Financial Accounting Technology ACCT.610

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I. Title: Project 2: Financial Accounting Technology

Table of Contents Section # Contents Page #

I. Title page 1 II. Introduction

Competencies assessed on this project 2 Scenario, the role you play in the project 3

III. Steps to Completion Step 1: Read the entire project file, rubric, and helpful hints and tips before communicating with your study group

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Step 2: Login to your QBO 3 Step 3: Setup company accounts and settings 4 Step 4: Setup and edit the Chart of Accounts 5 Step 5: Setup the Sales Tax 6 Step 6: Set up product items and contributed inventory 7 Step 7: Create journal entries for all other (non-inventory) Owner Contributions

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Step 8: Add customers and vendors 10 Step 9: Add Invoices, Purchase Orders (PO), and Bills 11 Step 10: Enter all transactions for the month of April 12 Step 11: Reconcile the April bank statement in QBO 15 Step 12: Review and revise the Financial Statements. 17 Step 13: Compare the Check Figures to account balances on your financial statements. Check figures are the correct answers for select accounts.

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Step 14: Print and save the following QBO Reports: 1) P&L, 2) Balance Sheet, and 3) the General Ledger in pdf format

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Step 15: Combine these 4 files: 1) P&L, 2) Balance Sheet, 3) General Ledger, and 4) Bank Reconciliation into 1 PDF file

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Step 16: Review the rubric 18 IV. Deliverables

Review the instructions before uploading your deliverable 19

V. Rubric Take one last look at the rubric to ensure you understand how your deliverable will be graded

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VI. Helpful hints and tips Read the hints and tips before starting the project

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Table List

Table #

Table title: Page #

1 Chart of Accounts 5 2 Standard Sales Prices (Casey’s Original Artwork) 7 3 Cost and Pricing of Prints (Reproductions of Casey’s original artwork) 8 4 Service and Non-Inventory Sales 8 5 Owner’s Contributions/Investments 9 6 Customer List 10 7 Vendor List 10 8 Consignment Vendor List 11 9 Invoices to Customers 11

10 Purchase Orders 12 11 Bills (Payables to Vendors) 12 12 April Transactions 14 13 Bank Statement 16 14 Check Figures 17 15 Summary of Report Deliverables 18 16 Report Files to be Combined into One PDF 18

II. Introduction: All graduate accounting course deliverables use the AICPA Pre-Certification Core Competency Framework to assess competencies deemed essential for success in the accounting profession. Competencies assessed by this project:  Measurement, Analysis, and Interpretation

o Identify appropriate, reliable, and verifiable measurements. o Analyze data for a given purpose and intended use. o Interpret results of data analysis for the intended user.

 Reporting o Prepare financial statements as governed by professional standards and

required by law.  Technology and tools

o Use relevant technology and tools to analyze data and assigned tasks.  Decision making

o Propose effective business decisions based on analysis and professional judgment.

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Scenario: Your good friend Casey has always expressed interest in opening his own retail art studio. He has been painting and selling his artwork for years and already has a good customer base. In January of this year, he started the process of formally setting up a business named Casey’s Crafts; he filed for an Employee Identification Number (EIN) in February. Casey found and rented an art studio on March 1st, and has been cleaning, painting, and setting up the space ever since. The grand opening was April 1, 2022. Casey’s Crafts sells Casey’s original artwork and prints of his original artwork that he purchases from a print shop. The original artwork and prints are inventory items. Casey also accepts custom orders from customers, which are referred to as Custom Artwork Sales. Custom Artwork involves Casey painting a picture for a particular customer based on the customers’ specification. Oftentimes, his Custom Artwork is a family portrait. Also, Casey agreed to allow a few of his artist friends to display and sell their artwork from the Casey’s Crafts shop. These sales would be classified as Consignment Sales. Artwork on consignment is owned by the artist who created the painting and therefore is not recorded as inventory on the Casey Kraft’s accounting records. It is customary for the consignee (the business owner) to retain a percentage of all consignment sales as payment for allowing the consignor (other artists) to display his or her artwork. Casey knows you are going to school for your master’s degree in accounting and has asked for your help setting up and using QuickBooks Online (QBO). You agree to help set up the QBO business account and complete the first month of transactions. You are not familiar with QBO, but you know it will be beneficial to your accounting career to learn QBO because it is the most widely used financial accounting platform for small business in the United States. To feel more confident with QBO, you decide to seek guidance and collaborate with some of your classmates in your MS degree program at UMGC. You recall a few mentioned working as an accountant for small business clients. Casey is interested in using the following QBO features:  Sales Receipts/Invoices  Purchase Orders/Inventory tracking  Bills and Bill Pay

