Accounting Question

CASE STUDY – THE COMPLETE ACCOUNTING CYCLEName: ___________________________________
This Case Study is worth 100 points, or 10% of your final course grade.
This Case Study relates to TCOs E and F, and Chapters 3 and 4.
MAKE SURE TO COMPLETE ALL REQUIREMENTS WHICH ARE LISTED BELOW.
There are 10 sheets in the Workbook, including this one.
All of the information that you need for the project is located in this Workbook.
Requirements
Requirement 1—Prepare the Journal Entries in the General Journal
Requirement 2—Post Journal Entries to the General Ledger
Requirement 3—Prepare a Trial Balance
Requirement 4—Prepare the Adjusting Entries
Requirement 5—Post Adjusting Entries to the General Ledger
Requirement 6—Prepare an Adjusted Trial Balance
Requirement 7—Prepare the Financial Statements
Requirement 8—Prepare the Closing Entries
Requirement 9—Post Closing Entries to the General Ledger
Requirement 10—Prepare the Post Closing Trial Balance
Sheet in Workbook
Journal Entries
General Ledger
Trial Balance
Adjusting Entries
General Ledger
Adjusted Trial Balance
Financial Statements
Closing Entries
General Ledger
Post-Closing Trial Balance
Hint for success: Review the Week 2 and 3 Activities prior to starting this project.
You can hover over the red pointer at the top right-hand corner of the cell to read the
Hints are provided for the following balances:
1) The debits for the journal entries are on the Journal Entries tab.
2) The credits for the journal entries are on the Journal Entries tab.
3) The cash balance is on the General Ledger tab.
4) The debits for the trial balance are on the Trial Balance tab.
5) The credits for the trial balance are on the Trial Balance tab.
6) The debits for the adjusted trial balance are on the Adjusted Trial Balance tab.
7) The credits for the adjusted trial balance are on the Adjusted Trial Balance tab.
8) Net income for the income statement is on the Financial Statements tab.
9) Retained earnings as of July 31 are on the Financial Statements tab.
10) Total assets for the balance sheet are on the Financial Statements tab.
11) Total liabilities and shareholders’ equity for the balance sheet are on the Financial Statements tab.
12) The debits for the post-closing trial balance are on the Post-Closing Trial Balance tab.
13) The credits for the post-closing trial balance are on the Post-Closing Trial Balance tab.
Requirement #1:
During its first month of operation, the True Consulting Corporation, which specializes in management consulting,
completed the following transactions.
July 1
Issued 15,000 shares of the company’s common stock in exchange for $15,000.
July 3
Purchased a truck for $8,000. A down payment of $3,000 was made, with the balance on account.
July 5
Paid $1,200 to cover rent from July 1 through September 30.
July 7
Purchased $2,000 of supplies on account.
July 10
Billed customers for consulting services performed, $3,700.
July 14
Paid $500 toward the amount owed for the supplies purchased on July 7.
July 15
Paid $1750 in cash for employee wages.
July 19
Collected $1600 in cash from customers that were billed on July 10.
July 21
Received $4,200 cash from customers for services performed.
July 31
Paid $350 in cash for truck repairs.
July 31
Declared and Paid $700 in cash dividends.
Prepare journal entries to record the July transactions in the General Journal below.
Date
General Journal
Description(Account Name)
Debit
Credit
0
0
Note: Remember that debits must equal credits—All of your journal entries should balance.
Use the following account names for journal entries.
Category
Assets
Chart of Accounts
Account Title
Normal Balance
Cash
Accounts Receivable
Supplies
Prepaid Rent
Equipment
Accumulated Depreciation – Equipment
Debit
Debit
Debit
Debit
Debit
Credit
Accounts Payable
Income Tax Payable
Credit
Credit
Common Stock
Retained Earnings
Dividends
Credit
Credit
Debit
Service Revenue
Credit
Rent Expense
Debit
Liabilities
Stockholders’ Equity
Revenue
Expenses
Wages Expense
Repairs & Maintenance Expense
Supplies Expense
Depreciation Expense
Income Tax Expense
Clearing Account
Income Summary
Debit
Debit
Debit
Debit
Debit
This Sheet will be used for Requirements 2, 5, and 9.
Requirement #2:
Post the July journal entries to the following T-accounts and compute ending balances.
Cash
Service Revenue
Accounts Receivable
Rent Expense
Supplies
Wages Expense
Prepaid Rent
Repairs & Maintenance Expense
Equipment
Supplies Expense
Accumulated Depreciation-Equipment
Depreciation Expense
Accounts Payable
Income Tax Expense
Income Tax Payable
Retained Earnings
Common Stock
Income Summary
Dividends
Requirement #3:
Prepare a trial balance for July in the space below.
True Consulting Corporation
Trial Balance
July 31
0
0
Requirement #4:
Prepare adjusting entries using the following information in the General Journal
below. Show your calculations!
a) One month’s rent has expired
b) The remaining inventory of supplies is $600.
c) The estimated depreciation on equipment is $100.
d) The estimated income taxes are $1,200.
Date
General Journal
Description (Account Name)
Debit
Credit
Requirement #5:
Post the adjusting entries to the General Ledger T-accounts and compute adjusted balances.
Just add to the balances that are already listed.
Requirement #6:
Prepare an adjusted trial balance in the space below.
True Consulting Corporation
Adjusted Trial Balance
July 31
0
0
Requirement #7:
Prepare the financial statements for True Consulting Corporation as of July 31 in the space below.
