Final Project

  

Final Project Data
 

On December 1, 2015 John Trap created a new travel agency, Trap Adventures, Inc. providing exclusive adventure trips.  The following transactions occurred during December 2015.
 

(NOTE: There are no beginning balances – this is a new company.)

  

Dec 1

John Trap invested $60,000 cash in   the company for common stock.

 

2

Purchase office equipment for   $17,500 cash.

 

2

The company rented furnished   office space by paying $18,000 cash for the first six months (December 2015 -   May 2016) rent.

 

3

The company purchased $1,500 of   office supplies on account.

 

10

The company paid $3,600 cash for   the premium on a 12-month insurance policy.

 

14

The company paid $10,750 cash for   two weeks' salaries earned by employees.

 

24

The company collected $54,000 cash   on commissions from airlines on tickets obtained for customers.

 

28

The company paid $12,125 cash for   two weeks' salaries earned by employees.

 

29

The company paid $350 cash for   minor repairs to the company's computer.

 

30

The company paid $450 cash for   this month's telephone bill.

 

30

Dividends of $3,000 cash were   paid.

Final Project Requirements

Using the spreadsheet found here and information above, complete the following: 

Adjustment Data:

• One month's insurance coverage has expired. 
• The company occupied the office space for the month of      December. 
• At the end of the month, $600 of office supplies are      still available.

1. Create journal entries to record the transactions that      occurred during the month of December. (Completed in Unit 3) 
2. Prepare an unadjusted trial balance (Completed in Unit      3) 
3. Create adjusting journal entries at the end of the      year, December 31 based on the adjustment data.  
4. Prepare an adjusted trial balance.  
5. Prepare an income statement, statement of stockholders'      equity, and classified balance sheet.  
6. Create closing journal entries to close all temporary      accounts.  
7. Prepare post-closing trial balance.  
8. In addition, answer TWO of the questions below in 1-2      fully developed paragraphs.  A fully developed paragraph should have      a major point with 3 to 5 support sentences.  One or two sentences is      not acceptable or does not discuss the question.  Be sure to show      what you know!!!  
   1. Trap Adventures, Inc. is looking for an       accountant.  In your own words, explain to Trap's hiring team the       role of accountant and accounting within business.  Provide examples       of the expectations of the accountant.  
   2. Discuss the financial position of Trap Adventures,       Inc. using the following ratios:   
      1. Current ratio  
      2. Return on equity: For each ratio, provide the        calculation and an explanation of the meaning.  Is this a positive        or negative result for the Trap Adventures, Inc.?
   3. Using Trap Adventures, Inc.'s income statement,       evaluate the operations for the month of December.  Complete a       common-size income statement using sales as the base number.  What       is the largest percentage?  What is the smallest percentage?        What recommendations could be made to increase Trap's net income?  
   4. Currently, Trap Adventures, Inc. does not own any       loans or bank notes (long-term liabilities).  What would happen if       Trap decides to obtain a bank loan for $25,000 to fund daily       operations?  How would this transaction impact the financial       statements - which accounts would be affected?  What is the debt to       equity ratio?  What does the debt to equity ratio represent