Eager to get started, you carefully read the Steps to Completion and review all QBO learning resources before beginning.

III. Steps to Completion:

Step 1 – Read the project and rubric before you begin communicating with your study group members. You will discuss the project together but will submit individual deliverables. Step 2 – Set up your QBO account. You should have received an email invitation to QuickbooksOnline from Intuit, which your professor initiated. Create your account by clicking the link in the email invitation.

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Step 3 – Set up the company account and settings  View the Video:

o How to Navigate in QuickBooks o The transcript for this video is in Content/Course Resources/Projects &

Rubrics/Project 2. Remember - QuickBooks is a very forgiving program. Most mistakes can be fixed as you have the ability to go back and make historical changes, however a correct setup will prevent the need in most cases. The following are the important pieces of information you need to set up Casey’s Crafts in QBO. Each of the Bolded items are Categories in the Account and Settings page.

COMPANY:  Company Name: Casey’s Crafts_YOUR NAME  Your name must be part of the Company name

o There are no exceptions o Example: Casey’s Crafts_SHARON LEVIN

 Email: Enter your UMGC email address that appears in our classroom  Telephone: Enter your phone number associated with your UMGC profile  EIN: Leave the EIN Blank because the EIN has not been received yet  Company Type: Sole proprietor  Address: 500 Grand Blvd. Miramar Beach, FL 32550  Website: Enter UMGC.edu  Tax form: Sole Proprietor (Form 1040)  Method of Accounting: Accrual  Casey’s Crafts will not be using track classes or track locations

SALES:  Casey’s Crafts sales terms are Net 30, unless otherwise stated  Shipping is available for a fee  Discounts are offered occasionally  Casey’s Crafts requires a 50% deposit on all Custom Artwork sales  Track the quantity and price/rate for all sales  Track inventory quantity on hand for the art prints.

EXPENSES:  Casey’s Crafts wants to use purchase orders, so make sure you check the box.  All other default settings are fine.

PAYMENTS:  This setting is used to allow clients to pay an invoice through their system. Although

Casey’s Crafts is possibly be interested in this feature in the future, he has no current interest.

ADVANCED:  Casey’s Crafts is a calendar year taxpayer, but he hasn’t received an EIN yet.

o The first month of the fiscal year is January  Use the tax form: Sole proprietorship Form 1040  Do not use account numbers  Do not track classes or track locations

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Step 4 – Set up and edit the Chart of Accounts (COA)  View the Video:

o How to Edit your Chart of Accounts in QuickBooks The transcript is in Content/Course Resources/Projects & Rubrics/Project 2

Table 1: Chart of Accounts

Add the accounts

in the next

column to the

Chart of Accounts

>>>>

Name: Type Detail Type Subaccount of: Casey's Crafts Bank Bank Checking Refundable Deposits Other Current

Assets Other Current Assets

Art Displays Fixed Assets Furniture & Fixtures Consignments

Payable Other Current

Liabilities Other Current

Liabilities

Art Sales Income Sale of Product Income

Original Artwork Income Sale of Product Income

Art Sales

Prints Sales Income Sale of Product Income

Art Sales

Custom Artwork Income Sale of Product Income

Art Sales

Consignment Income Income Service/Fee Income

Group Art Classes Income Service/Fee Income Printing &

Reproduction Expense Cost of Goods Sold Supplies & Materials –

COGS

Art Supplies Expense Expenses Supplies & Materials Shipping Expense Cost of Goods Sold Shipping, Freight &

Delivery

Gain on Sale of PP&E Other Income Other Miscellaneous Income

Loss on Sale of PP&E Other Income Other Miscellaneous Income

Make the edits

shown to the right:

Change from: Change to: Account Type: Detail Type: Owner Draws

Owner

Distributions Equity Owner's Equity

Building & Property Rent

Rent Expense Expense Rent or Lease of Building

Office Supplies

Office Supplies Expense

Expense Office/General Administrative

Expense Mark the Purchases account Inactive.

