T- Accounts and Worksheet

ACCT215 – Intermediate Accounting Portfolio Project

Week 4 Assignment

This Assessment is worth 20% of your grade

Deadline

Deliverable items for the Portfolio Project will be required at four points during our course. The timeline is as follows:

Assignment Due Date	Assignment for Submission	Grading
Week 3 Due by the end of Week 3 at 11:59 pm, ET.	Part 1 – Journal entries (use T Accounts spreadsheet provided)	5% of overall grade
Week 4 Due by the end of Week 4 at 11:59 pm, ET.	Part 2 – Adjusted trial balance***, Balance Sheet and income statement & notes to both
Week 5 Due by the end of Week 5 at 11:59 pm, ET.	Part 3 – Statement of Cash flows & notes, Post-closing Trial balance***
Week 6 Due by the end of Week 6 at 11:59 pm, ET.	Part 4- Please upload your Portfolio Project to your ePortfolio.	20% of overall grade

***Important Note: The adjusted trial balance and post-closing trial balance should be in proper format, not in the worksheet.

Outcomes

Completing this Assessment will help you to meet the following:

Course Outcomes

· Recommend ethical solutions to financially related reporting issues following Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS).

· Analyze errors in accounting records in order to record necessary adjustments.

· Construct a comprehensive retained earnings statement that includes prior period adjustments using excel.

· Design a solution to a real-world accounting scenario using appropriate technology.

Program Outcomes:

· Interpret and apply generally accepted accounting principles (GAAP) to analyze, record, and report financial information.

· Analyze and interpret financial information to assist users in the management decision-making process.

· Select and utilize appropriate technology to complete accounting functions.

Institutional Outcomes:

· Information Literacy and Communication - Utilize appropriate current technology and resources to locate and evaluate information needed to accomplish a goal, and then communicate findings in visual, written and/or oral formats.

· Relational Learning - Transfer knowledge, skills and behaviors acquired through formal and informal learning and life experiences to new situations.

· Thinking Abilities - Employ strategies for reflection on learning and practice in order to adjust learning processes for continual improvement

· Quantitative and Scientific Reasoning - Follow established methods of inquiry and mathematical reasoning to form conclusions and make decisions.

· Community and Career - Participate in social, learning, and professional communities for personal and career growth.

Directions

The Portfolio Project is a real-life simulation of the work you will do on the job to correctly prepare and present financial statements including the required notes and disclosures. Review the background and additional information below. Complete the required components and upload your Portfolio Project to your ePortfolio.

Required:

Your assignment is to set up a journal and general ledger to account for transactions during 2011. This should all be set up in an Excel Workbook. You may use different worksheets but only one workbook. The general ledger can be comprised of a set of T-accounts.

To assist your preparation of financial statements, you should generate post-transaction (unadjusted), pre-closing (adjusted) and post-closing trial balances for each year. (A worksheet like you used in Accounting Principles 1 may be helpful.)

You should also create a set of financial statements (balance sheet, income statement, statement of cash flows and notes to the statements) for 2011. The balance sheet should also have a comparative for 2010.

You should have notes to the financial statements as necessary but as a minimum should include significant accounting policies, current assets, depreciable assets, and long-term debt.

Finally, compose a reflective paragraph describing your experience working on the Portfolio Project. Specifically, describe the concepts learned from this assignment and assess whether financial statements are easier to understand as a result of this assignment.

Background Information:

The Widget Company is a small company with only a few employees. Its line of business is to purchase several items from a line of widgets and resale them to other companies. The Company owns one small shop with two rooms, one for sales and office work, and one for product receiving and shipping. The company is owned by a group of investors and it is organized as a corporation.

Widget Company uses a straight-forward financial accounting information system. Of course, accrual accounting is used. Other generally accepted accounting principles used are the $-Value LIFO of valuing product inventory, FIFO for valuing supplies, the straight-line depreciation method for matching the cost of long-term assets to periods of use (half year of depreciation in year of acquisition and disposition), and earnings per share. Widget’s fiscal year extends from January 1 through December 31.

