Milestone 2 Accounting

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MGMT210: Course Project
Requirement Requirement Description Worksheet Name
1 Prepare the Journal Entries in the General Journal 1 - Journal Entries
2 Post Journal Entries to the General Ledger 2 - General Ledger
3 Prepare a Trial Balance 3 - Trial Balance
4 Prepare the Adjusting Entries 4 - Adjusting Entries
5 Post Adjusting Entries to the General Ledger 2 - General Ledger
6 Prepare an Adjusted Trial Balance 5 - Adjusted TB
7 Prepare the Financial Statements 6 - Financial Statements
8 Prepare the Closing Entries 7 - Closing Entries
9 Post Closing Entries to the General Ledger 2 - General Ledger
10 Prepare the Post Closing Trial Balance 8 - Post Closing Trial Balance
11 Compute Ratios 11-Ratios
12 Interpret the Ratios 12-Interpretation of Ratios

Project Instructions

Course Project Overview
The Course Project consists of 12 Requirements for you to complete. The Course Project is due at the end of Week 9. See the Modules section for due date information. All of the information you need to complete the Course Project is located in this Workbook. • There are eight worksheets in the workbook you will need to complete. • A list of March transactions • A Chart of Accounts reference sheet • A Grading Rubric to help explain what is expected. • Each worksheet has the Check Figures embedded as a comment.
Scenario
You’ve just secured a new client in your accounting practice, Howard's Flight Radio Management Corporation (HFRM), a brand new small business specializing in flight management systems (FMS). The owner, Howard Allan, is a former Air Force pilot and retired Colonel, but definitely not an accountant. Your job is to help Howard put his affairs in order. Luckily Howard has only been in operation for a month and things have not gotten too out of hand yet! Howard has to submit his financial statements to his investors and doesn’t know where to begin. It’s your job to go through the complete Accounting cycle to prepare the financial statements for the HFRM.
Requirements
Guidelines
Use the embedded assistance in the template, guidance in your textbook, and examples in the weekly assignments to complete this project. Should you have any questions contact your professor.
Milestone 1 is due in Week 3 - This includes project requirements 1-3.
Milestone 2 is due in Week 6 - This includes project requirements 4-7.
Milestone 3 is due in Week 9 - This includes project requirements 8-12.

Before You Begin:  Review the Week 2 Lecture prior to starting work on this project.  Print the Chart of Accounts and October Transactions worksheets for your reference. You will need to refer to both throughout the project.  Review the Grading Criteria.  SAVE your work frequently in this workbook.

March Transactions

During its first month of operation, HFRM completed the following transactions.
March Transactions
Date Transaction Description
March 1 Began business by making a deposit in a company bank account of $20,000, in exchange for 2,000 shares of $10 par value common stock.
March 1 Paid the premium on a 1-year insurance policy, $2,400.
March 1 Paid the current month's rent expense, $1,900.
March 3 Purchased repair equipment from Fred Company, $5,800. Paid $1,000 down and the balance was placed on account. Payments will be $400.00 per month for 12 months. The first payment is due 4/1. Note: Use Accounts Payable for the Balance Due.
March 8 Purchased repair supplies from Gary Company on credit, $650.
March 10 Paid telephone bill for March, $340.
March 11 Cash flight management system (FMS) repair revenue for the first third of March, $1,650.
March 18 Made payment to Gary Company, $400.
March 20 Cash FMS repair revenue for the second third of March, $2,450.
March 31 Cash FMS repair revenue for the last third of March, $1,250.
March 31 Paid the current month's electice bill, $250.
March 31 Declared and paid cash dividend of $1,000.

Chart of Accounts

Use the following account descriptions for journal entries.
Chart of Accounts
Account Type Account Number Account Title Normal Balance
Assets
111 Money Debit
117 Prepaid Assurance Debit
119 Repair Supplies Debit
144 Repair Material Debit
145 Accum Dep -Repair Equipment Credit
Liabilities
212 Books Payable Credit
213 Income Tax Payable Credit
Stockholders Equity
311 CS Credit
312 Retained Earnings Credit
313 Surplus Debit
Revenue
411 FMS revenue Credit
Expenses
511 Rent Expenditure Debit
512 Telephone Expenditure Debit
513 Insurance Expenditure Debit
514 Repair Supplies Expenditure Debit
515 Dep Expense - Repair Equipment Debit
516 Income Tax Expenditure Debit
517 Electric Expenditure Debit

1 - Journal Entries

REQUIREMENT #1: Prepare journal entries to record the March transactions in the General Journal below. Remember that Debits must equal Credits—All of your Journal Entries should balance.
General Journal
Column1 Account Number from Chart of Accounts tab Account Title from Chart of Accounts tab Debit Credit
1-Mar 111 Money 20,000
311 CS 20,000
March 1 117 prepaid assurance 2,400
111 Money 2,400
March 1 511 rental expenditure 1,900
111 Money 1,900
March 3 144 repair material 5,800
111 Money 1,000
212 212 4,800
March 8 119 119 650
212 Accounts Payable 650
March 10 512 telephone expenditure 340
111 Money 340
March 11 111 Money 1,650
411 Flight management system revenue 1,650
March 18 212 Accounts Payable 400
111 Money 400
March 20 111 Money 2,450
411 Flight management system revenue 2,450
March 31 111 Money 1,250
411 Flight management system revenue 1,250
March 31 517 517 250
111 Money 250
March 31 313 Dividends 1,000
111 Money 1,000
38,090
: Debits = $38,090 		38,090
: Credits = $38,090

Journal Entries

Once you've completed this requirement print your General Journal to complete Requirement #2 on the General Ledger worksheet.