Tip for Success: The Opening Balance Equity account balance MUST = $0 before printing your final deliverables. Whenever the Opening Balance Equity account has a balance other than zero ($0), prepare a journal entry to eliminate its balance and credit the appropriate account, which in this case will likely be the Owner’s Investment account.

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Step 5 – Set up the sales tax  View the Video:

o How to Set Up Sales Tax: Settings, Sales & More o The transcript is in Content/Course Resources/Projects & Rubrics/Project 2

Overview of Sales Tax

NOTE: Sales Tax must be set up in the “TAXES” area in QBO. Proceed with this section carefully. QBO is very user friendly for the most part; however, there are areas that are hard to fix should you set it up incorrectly and Sales Tax is one of those areas so do not rush here. Read all the way through this appendix, watch the how to videos and then proceed with caution. Casey’s new art studio is located in Miramar Beach, Florida, 32550. He is required to pay 7% in sales tax to the State of Florida. Of that 7% state tax, the state of Florida disburses 1% to Walton County. The State of Florida requires most taxpayers to file monthly sales tax returns, Casey’s Crafts falls into this category. As of April 1st, Casey’s Crafts must start collecting taxes and the first return is due no later than May 20th (QBO knows when it is due) for the reporting period of April 1 – April 30. Casey’s Crafts needs to make sure he charges customers and remits sales tax for everything he sells except for the group art classes. Florida does not collect taxes on the sale of services. Address: 500 Grand Blvd. Miramar Beach, FL 32550 Go to the “TAXES” area and set up sales tax for the state of Florida. If you entered the business address when you were setting up the account, QBO should suggest the correct tax agency(s). If not, it should ask you for an address here. Make sure you select Florida Department of Revenue from the dropdown list. Again, make sure you find the taxing agency in the dropdown list to select. Do NOT manually add any taxing body. QBO already has all the information it needs to correctly tax products and it will automatically update taxes should laws change but only if it is set up correctly from the beginning. Step 6 – Set up product items and contributed inventory –  View the Video:

o Add Product Information o The transcript can be viewed in the video by clicking CC.

The setup of Inventory will be done in the “INVOICING/SALES” area of QBO. Once in SALES, go to the Products and Services tab. Then click “New” in the upper, right corner. Next click “Inventory” and fill in the name, category, and: • Fill in the name of the first inventory item. • Select the category. The first time you will have to add a new category.

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o You will be adding these categories: Casey’s Originals, Prints, and Non-inventory items

• The “initial quantity on hand” will be the owner contributed inventory, see the table below. • As of date will be 4/1/2022. • Do not enter a quantity in the “Reorder Point” field for any items. • The Inventory asset account is “Inventory asset” • Do not use product codes aka SKU numbers. • For all items that have a fixed sales price associated with it, enter the Sales price for each

item • Also, make sure you associate the correct Income Account with the correct product.

o Note: all sales of original artwork should be recorded to Income account: Art Sales: Original Artwork Sales

• Enter the costs to have the prints made. • Remember, all sales are taxable EXCEPT FOR Group Art Classes.

o Be sure to select “Taxable Standard” under “Sales tax category” for all sales other than group art classes, which will be “Nontaxable.”