Additional information:

Accounts receivable is recorded at gross. The Allowance for doubtful accounts is computed at 2% of ending accounts receivable. The Office supplies inventory is valued according to FIFO.

The Product inventory balance of 62,754 on December 31, 2010 is based on the following information:

$-Value LIFO index at January 1, 2006 1.0000

$-Value LIFO index at December 31, 2006 1.0425

$-Value LIFO index at December 31, 2007 1.0750

$-Value LIFO index at December 31, 2008 1.0675

$-Value LIFO index at December 31, 2009 1.1400

$-Value LIFO index at December 31, 2010 1.1825

Ending inventory valued at FIFO $72,000

Ending inventory valued at base $60,888

Base layer $35,200

2006 layer at base $19,250

2009 layer at base $3,000

2010 layer at base $3,438

Ending inventory at $-Value LIFO $62,754

Prepaid insurance is for a six-month policy that expires on April 30, 2011.

The sole Building was purchased in early 2003 for $550,000. At that time, the useful life was expected to be 25 years, and the eventual salvage value was expected to be $0. After a half year of depreciation in 2003, seven years of straight-line depreciation have been recorded at $22,000 per year.

Equipment is recorded using straight-line depreciation.

Accounts payable is comprised of $28,000 owed to various artisans for credit purchases, and $1,000 of accrued utilities.

Wages: A healthcare deduction from employee paychecks is computed at 5% of gross wages. The Widget Company contributes an additional 5% of gross wages (record under Fringe Benefit Expense).

Federal income taxes average 9% and state income taxes average 4% of income taxable wages (deductions for healthcare are not taxable for federal or state income tax purposes).

State unemployment taxes are 7% on the first $12,000 of yearly accumulated wages. Federal unemployment taxes are 6.2% (credit of 5.4% granted for state unemployment taxes) on the first $7,000 of yearly accumulated wages. For social security, the tax rate on employees is 4.2%, and on employers is 6.2%. The Medicare tax rate is 1.45% on both employee and employer.

Prepayments and deposits are from customer deliveries that are to be made in 2011.

Note Payable: There are two loans outstanding. One is an interest-bearing note of $100,000, due on October 1, 2014. The annual interest rate is 10%, and semi-annual interest payments are made on April 1 and October 1 of each year. Accrued interest of $2,500 is for three months.

The second is for a 9% installment loan, with annual installments of $44,584 is due on December 31 of each year. The last scheduled payment was made. Its amortization table is:

Cash Interest Loan

Date Payment Expense Amort. Balance

Jan 1, 2008 200,000

Dec 31, 2008 44,584 18,000 26,584 173,416

Dec 31, 2009 44,584 15,607 28,977 144,439

Dec 31, 2010 44,584 13,000 31,584 112,855

Dec 31, 2011 44,584 10,157 34,427 78,428

Dec 31. 2012 44,584 7,059 37.525 40,903

Dec 31. 2013 44,584 3,681 40,903 0

Common stock issued and outstanding (December 31, 2010) consists of 47,000 shares of $1 par value.

Trial Balance (post-closing) December 31, 2010

Here is a trial balance prepared on December 31, 2010. It includes all accounts that you are to use. Closing entries can be made using an income summary account, or you can omit the income summary account and make closing entries directly to retained earnings.

	Debit	Credit
Cash	210,326
Accounts receivable	34,512
Allowance for uncollectible accounts		690
Office supplies inventory	2,000
Product inventory	62,754
Prepaid insurance	3,000
Land	75,000
Building	550,000
Accumulated depreciation—building		165,000
Equipment Group	316,000
Accumulated depreciation—equipment		126,400
Accounts payable		29,000
Wages payable		30,000
Federal income taxes payable		3,420
State income taxes payable		1,520
Social security payable		4,960
Medicare payable		1,160
State unemployment tax payable		350
Federal unemployment tax payable		16
Health care payable		4,000
Prepayments & deposits		17,500
Interest payable		2,500
Note payable		212,855
Common stock		47,000
Additional paid in capital		24,000
Retained earnings		583,221
Dividends	0
Income summary	0	0
Sales revenue		0
Cost of goods sold expense	0
Utilities expense	0
Wages expense	0
Payroll taxes expense	0
Fringe Bad debt expense benefits expense	0	0
Supplies expense	0
Insurance expense	0
Depreciation expense	0
Gain on sale		0
Loss on sale	0
Interest expense	0
	1,253,592	1,253,592

Transactions to account for during 2011

Jan 1 Reversing entries made where appropriate.

