To start your company, the management team must make a budget for your new Company's Quarter 1, 20X0 operations (three-month accounting period).

To determine how much to budget for each category, you should imagine and research how your business will perform in Quarter 1, 20X0 and the related transactions:

• Determine the interesting and useful product your Company will sell and its selling price.

• Forecast expected Q1, 20x0 units sold and revenue recognized from your product.

• Determine how the product is created, how much it costs to create each unit, and scheduled Q1 20x0 inventory production.

• Forecast the related cost of goods sold for your product.

• Research monthly rent prices in your area for your office space.

• Determine the amount of employees and their monthly wage

• Research any other monthly expenses necessary to sell your product.

• Determine the amount your investors gave you to sell your product.

After a budget is formulated, make a chart of accounts using the following template, grouping expected transactions determined from your research in the appropriate category and giving it a unique number.

Assets(1000-1999)

Liabilities(2000-2999)

Equity(3000-3999)

Revenue(4000-4999)

Cost of Goods Sold(5000-5999)

Operating Expenses(6000-6999)

After you have finished your budget and chart of accounts, your team will assume that your company has managed to stay within that budget for the first quarter (i.e. your actual expenses equal the amount that you determined in your budget). Your accounting team will now work together to complete the accounting cycle, with assistance from the management team.

Throughout this section, you've been provided templates to keep track of your work. Transfer the information in these templates into spreadsheet and/or accounting software. Incorporating this accounting technology will help you maintain accurate accounting records and perform the steps of the accounting cycle. Remember, you can use spreadsheet software to create the data, manipulate formulas, and format your data. One helpful formula is =SUM(X:X), used to display a sum for a range of cells in a spreadsheet. You enter the first cell in the range (e.g. B2) and then the last cell in the range (e.g. B7) where the Xs are.

Use this template to journalize the transactions.

Date

Account

Debit

Credit

Date of transaction

Description of transaction

0

Cash, accounts payable, etc.

0

Date of transaction

Description of transaction

0

Cash, accounts payable, etc.

0

Use this template to post the transactions to the general ledger.

Account Name:

Date

Item Description

Debit

Credit

Balance

Use this template to make a trial balance.

Company Name

Trial Balance

First Quarter,year

Account Name

Debit

Credit

Cash

Accounts receivable

Asset

Asset

Accounts payable

Equity

Revenue

Expense

Expense

Expense

TOTAL

Determine whether you will need to make any adjusting entries based on the outcome of your trial balance. Then, use the information to make a ten-column worksheet. Use this worksheet as a template.

Company Name

First Quarter,Dates

Trial Balance

Adjustments

Adjusted Trial Balance

Income Statement

Balance Sheet

Account Name

Debit

Credit

Debit

Credit

Debit

Credit

Debit

Credit

Debit

Credit

Cash

Accounts receivable

Asset

Asset

Asset

Accounts payable

Equity

Revenue

Expense

Expense

Expense

TOTAL

Prepare the income statement using this template.

Income Statement

First Quarter

Revenues

Description

$0

Description

$0

Description

$0

Expenses

Description

$0

Description

$0

Description

$0

Total

Net income

TOTAL

Use this template to prepare the statement of owner's equity.

Statement of Owner's Equity

First Quarter

Beginning capital

$0

Investment

0

Net income

0

Subtotal

$0

Withdrawals

0

Net losses

0

Owner's Equity

$0

Now, prepare the balance sheet using this template.

Balance Sheet

December 31

Assets

Cash

$0

Accounts receivable

0

Other

0

Other

0

Total assets

$0

Liabilities

Accounts payable

$0

Salaries payable

0

Other

0

Other

0

Total liabilities

$0

Owner's equity

Total owner's equity

0

Total liabilities and equity

0

Use this template to journalize and post closing entries.

General Journal

Date

Accounts

Debit

Credit

Revenue, expense, summary, or capital

0

Revenue, expense, summary, or capital

0

Description of closing entry

Finally, use this template to make your post-closing trial balance.

Closing Trial Balance

Date

Debits

Credits

Cash

$0

Accounts receivable

0

Asset

0

Asset

Accounts payable

$0

Salaries payable

0

Expense

0

Expense

0

Expense

0

Owner's capital

_____

0

$0

$0