Casey’s Crafts primarily sells 3 types of original artwork and prints - Large, Medium, and Small. Pricing of Original Artwork: Table 2: Standard Sales Prices for Casey’s Original Artwork

Size of Artwork Sales Price Number of Pieces Contributed

Large Originals $4,500 5

Medium Originals $2,500 12

Small Originals $900 32

Sales of Casey’s original artwork should set the product Income account to: Art Sales: Original Artwork Sales. Cost of Original Artwork: Casey was instructed years ago by his tax accountant that his original artwork inventory should not have a COGS associated with it because it is impossible to accurately determine the costs associated with his original artwork, some of which he painted decades ago. Instead, he needs to expense all of his art supplies purchases. However, the prints in inventory are classified as inventory until sold and then those costs will be classified as COGS. So, although the original artwork inventory will have zero costs ($0.00) associated with it, you will enter the sales price of the inventory Casey transfers into the business. On April 1st, Casey contributed his personal inventory of prints (reproductions of original artwork) to the business, as follows:

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Table 3: Cost and Pricing of Prints (Reproductions of Casey’s original artwork)

Size of Prints QTY Cost per Unit

Sales Price per Unit

24 x 36 Print 12 $95 $214.99 11 x 14 Print 48 $30 $79.99

5 x 7 Print 125 $7.75 $19.99

All of the prints in the table above should have the following setting: 1. Income account to: Art Sales: Print Sales 2. Expense account to: Cost of Goods Sold (COGS) account Note: QBO will automatically credit the Opening Balance Equity account when you enter the prints. Thus, you must prepare a journal entry to move each print size balance in the Opening Balance Equity to the Owner’s Investment account. The Opening Balance Equity account must be zero ($0). In addition to original artwork and prints, Casey has several non-inventory items that you need to add.

Table 4: Service and Non-Inventory Sales

Type Sales Price per Unit (student)

Income Account

Service (non-taxable)

Group Art Classes* $35

Group Art Classes

Non-Inventory Sale Custom Artwork N/A Art Sales: Original

Artwork Non-Inventory Sale Consignment Artwork** N/A Consignment Income Non-Inventory Sale Unusual Sales PP&E*** N/A Gain on sale of PP&E

For all Custom Artwork, Casey’s Crafts requires a 50% deposit at time of order and the balance when the buyer picks up the artwork. * Remember, this is the only non-taxable item. ** Casey also displays and sells consignment pieces. He earns a 25% commission on each piece sold. The consignee sets the price, so Casey keeps those records on an Excel spreadsheet and does not enter the prices in QBO until he sells the pieces. In other words, the consignment inventory is not an inventory item, but you need to set up a product item to handle the transaction. However, make note of all consignment sales because in order to complete the

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sales transaction, you need to make a journal entry (JE) to move 75% of the sale from the P&L to the balance sheet as Consignments Payable. *** Sales of PP&E will also require a JE to remove the item from the balance sheet and reduce the gain (or increase the loss) on the sale. The transaction is not complete until this JE is made. Step 7 – Create journal entries for all other (non-inventory) owner contributions  View the Video:

o Journal Entries in QuickBooks Online The transcript is in Content/Course Resources/Projects & Rubrics/Project 2

Owner Investments (aka Owner Contributions)

To enter all owner contributions, you may create one or multiple JEs. Determine the correct account to debit from the list below and credit: Owner’s Investments. Reminder: all of the items below were paid by Casey from his personal bank account. Also remember to put the description of each item in the JEs. Table 5: Owner’s Contributions/Investments

Date Description Account Amount 3/1 *Rental Deposit (Refundable) Refundable deposits $2,500

3/1 *1st month rent - March (prior to opening)

Rent expense 3,000

3/1 *Electricity Deposit (Refundable) Refundable deposits 900 3/5 *Chesapeake Communications Network

Deposit (nonrefundable) Utilities: Phone Service 300

3/10 *Gallery set up supplies – paint for walls, cleaning supplies, lumber for building shelves/racks

Office Supplies 435

3/15 *Miscellaneous art supplies for classes

Art Supplies expense

750

3/25 4 large Art displays (Fair market value at time of contribution

= $450 each)

Art Displays 1,800

3/31 Owner’s deposit to open a business bank account

Casey’s Crafts Bank 22,500

Total: $32,185

Step 8 - Add customers and vendors  View the Video:

o How to Add Customers and Vendors into QuickBooks The transcript is in Content/Course Resources/Projects & Rubrics/Project 2

Customers and Vendors:

Enter all customers in the “SALES” area and all Vendors in the “EXPENSES” area.