Jan 1 Purchased on credit and received $160,000 of product inventory.

Jan 1 Purchased on credit and received $5,000 of office supplies inventory.

Jan 5 Made all payments related to 4th quarter payroll.

Jan 10 Paid $1,000 utility bill for 4th quarter.

Mar 31 Sold product inventory for $320,000 on credit and shipped to customers.

Mar 31 Made payments to suppliers for $125,000.

Mar 31 Receipts on account and prepayments from customers total $290,000. AR of $1,800 written off.

Apr 1 Purchased on credit and received $185,000 of product inventory.

Apr 1 Purchased on credit and received $3,000 of office supplies inventory.

Apr 1 Made $5,000 interest payment on first loan.

Apr 1 Paid dividends of 13,000

Apr 5 Made all payments related to 1st quarter payroll. Gross wages of $65,000,

income taxes wages of $61,750, social security wages of $65,000, Medicare wages of $65,000, state unemployment wages of $52,000, federal unemployment wages of $49,000.

Apr 10 Paid $1,200 utility bill for 1st quarter.

May 1 Sold 80,500 shares of common stock for $140,000

May 1 Purchased $5,000 insurance policy for May 1 to October 31.

June 30 Sold product inventory for $280, 000 on credit and shipped to customers.

June 30 Made payments to suppliers for $130,000.

June 30 Receipts on account and prepayments from customers total $310,000. AR of $1,700 written off.

July 1 Purchased on credit and received $165,000 of product inventory.

July 1 Purchased on credit and received $11,000 of office supplies inventory.

July 1 Sold equipment with original historical cost of $20,000 for $3,000. Its

depreciation table is:

Equipment #315

Date purchased May 1, 2007

Purchase cost $20,000

Salvage value $0

Year Depreciation expense Accumulated depreciation Book value

2007 2,000 2,000 18,000

2008 4,000 6,000 14,000

2009 4,000 10,000 10,000

2010 4,000 14,000 6,000

2011 4,000 18,000 2,000

2012 2,000 20,000 0

July 1 Purchased equipment (5 year useful life and 0 salvage value) for $80,000.

This will be identified as Equipment #512

July 5 Made all payments related to 2"" quarter payroll. Gross wages of $70,000,

Income taxes wages of $66,500, social security wages of $70,000, Medicare wages of $70,000, state unemployment wages of $37,000, federal unemployment wages of $11,000.

July 10 Paid $800 utility bill for 2nd quarter.

Sep 30 Receipts on account and prepayments from customers total $270,000. AR of`$1,600 written off.

Sep 30 Sold product inventory for $487,000 on credit and shipped to customers.

Sep 30 Made payments to suppliers for $135,000.

Oct 1 Made $5,000 interest payment on first loan.

Oct 1 Purchased on credit and received $110,000 of product inventory.

Oct 1 Purchased on credit and received $5000 of office supplies inventory.

Oct 1 Paid dividends of 10,000

Oct 5 Made all payments related to 3rd quarter payroll. Gross wages of $60,000,

Income taxes wages of $57,000, social security wages of $60,000, Medicare wages of $60,000, state unemployment wages of$17,000, federal unemployment wages of $5,000.

Oct 10 Paid 1,100 utility bill for 3rd quarter.

Oct 25 Purchased land for 60,000

Nov 1 Purchased $6,000 insurance policy November 1 to April 30.

Dec 31 Sold product inventory for $430,000 on credit and shipped to customers.

Dec 31 Receipts on account and prepayments from customers total $330,000. AR of $1,500 written off.

Dec 31 Made payments to suppliers for $125,000.

Dec 31 Made $44,584 installment payment on second loan.

