Accounting: Balance Sheet Assignment

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Day___Knight_Computer_Connection.xlsx
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Facts

Lastname, firstname
Portfolio Project
Day & Knight Computer Connection was incorporated on January 1st. The business maintains a retail personal computer replacement parts store, and also provides
a full range of services, including computer diagnostic services, virus removal, hardware replacement, software installation and upgrades, and optimization services.
The following transactions occurred during the first twelve months of operations:
January 1st Common stock is issued in exchange for cash in the amount of ………….………….……………………… 325,000
February 8th The company purchases and pays for 400 units of computer replacement parts at a price of $35 per unit ………….. 14,000
March 1st The company pays cash for a one-year insurance policy in the amount of ……………….………………………..….. 10,375
March 31st Rent on a retail space for 12 months is paid in the amount of …..……….……………………………………… 10,125
April 1st Diagnostic tools and testing equipment with a useful life of 2 years is purchased for cash in the amount of …… 24,360
April 10th PC tuning supplies purchased on account in the amount of …………..…………………………………………… 2,450
May 15th The company purchases and pays for another 200 units of computer replacement parts at a price of $38 per unit ….. 7,600
May 30th PC repair services are performed on account in the amount of …………………………………………………………..………… 10,835
June 1st The company pays for advertisements to be run for the next 12 months in the amount of ………………………. 1,440
June 30th The company issues a 5-year bond with a face value of $100,000 and a stated annual rate of 8%.
Interest is due on June 30th each year. The market rate is 6% on the date of issuance ……………………………. 100,000
July 25th Software installation & upgrade services are performed on account in the amount of …...……………………………..………… 10,975
July 31st 100 units of computer replacement parts are sold for $75 per unit with terms 2/10, n/30. The sale is recorded using
the gross method in the amount of (see note c for cost flow assumptions) ……………………………………………………………………………………. 7,500
August 2nd Hardware replacement services are provided on account in the amount of ………………………………………………………………. 7,820
August 6th The company receives full payment from the customer for the July 31st sale ……………………………………… 7,350
September 15th Virus removal services are performed on account in the amount of ……………………..…………………………….………….. 2,695
September 29th Customer payments are received for services previously provided in the amount of ……………………………….. 1,250
October 13th 126 units of computer replacement parts are sold for $75 per unit with terms 2/10, n/30. The sale is recorded using
the gross method in the amount of ………………………………………………………………………………………. 9,450
October 29th The company receives payment for half of the October 13th sale ……………………………………………………… 4,725
November 1st Equipment originally purchased on April 1st for $3,000 is sold for $1,500 cash
November 15th A bookkeeper is hired to help the company with daily accounting taxes and annual tax preparation
December 15th The bookkeeper is paid $4,500 for the previous month's services 4,500
Additional information:
a. PC tuning supplies on hand at the end of the month are as follows: ……………………………………. 1,470
b. The year-end balance reported at the end of the year for the Allowance for Doubtful Accounts
is estimated as 2.5% of outstanding receivables at the end of the year
c. The Company uses a perpetual inventory system and accounts for costs using the Last-In-First-Out cost
flow assumption. On December 31st, a count of ending inventory reveals that there are 374 units of computer
replacement parts on hand.
d. All revenue is recorded in the "Sales Revenue" account and reported net of cash discounts on the income statement.
e. The effective interest method is used to amortize bond premiums and discounts
f. Adjustments are made at the end of the year for prepaid insurance, rent, advertising, depreciation, and interest expense.
g. The bookkeeper is paid a salary of $4,500 on the 15th of every month.
h. The company declared dividends of $400 for the year
i. Assume selling expenses include advertising and supplies expense. All other expenses, other than depreciation
and interest expense, are considered general & administrative.
REQUIRED:
1. Prepare journal entries for each transaction listed above (with descriptions).
2. Post journal entries to the general ledger accounts.
3. Prepare an unadjusted trial balance.
4. Prepare all necessary adjusting journal entries (with descriptions)
and post to the general ledger.
5. Prepare an adjusted trial balance on December 31st.
6. Prepare closing entries, post to the general ledger, and carryforward balances to January 1st of the next year.
7. Prepare the following financial statements on December 31st (ignore income taxes):
a. Income Statement (multi-step, see Example 5.2 in textbook)
b. Statement of Stockholders' Equity
c. Balance Sheet (classified)
d. Statement of Cash Flows (indirect method)
8. Rename the excel file Lastname_PortfolioProject_Option1.xls and submit your completed project online.