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Table 6: Customer List

Name Phone Number Email Address Jackson Madonna 898-474-1111 [email protected]

Kids Love Art 898-474-0000 [email protected] 1173 Front Beach Rd Miramar Beach, FL 32550

Bowie Castiel 898-747-5200 [email protected]

Marley Veloso 897-872-2152 [email protected]

Armstrong Presley 899-421-1478 [email protected]

Customers Casey uses this “Customers” account to record sales to non-recurring customers and Daily Sales Receipts

Table 7: Vendor List

Name of company/account

managers

Phone Number

Email Address

Jamie MacKenzie Real Estate

Laurie Sweet (Manager)

850-393-5555 Jamie@MacKenziereale state.com

3630 Bay Avenue Miramar Beach, FL 32550

Red Hook Prints Sasha Levin (Manager)

850-981-0000 Orders@RedHookprints .com

Chesapeake Communications

Network Ron Primo (Manager)

850-424-7900 Ron.Primo@Chesapeak eCommunications.net

78-541 Alligator Drive Dade City, FL 33624

Casey

USA Art Supply Veronica Paz (Manager)

813-771-3161 [email protected] 602 Rose Lane Brandon, FL 33617

Table 8: Consignment Vendor List

Name Phone Number Email Address Aba Zahara

Original artwork 904-546-7300 [email protected] 415 Orange Avenue

Tampa, FL 33616 Evander Duran 850-778-2211 [email protected] 910 Boxer Lane

Marco Island, FL 34145

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Step 9 – Add invoices, purchase orders (POs) and bills.  View the Video:

o How to Create a Purchase Order The transcript is in Content/Course Resources/Projects & Rubrics/Project 2

 View the Video: o How to Enter Bills, Track Expenses, & Record What You Owe

The transcript is in Content/Course Resources/Projects & Rubrics/Project 2 NOTE: Do not spend time creating fancy invoices. Use the basic form unless you want to play around with this feature.

Table 9: Invoices to Customers

INVOICES – Purchases from Customer Date Customer Terms Discount* Product

Purchased QTY Amount

1-Apr Kids Love Art Net 30 10% Art Classes 10 $350 before discount

2-Apr Marley Veloso Due on receipt

Custom Artwork 1 $4,500 + tax

30-Apr Kids Love Art Net 30 10% Art Classes 35 $1,225 before discount

* Kids Love Art is the only customer that receives a discount because they buy individual art classes in bulk and pay within 15 days.

Table 10: Purchase Orders (PO)

PURCHASE ORDERS – Orders to Vendor Purchases: Description QTY Cost Totals

Red Hook Prints* order 4/1/2022 24 x 36 Prints 4 $95 $380

11 x 14 Prints 12 $30 $360

5 x 7 Prints 18 $7.75 $139.50

Subtotal $879.50

Tax (non-taxable online purchase) $0

Total Order $879.50

IMPORTANT NOTE: Create the bill directly from the PO.

* Note: be sure you create the bill for the Purchase Order from the Purchase Order.

It is very easy, please make sure the dates are

correct, see table below. Use “Copy to Bill.”

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Table 11: Bills

BILLS – Payable to Vendors

Received Due To For Amount 1-Apr 1-Apr Jamie MacKenzie Real Estate April Rent $3,000

1-Apr 16-Apr Chesapeake Communications Network Utilities: Phone Service $186.35

4-Apr 19-Apr Red Hook Prints Print order 4/1* $899.50

24-Apr 9-May USA Art Supply Purchased large glass art display $4,010.99

30-Apr 30-Apr Jamie MacKenzie Real Estate May Rent $3,000

Make sure you create the bill from the P.O. When the bill arrived you see there is a $20 shipping expense

you must add to the bill. Step 10 – Enter all transactions for the month of April  View the Video:

o Create Sales Receipts in QuickBooks The transcript can be viewed in the video by clicking CC.