2 - General Ledger

REQUIREMENT #2: Post the March journal entries to the following T-Accounts and compute ending balances.
Date Money (111)
: The balance of the Cash account after posting journal entries for Part A should be $18,060 .		 Date FMS Revenue (411) Account Cash Account No 111
March 1 20,000 2,400 March 11 1,650
March 11 1,650 March 20 2,450 Date Description Post Ref Debit Credit Balance
March 20 2,450 March 31 1,250 1-Mar Common Stock JE1 20,000 20000
March 31 1,250 5,350 1-Mar Prepaid Insurance JE2 2400 17,600
March 1 1,900 March 31 5,350 1-Mar Store Rent JE3 1900 15700
March 3 1,000 0 0 JE4 1000 14700
March 10 340 JE5 340 14360
March 18 400 JE6 1650 16010
March 31 250 JE7 400 15610
March 31 1,000 JE8 2450 18060
End Balance 18,060 JE9 1,250 19310
31-Mar JE10 250 19060
31-Mar JE11 1000 18060
Prepaid Assurance (117) Rental expenditure (511)
March 1 2,400 March 1 1,900
March 31 200 March 31 1,900
End Balance 2,200
Repair Supplies (119) Telephone Expenditure(512) Account Repair Supplies Account No 119
March 8 650 450 March 10 340
End Balance 200 March 31 340 Date Description Post Ref Debit Credit Balance
March 8th 650 650
450 200
Repair Equipment (144) Insurance Expenditure (513) Account Common Stock Accoun No 311
March 3 5,800 March 31 200
End Balance 5,800 March 31 200 Date Description Post Ref Debit Credit Balance
1-Mar Cash 20000 20000
Accum. Depr.-Repair Equipment (145) Repair Supplies Expenditure (514) Account Accu. Dep/ Repair Equipment Accoun No 145
March 31 120 March 31 450
End Balance 120 March 31 450 Date Description Post Ref Debit Credit Balance
AJE 3 120 5680
Accounts Payable (212) Depr. Exp.-Repair Equipment (515)
March 3 4,800 March 31 120
March 8 650 March 31 120
March 18 400
End Balance 5,050
Account Dep. Expense for Repair Equip Accoun No 515
Income Taxes Payable (213) Income Taxes Expenditure (516)
March 31 65 65 Date Description Post Ref Debit Credit Balance
End Balance 65 March 31 65 AJE 3 120 120
CS (311) Electric Expenditure (517)
March 1 20,000 March 31 250
End Balance 20,000 March 31 250
Retained Earnings (312)
March 31 1,000
March 31 2,025
End Balance 1,025
Surplus (313)
March 31 1,000
March 31 1,000

3 - Trial Balance

REQUIREMENT #3: Prepare a trial balance for March in the space below.
Howard's Flight Radio Management Corporation Trial Balance March 31
Account Account Balance
Number Title Debit Credit
111 Money 18,060
117 Prepaid Assurance 2,400
119 Healing Materials 650
144 Repair Apparatus 5,800
212 Books Payable 5,050
311 CS 20,000
313 Surpluses 1,000
411 Flight management system revenue 5,350
511 Rental Expenditure 1,900
512 Telephone Expenditure 340
517 Electric Expenditure 250
30,400
: Debit Balance = $30,400 		30,400
: Credit Balance = $30,400

Journal Entries

Only enter accounts that have a balance.

4 & 5 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 repair supplies is $200. c) The estimated depreciation on repair equipment is $120. d) The estimated income taxes are $65.
Requirement #5: Post the adjusting entries on March 31 below to the General Ledger T-accounts and compute adjusted balances. Just add to the balances that are already listed.
General Journal
Date Account Number from Chart of Accounts tab Account Title from Chart of Accounts tab Debit Credit
0
: Balance $406.00		 0
: Balance $406.00

Journal Entries

6 - Adjusted TB

REQUIREMENT #6: Prepare an Adjusted Trial Balance in the space below.
Howard's Flight Radio Management Corporation Adjusted Trial Balance March 31
Account Account Balance
Number Title Debit Credit
0
: Debit Balance = $30,585		 0
: Credit Balance = $30,585

Journal Entries

Only enter accounts that have a balance.