You will only be preparing the income statement, statement of retained earnings, and the balance sheet.
The statement of cash flows is a required financial statement, but is not required for this case study.
True Consulting Corporation
Income Statement
For the Month Ending July 31
Revenues:
Service Revenue
Expenses:
Rent Expense
Wages Expense
Repairs & Maintenance Expense
Supplies Expense
Depreciation Expense
Income Tax Expense
Total Expenses
Net Income
True Consulting Corporation
Statement of Retained Earnings
For the Month Ending July 31
Retained Earnings, July 1
Add: Net Income
Subtotal
Less: Dividends
Retained Earnings, July 31
True Consulting Corporation
Balance Sheet
July 31
Assets:
Cash
Accounts Receivable
Supplies
Prepaid Rent
Equipment
Less: Accum. Depr.
Total Assets
Liabilities:
Accounts Payable
Income Tax Payable
Total Liabilities
Stockholders’ Equity:
Common Stock
Retained Earnings
Total Stockholders’ Equity
Total Liabilities and
Stockholders’ Equity
Requirement #8:
Prepare the closing entries at July 31 in the General Journal below.
Date
General Journal
Description (Account Name)
Debit
Credit
Requirement #9:
Post the closing entries to the General Ledger T-accounts and compute ending balances.
Just add to the adjusted balances already listed.
Requirement #10:
Prepare a post-closing trial balance as of July 31 in the space below.
True Consulting Corporation
Post-Closing Trial Balance
July 31
0
0
Case Study 1 Rubric
Please note that this rubric provides a general guideline, but you can score anywhere between 0
and the maximum number of points for that step, depending on the accuracy and completeness
of your work.
Criteria
Step 1
Prepared
Journal
Entries (20
points)
Outstanding
Prepared
Adjusting
Journal
Entries (10
points)
Very Poor
16 points
12 points
8 points
Posting is
Posting has
Posting is done poorly, but does
mostly correct, several errors that show evidence of an attempt to
but minor
resulted in
complete.
errors are
incorrect account
evident.
balances.
8 points
6 points
4 points
Some minor
Errors in
Evidence of an attempt to complete
errors such as computations that the trial balance.
incorrect
resulted in
account
incorrect amounts
names or
to be debited and
incorrect totals credited.
due to errors
in prior steps.
10 points
8 points
6 points
Journal
Journal entries Journal entries
entries use
mostly use
have some errors
accurate
accurate
in use of accounts
accounts and accounts and and amounts; and
amounts; and amounts; and debits and credits
debits and
debits and
are only used
credits are
credits are
somewhat
used
used correctly. correctly.
correctly.
10 points
Posting
is
Steps 5 and
correct,
6
Posted and leading to an
Prepared an accurate trial
Unadjusted balance.
Trial
Balance (10
points)
Poor
Journal
Minor errors
Errors in
Evidence of an attempt to complete
entries use
such as
computations that the journal entries.
accurate
incorrect
resulted in
accounts and account
incorrect amounts
amounts; and names or
to be debited and
debits and
credits listed credited.
credits are
prior to debits.
used
correctly.
20 points
Posting is
Step 2
correct,
Posted to
the General leading to
Ledger (10 accurate
account
points)
balances.
10 points
Correct
Step 3
Prepared a account
names and
Trial
Balance (10 balances so
to arrive at a
points)
correct trial
balance.
Step 4
Good
8 points
6 points
Posting is
Posting has
mostly correct, several errors,
leading to a
leading to a trial
mostly correct balance with
trial balance. several errors.
4 points
Journal entries have some errors in
use of accounts and amounts; and
debits and credits are not used
correctly.
4 points
Posting is done poorly or not at all,
leading to inaccurate or no trial
balance.
Posted and
Prepared an
Unadjusted
Trial
Balance (10
points)
Step 7
Prepared
Financial
Statements
(20 points)
Step 8
Prepared
Closing
Journal
Entries (10
points)
10 points
All three
Financial
Statements
are prepared
accurately
and in an
appropriate
format.
20 points
16 points
12 points
8 points
Journal
Journal entries Journal entries
Journal entries have some errors in
entries use
mostly use
have some errors use of accounts and amounts; and
accurate
accurate
in use of accounts debits and credits are not used
accounts and accounts and and amounts; and correctly.
amounts; and amounts; and debits and credits
debits and
debits and
are only somewhat
credits are
credits are
used correctly.
used
used correctly.
correctly.
10 points
Steps 9 and Posting is
correct,
10
Posted and leading to an
accurate trial
Prepared
Post-Closing balance.
Trial
Balance (10
points)
8 points
6 points
4 points
Two of the
One of the three
One or fewer of four Financial
three financial Financial
Statements are prepared accurately
Statements
Statements is
and mostly in an appropriate format.
are prepared prepared
Three or all statements have some
accurately,
accurately and
errors.
and mostly in mostly in an
an appropriate appropriate format.
format. One
Two statements
statement has have some errors.
some errors.
10 points
8 points
6 points
Posting is
Posting has
mostly correct, several errors,
leading to a
leading to a trial
mostly correct balance with
trial balance. several errors.
8 points
6 points
4 points
Posting is done poorly or not at all,
leading to inaccurate or no trial
balance.
4 points
Total Points Earned Out of 100
Points
nywhere between 0
y and completeness
Points
Awarded
0