 View the Video: o Receive Payments in QuickBooks

The transcript can be viewed in the video by clicking CC. NOTE: make sure you are receiving the payment to Casey’s Bank account, NOT the undeposited funds

 View the Video: o How to Record & Print Checks

The transcript can be viewed in the video by clicking CC.  View the Video:

o How to Record Bill Payments The transcript can be viewed in the video by clicking CC.

 NOTE: Make sure you document the check number used to pay the bill.

April Transactions: Make sure you pay all bills through the EXPENSES area and receive all invoice payments in the SALES area. Make sure you pay the sales tax through the TAXES area. If your sales taxes due for the period of April is different than the transaction amount below, there is a problem with your sales tax somewhere along the way. All receipts that were not invoice payments will require a Sales Receipt. You will create Sales Receipts in the SALES area. All sales should be considered cash sales. Just make sure the dates are correct and the account the money is deposited to is Casey’s bank account. Unless Casey does recurring business with a customer, or it is a special sale, all Sales receipt transactions will be from customer “Customers."

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Write checks for all expenses that are not bill payments. However, if there is no check number associated with the transaction, that means it is a debit card transaction so change the check number to EFT in place of the check number. Small inexpensive purchases, under $500, should be expensed. Make sure you select the appropriate account for each transaction. Do not add any more accounts as you enter these transactions. Think macro instead of micro. For example, paying for a PO Box or purchasing small, inexpensive items, such as a lamp, should be considered an Office Supply. QBO is limited in what you can record in a single transaction. This is where journal entries (JEs) will be necessary. Hint: transactions where JEs will be necessary include sale of fixed assets and sale of consignment artwork. I suggest you make the JEs as you go to complete the transactions.

Table 12: April Transactions

Date Description Expenses Deposits Method of Entry into

QBO 31-Mar Owner deposit to open bank account

(This was already done in Appendix E as long as your debit entry was to Casey’s Crafts

Bank)

22,500.00 J/E

1-Apr Paid April rent (bill) check #1001 (3,000.00)

Bill Payment

1-Apr Sold one 11 x 14 print

85.59 Sales Receipt

1-Apr Coffee and fingers foods for grand opening – Trader Joe’s using a debit card (Add Trader Joe

payee while writing check) use Office Supplies account

(79.61)

Check

2-Apr Sold medium original artwork

2,675.00 Sales Receipt

2-Apr Deposit to complete a Custom Artwork painting for Marley Veloso

(Paid ½ of Invoice. Receive partial payment)

2,407.50 Receive

Invoice payment

4-Apr Sold four 24 x 36, two 11 x 14 and nine 5 x 7 prints at art fair

1,283.84 Sales Receipt

5-Apr USA Art supplies (art supplies) DEBIT (287.21)

Check

5-Apr Paid Chesapeake Communications Network received 4/1 check# 1002

(186.35)

Bill Payment

12-Apr Sold four 5 x 7 art prints

85.56 Sales Receipt

12-Apr Paid for Post Office box (for 1 year) using debit card (Add USPS as a vendor and use

Office Supplies account)

(75.00)

Check

13-Apr Sold a consignment piece for Zahara $1000 to Bowie Castiel

1,070.00 Sales

Receipt

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Date Description Expenses Deposits Method of Entry into

QBO 14-Apr Received payment from Kids Love Art

for invoiced amount

315.00 Receive

Invoice payment

14-Apr Paid Zahara for consignment sale to Bowie Castiel

check # 1003 (to account Consignment Income)

(750.00)*

Check

14-Apr Sold one large original artwork

4,815.00 Sales Receipt

15-Apr Purchased shelving from IKEA using a debit card (EFT) record to office supplies and add IKEA

vendor)

(369)

Check

19-Apr Withdrew cash for personal use using a debit card

(This is an Owner Distribution transaction)

(1,600.00)

Check

19-Apr Paid bill for prints to Red Hook Prints 4/4 bill check # 1004

(899.50)

