Study

305CS.xlsx

Home >Business & Finance homework help >Accounting homework help >Study

Instructions

CASE STUDY - THE COMPLETE ACCOUNTING CYCLE
Name: ___________________________________
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 2 and 3.
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	Sheet in Workbook
Requirement 1—Prepare the Journal Entries in the General Journal	Journal Entries
Requirement 2—Post Journal Entries to the General Ledger	General Ledger
Requirement 3—Prepare a Trial Balance	Trial Balance
Requirement 4—Prepare the Adjusting Entries	Adjusting Entries
Requirement 5—Post Adjusting Entries to the General Ledger	General Ledger
Requirement 6—Prepare an Adjusted Trial Balance	Adjusted Trial Balance
Requirement 7—Prepare the Financial Statements	Financial Statements
Requirement 8—Prepare the Closing Entries	Closing Entries
Requirement 9—Post Closing Entries to the General Ledger	General Ledger
Requirement 10—Prepare the Post Closing Trial Balance	Post-Closing Trial Balance
Hint for success: Review the Week 2 Lesson prior to starting this project.
There are also hints contained within certain cells on some of the Worksheet tabs.
You can hover over the red pointer at the top right-hand corner of the cell to read the hint.
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.

Journal Entries

Requirement #1:

During its first month of operation, the Quick Tax Corporation, which specializes in tax preparation,

completed the following transactions.

July 1

Began business by making a deposit in a company bank account of $60,000, in exchange

for 6,000 shares of $10 par value common stock.

July 3

Paid the current month's rent, $3,500

July 5

Paid the premium on a 1-year insurance policy, $4,200

July 7

Purchased supplies on account from Little Company, $1,000.

July 10

Paid employee salaries, $3,500

July 14

Purchased equipment from Lake Company, $10,000. Paid $2,500 down and the balance was

placed on account. Payments will be $500.00 per month until the equipment is paid. The first payment is due 8/1.

Note: Use accounts payable for the balance due.

July 15

Received cash for preparing tax returns for the first half of July, $8,000

July 19

Made payment on account to Lake Company, $500.

July 31

Received cash for preparing tax returns for the last half of July, $9,000

July 31

Declared and paid cash dividends of $600.

Prepare journal entries to record the July transactions in the General Journal below.

Use the following account names for journal entries.

General Journal

Chart of Accounts: Account Title (Normal Balance)

Date

Description(Account Name)

Debit

Credit

Assets

Cash (Debit)

Prepaid Insurance (Debit)

Supplies (Debit)

Equipment (Debit)

Accumulated Depreciation - Equipment (Credit)

Liabilities

Accounts Payable (Credit)

Income Tax Payable (Credit)

Stockholders' Equity

Common Stock (Credit)

Retained Earnings (Credit)

Dividends (Debit)

Revenue

Tax Preparation Revenue (Credit)

Expenses

Rent Expense (Debit)

Salaries Expense (Debit)

Insurance Expense (Debit)

Supplies Expense (Debit)

Depreciation Expense (Debit)

Income Tax Expense (Debit)

0
DeVry: Debits equal $100,300

0
DeVry: Credits equal $100,300

Note: Remember that debits must equal credits—All of your journal entries should balance.

General Ledger

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 (111) DeVry: The balance of the Cash account after posting all journal entries should be $62,200.			Tax Preparation Revenue
Prepaid Insurance (117)			Rent Expense (511)
Supplies (119)			Salaries Expense (512)
Equipment (144)			Insurance Expense (513)
Accumulated Depreciation-Equipment (145)			Supplies Expense (514)
Accounts Payable (212)			Depreciation Expense (515)
Income Tax Payable (213)			Income Tax Expense (516)
Common Stock (311)
			Retained Earnings (312)
Dividends (313

Trial Balance

Requirement #3:
Prepare a trial balance for July in the space below.
Quick Tax Corporation
Trial Balance
July 31
	0 DeVry: Debits equal $85,000	0 DeVry: Credits equal $85,000

Adjusting Entries

Requirement #4:
Prepare adjusting entries using the following information in the General Journal
below. Show your calculations!
a) One month's insurance has expired.
b) The remaining inventory of supplies is $400.
c) The estimated depreciation on equipment is $125.
d) The estimated income taxes are $3,000.
		General Journal
Date	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.

Adjusted Trial Balance

Requirement #6:
Prepare an adjusted trial balance in the space below.
Quick Tax Corporation
Adjusted Trial Balance
July 31
	0 DeVry: Debits equal $88,125	0 DeVry: Credits equal $88,125

Financial Statements

Requirement #7:

Prepare the financial statements for the Quick Tax 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.