Journal

Journal
Date Accounts Debit Credit
Journal
Date Accounts Debit Credit
- 0

General Ledger

ASSETS LIABILITIES STOCKHOLDERS' EQUITY TEMPORARY ACCOUNTS
Cash Accounts Receivable Accounts Payable Dividends Payable Common Stock Retained Earnings Service Revenue Advertising Expense
Insurance Expense
Interest Payable Salaries Payable
Rent Expense
Cash Discounts
Bonds Payable
Allowance for Doubtful Accounts Supplies Expense
Cost of Goods Sold
Bond Premium
Depreciation Expense
Prepaid Insurance Supplies
Bad Debt Expense
Salaries Expense
Prepaid Rent Inventory Interest Expense
Loss on Sale of Equipment
Prepaid Advertising
Equipment
Dividends
Accumulated Depreciation

Trial Balance

YOUR COMPANY
Trial Balance
As of December 31, 2017
Unadjusted Adjusting Adjusted January 1st, 2018
Accounts Debit Credit Debit Credit Debit Credit Debit Credit
Cash
Accounts Receivable
Allowance for Doubtful Accounts
Supplies
Prepaid Insurance
Prepaid Rent
Prepaid Advertising
Inventory
Equipment
Accumulated Depreciation
Accounts Payable
Interest Payable
Bonds Payable
Bond Premium
Salaries Payable
Dividends Payable
Common Stock
Retained Earnings
Sales Revenue
Cash Discounts
Cost of Goods Sold
Bad Debt Expense
Interest Expense
Salaries Expense
Advertising Expense
Insurance Expense
Rent Expense
Supplies Expense
Depreciation Expense
Loss on Sale of Equipment
Dividends
TOTAL

IS

YOUR COMPANY
Income Statement
For the year ended December 31, 2017
Sales revenue (net)
Cost of goods sold
Gross profit
Operating expenses:
Selling expenses
General & administrative expenses
Depreciation expense
Total operating expenses
Operating Income
Other items:
Interest expense
Loss on sale of equipment
Net Income

SE

YOUR COMPANY
Statement of Stockholders' Equity
For the year ended December 31st, 2017
Common Stock Retained Earnings Total
Beginning Balance
Issuance of Stock
Add: Net Income
Less: Dividends
Ending Balance
For the Month Ended February 28, 20x1
Common Stock Retained Earnings Total
Beginning Balance 0 0 0
Issuance of Stock
Add: Net Income ERROR:#REF! ERROR:#REF!
Less: Dividends
Ending Balance 0 ERROR:#REF! ERROR:#REF!
For the Month Ended March 31, 20x1
Common Stock Retained Earnings Total
Beginning Balance 0 ERROR:#REF! ERROR:#REF!
Issuance of Stock
Add: Net Income ERROR:#REF! ERROR:#REF!
Less: Dividends ERROR:#REF! ERROR:#REF!
Ending Balance 0 ERROR:#REF! ERROR:#REF!
For the Quarter Ended March 31, 20x1
Common Stock Retained Earnings Total
Beginning Balance 0 0 0
Issuance of Stock 0 0
Add: Net Income ERROR:#REF! ERROR:#REF!
Less: Dividends ERROR:#REF! ERROR:#REF!
Ending Balance 0 ERROR:#REF! ERROR:#REF!

BS

YOUR COMPANY
Balance Sheet
As of December 31st, 2017
ASSETS
Current assets:
Cash
Accounts receivable
Less: Allowance for doubtful accounts
Inventory
Supplies
Prepaid insurance
Prepaid rent
Prepaid advertising
Total current assets
Long-term assets:
Equipment
Less: Accumulated depreciation
Total long-term assets
TOTAL ASSETS
LIABILITIES
Current Liabilities:
Accounts payable
Interest payable
Salaries payable
Dividends payable
Total Current Liabilities
Long-Term Liabilities
Bonds payable
Plus: Unamortized bond premium
Total Liabilities
STOCKHOLDERS' EQUITY
Common Stock
Retained Earnings
Total Stockholders' Equity
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY

CF

YOUR COMPANY
Statement of Cash Flows
For the year ended December 31st, 2017
Cash Flows from Operating Activities
Net Income
Adjustments for noncash effects:
Depreciation expense
Bad debt expense
Amortization of bond premium
Loss on sale of equipment
Changes in current assets and current liabilities:
Increase in accounts receivable
Increase in inventory
Increase in supplies
Increase in prepaid insurance
Increase in prepaid rent
Increase in prepaid advertising
Increase in accounts payable
Increase in interest payable
Increase in salaries payable
Net cash flows for operating activities
Cash Flows from Investing Activities
Purchase of equipment
Proceeds from sale of equipment
Net cash flows for investing activities
Cash Flows from Financing Activities
Issuance of common stock
Proceeds from bond issuance
Payment of dividends
Net cash flows from financing activities
Net increase in cash
Beginning cash balance, Jan. 1
Ending cash balance, December 31st