Dec 31 Accrued for 4th quarter payroll. Gross wages of $70,000, income taxes wages of $66,500, social security wages of $70,000, Medicare wages of $70,000, state unemployment wages of $9,000, federal unemployment wages of $0.

Dec 31 Ending product inventory of $85,000 valued at FIFO. Index value for $-

Value LIFO on December 31,2011, is 1.2333.

Dec 31 Office supplies on hand, 500.

Dec 31 Record accrued interest for loans.

Dec 31 Record accrued utilities of 1,900.

Dec 31 Record time passage on insurance policy.

Dec 31 Record adjustment for uncollectible accounts.

Dec 31 Prepayments still owed to customers amount to $18,000.

Dec 31 Record depreciation for building.

Dec 31 Depreciation for equipment (not including #512 or #315) is $45,200.

Criteria	Exceeds Expectations	Above Expectations	Meets Expectations	Needs Improvement	Pts.
30 pts. Balance Sheet	30-28 pts. Student submits Balance Sheet with all correct accounts and balances. Assets equal Liabilities and Equity. Statement follows proper format and is neat.	27-25 pts. Student submits Balance Sheet with 1-3 incorrect accounts or balances. Assets equal Liabilities and Equity. Statement follows proper format and is neat.	24-21 pts. Student submits Balance Sheet with 4-8 incorrect accounts or balances. Assets do not equal Liabilities and Equity. Statement does not follow proper format.	20-0 pts. Student does not submit a Balance Sheet, or is submitted with multiple errors, out of balance, and does not follow good format.
30 pts. Income Statement	30-28 pts. Student submits Income Statement with all correct accounts and balances. Statement arrives at proper Net Income. Statement follows proper format and is neat.	27-25 pts. Student submits Income Statement with 1-3 incorrect accounts or balances. Statement does not arrive at proper Net Income. Statement follows proper format and is neat.	24-21 pts. Student submits Income Statement with 4-8 incorrect accounts or balances. Statement does not arrive at proper Net Income. Statement does not follow proper format.	20-0 pts. Student does not submit an Income Statement, or is submitted with multiple errors, arrives at incorrect Net Income, and does not follow good format.
30 pts. Statement of Cash Flows	30-28 pts. Student submits Statement of Cash Flows with all correct accounts and balances. Statement arrives at proper increase or decrease in cash flow. Statement contains three sections (Operations, Investing, and Financing), and follows proper format and is neat.	27-25 pts. Student submits Statement of Cash Flows with 1-3 incorrect entries for accounts and balances. Statement does not arrive at proper increase or decrease in cash flow. Statement contains three sections (Operations, Investing, and Financing), and follows proper format and is neat.	24-21 pts. Student submits Statement of Cash Flows with 4-8 incorrect entries for accounts and balances. Statement does not arrive at proper increase or decrease in cash flow. Statement does not contain three sections (Operations, Investing, and Financing). Does not follow proper format.	20-0 pts. Student submits Statement of Cash Flows with multiple incorrect entries for accounts and balances. Statement does not arrive at proper increase or decrease in cash flow. Statement does not contain three sections (Operations, Investing, and Financing). Does not follow proper format.
5 pts. Grammar, Spelling, and Punctuation	5 pts. Used proper grammar, spelling and punctuation. Report is neat and has professional look with 0-2 errors.	4 pts. Some grammar and spelling errors (3-5). However, Report is neat and has professional look.	3-2 pts. Contains multiple grammar and spelling errors (more than 5). Report is still neat and has professional look.	1-0 pts. Student does not submit, or contains multiple grammar and spelling errors (more than 5). Report is not professional in set-up.
5 pts. Reflection on Portfolio Project	5 pts. Student specifically describes concepts learned from this assignment. Student assesses whether financial statements are easier to understand as a result of this assignment.	4 pts. Student specifically describes concepts learned from this assignment. Student does not assess whether financial statements are easier to understand as a result of this assignment.	3-2 pts. Student does not specifically describe concepts learned from this assignment. Student does not assess whether financial statements are easier to understand as a result of this assignment.	1-0 pts. Student does not submit a reflection, or does not specifically describe concepts learned from this assignment.
Total Points