Service Revenue $ - $ - EXPENSES Rent Expense Telephone Expense Wages Expense Total Expenses NET INCOME Jon Wallace Company Statement of Owner's Equity Month ended March 31, 20xx Jon Wallace, Capital March 1, 20xx Investments during June Total Investment Add: Net Income for March Less: Withdrawals for March Net Increase in capital Jon Wallace, Capital March 31, 20xx Jon Wallace Company Balance Sheet As of March 31, 20xx ASSETS Cash Office Equipment Accounts Receivable Total Assets LIABILITIES Accounts Payable OWNER'S EQUITY Jon Wallace, Capital TOTAL LIABILITIES + OWNER'S EQUITY FINANCIAL STATEMENTS Jon Wallace Company Income Statement Month ended March 31, 20xx REVENUE Service Revenue $ EXPENSES Rent Expense Telephone Expense Wages Expense Total Expenses 3,900 1000 68 500 1568 NET INCOME $ 2,332 Jon Wallace Company Statement of Owner's Equity Month ended March 31, 20xx Jon Wallace, Capital March 1, 20xx Investments during June Total Investment Add: Net Income for March Less: Withdrawals for March Net Increase in capital Jon Wallace, Capital March 31, 20xx 0.00 $ 30,000 30,000 2,332 (800) 1,532 $ 31,532 Jon Wallace Company Balance Sheet As of March 31, 20xx ASSETS Cash Office Equipment Accounts Receivable Total Assets LIABILITIES Accounts Payable OWNER'S EQUITY Jon Wallace, Capital TOTAL LIABILITIES + OWNER'S EQUITY $ 27,532 6,100 400 34,032 2,500 31,532 $ 34,032