AccountingCycle Project
Transaction PracticeSet –B&GCo.
ACC5100& 7040 - Fall 2015-ProfChung
You have been hired as an accountant for B&G Co., a corporation performing diverse consulting services in Detroit, Michigan. B&G Co. prepares financial statements on monthly bases.
Project Scope:You are torecord the transactions for December,prepare the monthlyadjustments,andprepare the financialstatements using theExcelworkbook provided.Then youwillclose the fiscalyearandprepare the books for next year.
Directions:The assignment encompasses two files: Project DirectionsandTransactions(thisWorddocument) and Forms(a separateExcelworkbook).Your solution shouldbe workedin Exceland thecompletedExcelworkbook submittedfor grading.
You shoulduse Excelformula where appropriate andcellreferences to carryforwardvalues andnumbersbetween worksheets within the workbook. Simply typing values in Excel willresultin a reducedscore, evenif thecorrectsolutionisprovided. Youshould useformulawherever possible.
1. Analyze thenarrative to prepare andrecord the transactionsfor December to the GeneralJournal.
2. Post the journal entries to ledger accounts using T-accounts (Don’t forget the opening balances from the information given on the post-closing trial balance on Nov. 30th.)
3. Complete the trialbalance on theworksheet.
4. Analyze thenarrative to prepareAdjusting Entries and record themto the T-accountsandtheworksheet.
5. Prepare the Adjusted TrialBalance on theworksheet.
6. Carry forwardthe appropriate balances to the IncomeStatement andBalance Sheet columnsonthe worksheet.
7. Prepare IncomeStatementandtheRetained Earnings Statement for the month endedDecember 31,2015and Balance Sheet asofDecember 31,2015in goodforms.Use the multi-step format for the Income Statement.
8. Close the income statement accounts, posting any net income or loss to retained earnings. Post the closing entry to the general journal and the T-accounts.
Due Date: Oct. 26 th,2015 (11:00pm) .
Note: You can work on this project individually or with your classmates as a team (the number of members up to three).
The following is the post-closing trial balance of the B&G Co. on Nov. 30 th, 2015:
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B&G Co. |
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Post-closing Trial Balance |
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November 30th, 2015 |
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ACCOUNT |
DEBIT |
CREDIT |
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Cash |
$41,500 |
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Accounts Receivable |
20,000 |
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Supplies |
9,000 |
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Equipment |
10,000 |
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Accumulated Depreciation |
$5,000 |
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Land |
10,500 |
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Accounts Payable |
8,000 |
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Salaries Payable |
10,000 |
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Common Stock* |
50,000 |
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Retained Earnings |
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18,000 |
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$91,000 |
$91,000 |
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* 50,000 shares authorized, 20,000 shares issued and outstanding |
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Transactions in December 2015 :
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Dec. |
1 |
The equipment was completely destroyed by the regional earth quake. “Loss by earthquake” was recognized. Assume that the transaction meets the requirements of an extraordinary item. |
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1 |
Lent 20,000 to another company and received a 2 year note. The note has a 9% interest rate. Interest will be paid annually on Dec. 1 stof 2016 and2017. |
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2 |
Purchased new equipment that costs $12,000 and issued 1,000 shares of common stock (no-par stock) to the equipment seller. |
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3 |
Cash payment on accounts payable amounted to $6,000. |
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4 |
Sold land for $13,000 cash. |
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10 |
Collected $15,000 as payment for amounts previously billed. |
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15 |
Paid monthly salaries of $20,000 to employees |
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16 |
Issued 1,000 shares of preferred stock at $10 per share |
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17 |
Purchased 500 shares of ABC corporation’s common stock at $15 (per share) and classify the securities as available-for-sales securities |
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20 |
Found that the company incorrectly overstated its November account receivable and sales revenue by $1,000 and made a journal entry to correct the error. |
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31 |
Performed services for various customers for $30,000 cash and another $30,000 on account during December. |
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31 |
Dividends of $5,000 were declared and paid. $ 1,025 is paid to preferred stockholders and the rest is paid to the common stock holders. |
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31 |
ABC corporation declared $ 5 dividend per share (to common stock holders). It will be paid in 2016. |
* Additional information
1. Ignore tax effect.
2. Salaries expenses incurred but not paid prior to Dec. 31 sttotaled $10,500.
3. The company received the bill for utility services (electricity) that the firm used during December in the amount of $6,000. The company will pay the bill in Jan. 2016.
4. $3,000 of supplies remained at the end of December.
5. The company decided to use the “Allowance” method for possible accounts receivable write-offs in the future and recorded the 5% of the outstanding account receivable as “Allowance for doubtful account” and “Bad debt expense”. Since the company did not use the method before, the beginning balance of the allowance is zero.
6. The equipment purchased on Dec. 2 nddepreciates $200 per month.
7. The common stock price of ABC Corporation on December 31st is still $ 15 per share.
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