Quick Tax Corporation

Income Statement

Statement of Retained Earnings

Balance Sheet

For the Month Ending July 31

July 31

Revenues:

Retained Earnings, July 1

Assets:

Revenue

Add: Net Income

Cash

Subtotal

Supplies

Expenses:

Less: Dividends

Prepaid Insurance

Rent Expense

Retained Earnings, July 31

DeVry: Retained Earnings equals $5,325

Equipment

Salaries Expense

Less: Accum. Depr.

Insurance Expense

Total Assets

Supplies Expense

Depreciation Expense

Liabilities:

Income Tax Expense

Accounts Payable

Total Expenses

Income Tax Payable

Total Liabilities

Net Income

Stockholders' Equity:

Common Stock

Retained Earnings

Total Stockholders' Equity

Total Liabilities and

Stockholders' Equity

DeVry: Total Liabilities & Stockholders' Equity equals $76,325

DeVry: Net Income equals $5,925

DeVry: Total assets equals $76,325

Closing Entries

Requirement #8:
Prepare the closing entries at July 31 in the General Journal below.
		General Journal
Date	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.

Post-Closing Trial Balance

Requirement #10:
Prepare a post-closing trial balance as of July 31 in the space below.
Quick Tax Corporation
Post-Closing Trial Balance
July 31
	0 DeVry: Debits equal $76,450	0 DeVry: Credits equal $76,450

Grading Rubric

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		Outstanding	Good	Poor	Very Poor	Points Awarded
	Step 1 Prepared Journal Entries (20 points)	Journal entries use accurate accounts and amounts; and debits and credits are used correctly.	Minor errors such as incorrect account names or credits listed prior to debits.	Errors in computations that resulted in incorrect amounts to be debited and credited.	Evidence of an attempt to complete the journal entries.
		20 points	16 points	12 points	8 points
	Step 2 Posted to the General Ledger (10 points)	Posting is correct, leading to accurate account balances.	Posting is mostly correct, but minor errors are evident.	Posting has several errors that resulted in incorrect account balances.	Posting is done poorly, but does show evidence of an attempt to complete.
		10 points	8 points	6 points	4 points
	Step 3 Prepared a Trial Balance (10 points)	Correct account names and balances so to arrive at a correct trial balance.	Some minor errors such as incorrect account names or incorrect totals due to errors in prior steps.	Errors in computations that resulted in incorrect amounts to be debited and credited.	Evidence of an attempt to complete the trial balance.
		10 points	8 points	6 points	4 points
	Step 4 Prepared Adjusting Journal Entries (10 points)	Journal entries use accurate accounts and amounts; and debits and credits are used correctly.	Journal entries mostly use accurate accounts and amounts; and debits and credits are used correctly.	Journal entries have some errors in use of accounts and amounts; and debits and credits are only used somewhat correctly.	Journal entries have some errors in use of accounts and amounts; and debits and credits are not used correctly.
		10 points	8 points	6 points	4 points
	Steps 5 and 6 Posted and Prepared an Unadjusted Trial Balance (10 points)	Posting is correct, leading to an accurate trial balance.	Posting is mostly correct, leading to a mostly correct trial balance.	Posting has several errors, leading to a trial balance with several errors.	Posting is done poorly or not at all, leading to inaccurate or no trial balance.
		10 points	8 points	6 points	4 points
	Step 7 Prepared Financial Statements (20 points)	All three Financial Statements are prepared accurately and in an appropriate format.	Two of the three financial Statements are prepared accurately, and mostly in an appropriate format. One statement has some errors.	One of the three Financial Statements is prepared accurately and mostly in an appropriate format. Two statements have some errors.	One or fewer of four Financial Statements are prepared accurately and mostly in an appropriate format. Three or all statements have some errors.
		20 points	16 points	12 points	8 points
	Step 8 Prepared Closing Journal Entries (10 points)	Journal entries use accurate accounts and amounts; and debits and credits are used correctly.	Journal entries mostly use accurate accounts and amounts; and debits and credits are used correctly.	Journal entries have some errors in use of accounts and amounts; and debits and credits are only somewhat used correctly.	Journal entries have some errors in use of accounts and amounts; and debits and credits are not used correctly.
		10 points	8 points	6 points	4 points
	Steps 9 and 10 Posted and Prepared Post-Closing Trial Balance (10 points)	Posting is correct, leading to an accurate trial balance.	Posting is mostly correct, leading to a mostly correct trial balance.	Posting has several errors, leading to a trial balance with several errors.	Posting is done poorly or not at all, leading to inaccurate or no trial balance.
		10 points	8 points	6 points	4 points
					Total Points Earned Out of 100 Points	0