7 - Financial Statements

Requirement #7: Prepare the financial statements for Howard's Flight Radio Management Corporation as of March 31 in the space below. You will only be preparing the Income Statement, Statement of Retained Earning, and the Balance Sheet. The Statement of Cash Flows is a required Financial Statement, but is not required for this project.
Howard's Flight Radio Management Corporation Howard's Flight Radio Management Corporation Howard's Flight Radio Management Corporation
Income Statement Statement of Retained Earnings Balance Sheet
For the Month Ending March 31 For the Month Ending March 31 March 31
Revenues: Retained Earnings, March 1 Assets:
FMS Repair Revenue Add: Net Income Cash
Total Revenue Subtotal Prepaid Insurance
Less: Dividends Repair Supplies
Expenses: Retained Earnings, March 31
: Retained Earnings = $1,025 		Repair Equipment
Store Rent Expense Less: Accum. Depr.
Telephone Expense Total Assets

: $26,140		 Insurance Expense
Repair Supplies Exp. Liabilities and Stockholders' Equity
Depreciation Exp. Liabilities:
Income Taxes Expense Accounts Payable
Electric Expense Income Taxes Payable
Total Expenses Total Liabilities
Net Income
: Net Income = $2,025 		Stockholders' Equity:
Common Stock
Retained Earnings
Total Stockholders' Equity
Total Liabilities & Stockholders' Equity

: $26,140

8 & 9- - Closing Entries

Requirement #8: Prepare the closing entries at March 31 in the General Journal below. Hint:Use the balances for each account which appear on the Adjusted Trial Balance for your closing entries.
Requirement #9: Post the closing entries to the T-Accounts on the General Ledger worksheet and compute ending balances. Just add to the adjusted balances already listed.
General Journal
Date Account Number from Chart of Accounts tab Account Title from Chart of Accounts tab Debit Credit
0
: Debit $9,675 		0
: Credit $9,675

Journal Entries

10 - Post Closing Trial Balance

Requirement #10: Prepare a post-closing trial balance as of March 31 in the space below.
Howard's Flight Radio Management Corporation Post-Closing Trial Balance March 31
Account Account Balance
Number Title Debit Credit
- 0
: Debits = $26,260		 - 0
: Credits = $26,260

Journal Entries

11- Ratios

Requirement #11: Ratios
Using the data from Income Statement and Balance Sheet prepared by you in step 7 compute the following ratios.
Current Ratio
Leverage Ratio
Asset Turnover Ratio
Net Profit Margin Ratios
Rate of Return on Total Assets

12- Interpretaion of Ratio

Grading Rubric

Project 1 Grading Rubric - Students
Criteria Excellent Good Poor Very Poor Unacceptable Points Available
Milestone 1 Step 1 —Journal Entries (20 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. The submission does not meet this requirement. Little-to-no work was completed.
Step 1 Grading Scale 20-18 17-15 14-12 11-9 8-0 20
Milestone 1 Steps 2 and 3 —Posted an Unadjusted Trial Balance. (13 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. The submission does not meet this requirement. Little-to-no work was completed.
Step 2 & 3 Grading Scale 13-11 10-8 7-5 4-2 1-0 13
Milestone 1 Total 33
Milestone 2 Step 4 —Adjusting Journal Entries (8 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. The submission does not meet this requirement. Little-to-no work was completed.
Step 4 Grading Scale 8-7 6-5 4-3 2-1 0 8
Milestone 2 Steps 5 and 6 —Posted and Adjusted 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. The submission does not meet this requirement. Little-to-no work was completed.
Step 5 & 6 Grading Scale 10-9 8-7 6-5 4-3 2-0 10
Milestone 2 Step 7 —Financial Statements (15 points) All four financial statements are prepared accurately and in an appropriate format. Three of four financial statements are prepared accurately and mostly in an appropriate format, one statement has some errors. Two of four financial statements are 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. The submission does not meet this requirement. Little-to-no work was completed.
Step 7 Grading Scale 15-13 12-10 9-7 6-4 3-0 15
Milestone 2 Total 33
Milestone 3 Step 8 —Closing Journal Entries (7 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. The submission does not meet this requirement. Little-to-no work was completed.
Step 8 Grading Scale 7-6 5-4 3-2 1 0 7
Milestone 3 Steps 9 and 10 —Posted a Post-closingTrial 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. The submission does not meet this requirement. Little-to-no work was completed.
Step 9 & 10 Grading Scale 10-9 8-7 6-5 4-3 2-0 10
Milestone 3 Steps 11 and 12 —Ratios and Interpretation. (17 points) Ratios are calculated correctly. Math process is present. Interpretation of ratios are accurate. Ratios are calculated mostly correctly. Math process is present. Interpretation of ratios are mostly accurate. Ratios calculations have some errors. Math process is present. Interpretation of ratios is flawed. Ratios calculations have various errors. Math process is present. Interpretation of ratios is severely flawed. The submission does not meet this requirement. Little-to-no work was completed. No math process is present.
Step 11 & 12 Grading Scale 17-15 14-12 11-9 8-6 5-0 17
Milestone 3 Total 34