ACCOUNTING I

BCO114 ACCOUNTING I Task brief & rubrics

Task: Summative Evaluation: Midterm Assessment

• This is an assignment to be done individually.

• You must answer all the questions in the proposed problem.

• Submission file format: Word document with all the answers, clearly identifying all steps, results, journals, ledger accounts and including comments

when requested.

Submission: Week 4 – Via Moodle (Turnitin). Deadline: 20 June 2021 at 23:59.

Weight: This task is a 40% of your total grade for this subject.

This task assesses the following learning outcomes:

• Understand how companies are created and how to register all business transactions in the main accounting books: The Journal and the Ledger.

• Understand how to prepare a company’s Trial Balance.

• Learning how to record adjusting entries at the end of each month and preparing and Adjusted Trial Balance.

• Understand how to record the closing entries to be able to close the company’s accounting books.

• Understand how to prepare the company’s financial statements: Balance Sheet, Income Statement and Statement of Retained Earnings.

• Acquire a thorough understanding of the company’s accounting cycle and the importance of all the procedures need to determine the company’s final

net income and its financial situation in the Balance Sheet.

Problem 1: Recording transactions in the journal, posting to T accounts and trial balance (30 points)

On February 20, Jane Doe began a new business called Doe Printing, which provides typing, duplicating, and printing services. The following six

transactions were completed by the business during February.

1. Issued to Jane 1,000 shares of capital stock in exchange for her investment of $200,000 cash. (4 points)

2. Purchased land and a small building for $550,000, paying $150,000 cash and signing a note payable for the balance. The land was worth

$240,000 and the building $310,000. (5 points)

3. Purchased office equipment for $50,000 from Staples, Inc. Paid $18,000 cash and agreed to pay the balance within 60 days. (4 points)

4. Purchased a motorcycle on credit for $3,500 to be used for making deliveries to customers and agreed to make payment to Spokes, Inc.

within 10 days. (4 points)

5. Paid in full the account payable to Spokes, Inc. (4 points)

6. Borrowed $40,000 from a bank and signed a note payable due in six months.

(4 points)

Instructions:

1. Record the above transactions in general journal form. (18 points)

2. Post the entries in the T accounts below. (12 points)

Problem 2: Recording adjusting entries (24 points)

Hollander Laboratory adjusts and closes its accounts at the end of each month. The trial balance on September 30, 2020, before

adjustments is as follows:

Cash $18,200

Accounts Receivable 27,000

Prepaid Rent 5,000

Office Supplies 1,200

Medical Equipment 21,800

Accumulated Depreciation: Medical Equipment

$6,000

Accounts Payable 3,000

Notes Payable 8,000

Unearned Revenue 14,000

Capital Stock 18,000

Retained Earnings 16,000

Dividends 1,000

Medical Revenue 31,000

Salaries Expense 14,000

Utilities Expense 2,000

Insurance Expense 5,800

Total $96,000 $96,000

The following information relates to month end adjustments:

(1) Office supplies consumed during September 30 amounted to $600.

(2) The useful life of the medical equipment was estimated to be 10 years.

(3) Many patients pay in advance for major medical procedures. Fees of $7,000 were earned during the month by performing procedures

patients who had paid in advance.

(4) Salaries earned by employees during the month but not yet recorded amounted to $2,500.

(5) On September 1 Hollander Laboratory paid $5,000 for 2 month's rent in advance.

(6) Medical procedures performed during the month but not yet billed or recorded amounted to $8,600.

Instructions: Prepare the adjusting entries required at September 30. (4 points per entry)

Problem 3: Closing entries and preparing Financial Statements (46 points)

Funky Beat Studio provides music lessons to student musicians. Some students pay in advance for lessons; others are billed after lessons have been already provided and the amounts are credited to “Lessons revenue”. The advanced payments are credited to an account entitled “Unearned revenue”.

FUNKY BEAT STUDIO

ADJUSTED TRIAL BALANCE

DECEMBER 31, 2020

Cash $ 20,800

Accounts receivable 2,100

Unexpired insurance 3,200

Prepaid rent 6,000

Sheet music supplies 450

Music Equipment 180,000

Accumulated depreciation: music equipment $ 72,000

Accounts payable 3,500

Notes payable 5,000

Dividend payable 1,000

Interest payable 25

Income taxes payable 3,400

Unearned revenue 1,100

Capital stock 20,000

Retained earnings 56,600

Dividends 1,000

Lessons revenue 159,375

Advertising expense 7,400

Insurance expense 4,400

Rent expense 16,500

Sheet music supplies expense 780

Utilities expense 5,000

Depreciation expense: music equipment 33,000

Salaries expense 27,500

Interest expense 25

Income tax expense 13,845

Total $322,000 $322,000

From the adjusted trial balance dated December 31, 2020, provided above, complete the following:

1. Prepare all the closing entries for the company. (12 points) 2. Prepare the Income Statement dated 31/12/20. (10 points) 3. Prepare a Statement of Retained Earnings dated 31/12/2020. (10 points) 4. Prepare the company’s Balance Sheet dated 31/12/2020. (14 points)

Rubrics

Exceptional 90-100 Good 80-89 Fair 70-79 Marginal fail 60-69

Knowledge & Understanding

(20%)

Student demonstrates excellent understanding of key concepts and technical vocabulary used.

Student demonstrates good understanding of the task and mentions some relevant concepts and demonstrates use of the relevant vocabulary.

Student understands the task and provides minimum theory and/or some use of vocabulary.

Student understands the task and attempts to answer the question but does not mention key concepts or uses minimum amount of relevant vocabulary. Shows lack of study.

Application (30%) Student applies fully relevant knowledge from the topics delivered in class.

Student applies mostly relevant knowledge from the topics delivered in class.

Student applies some relevant knowledge from the topics delivered in class. Misunderstanding may be evident.

Student applies little relevant knowledge from the topics delivered in class. Misunderstandings are evident.

Critical Thinking (30%)

Student critically assesses in excellent ways, drawing outstanding conclusions from material learned.

Student critically assesses in good ways, drawing conclusions from relevant topics learned in class.

Student provides some insights but stays on the surface of the topic. References may not be relevant.

Student makes little or no critical thinking insights and is unable to show having assimilated the concepts dealt with in class.

Communication (20%)

Student communicates their ideas extremely clearly and concisely, providing accurate and clear explanations required.

Student communicates their ideas clearly and concisely.

Student communicates their ideas with some clarity and concision.

Student communicates their ideas in a somewhat unclear and unconcise way. Conceptual and numeric errors are evident.