Bill Payment

21-Apr Custom Artwork painting completed and picked up for Marley Veloso – (Receive the

remaining invoice amount)

2,407.50 Receive

Invoice payment

24-Apr Sold one 24 x 36; five 11 x 14; and ten 5 x 7 prints

871.88 Sales

Receipt 25-Apr Sold one large (owner contributed)

art displays for $1000 (Product/Service: Unusual Sales)

1,070.00 Sales

Receipt

30-Apr Bank Fees (18.50)

Check 30-Apr Paid Sales Tax to Fl Dept of Revenue Online-

DEBIT (Pay through TAXES area)

(1,097.23)

Through Taxes Tab

30-Apr Paid rent May rent check # 1005 (3,000.00)

Bill Payment 30-Apr Paid Bill for art display on 04/25 check #1006 (4,010.99)

Bill Payment

Subtotals: (15,373.39) 39,586.87 BLANK Net Total: $24,213.48

* Note, this transaction is instructing you to code an expense item to an income account because the original transaction records the full sales price to consignment income. Check #1003 is removing the consignee’s portion of the consignment sale income. The amount that will remain in the Consignment Income account will be Casey’s Crafts’ consignment income, which equals 25% of the sale. QBO offers multiple ways to properly record the revenue; this method is one way. An alternative method would create a J/E to move 75% of the consignment sale to a payable account at the time of sale is recorded and then record the check against that payable. Step 11 – Reconcile April Bank Statement  View the Video:

o Reconcile your accounts The transcript can be viewed in the video by clicking CC.

 Perform a Bank Reconciliation in QuickBooksOnline

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Table 13: Bank Statement

Business Checking Statement: Casey's Crafts

Account number: 18586299 Statement Period: April 1, 2022 to April 30, 2022 Account summary Beginning Balance on April 1, 2022 $0.00 Deposits and other additions 39,586.87 Withdrawals and other subtractions 2,410.82 Checks $4,835.85 Bank service fees -18.50

Ending Balance on April 30, 2022 32,321.70 Deposits and other additions

Date Description Amount 1-Apr Counter Deposit $ 22,500.00 1-Apr Counter Deposit 85.59 2-Apr Counter Deposit 2,675.00 2-Apr Counter Deposit 2,407.50 4-Apr Counter Deposit 1283.84 12-Apr Counter Deposit 85.56 13-Apr Counter Deposit 1,070.00 14-Apr Counter Deposit 315.00 14-Apr Counter Deposit 4,815.00 21-Apr Counter Deposit 2407.50 24-Apr Counter Deposit 871.88 25-Apr Counter Deposit 1,070.00

Total deposits $39,586.87 Withdrawals and other subtractions

Date Description Amount 1-Apr Trader Joe’s -$79.61 5-Apr USA Art Supplies -287.21

12-Apr U.S. Post Office -75.00 15-Apr IKEA -369.00 19-Apr Counter: Withdrawal -1,600.00

Total withdrawals and other subtractions ($2,410.82) Checks

Date Description Amount 1-Apr #1001 -$3,000.00 5-Apr #1002 -186.35

14-Apr #1003 -750.00 19-Apr #1004 -899.50

Total checks ($4,835.85) Total # of checks = 4

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Step 12 – Review and Revise Financial Statements  View the videos:

o Understanding Profit & Loss Statement: Income, Cost of Goods The transcript can be viewed in the video by clicking CC.

o How to Customize Reports: Basics, Sorting & Date Ranges

The transcript can be viewed in the video by clicking CC.

 You may notice a balance in the Opening Balance Equity account. QBO automatically created this account when you entered the print inventory. The Opening Balance Equity account is a temporary holding account (sometimes referred to as a junk account) that needs to be zeroed out by preparing a journal entry before financial statements are printed. Create a journal entry to move the balance from Opening Balance Equity (debit) to Owner Investment (credit). The Opening Balance Equity account balance must be zero on the Balance Sheet.

 If your fixed asset account is incorrect, another J/E will be required is to remove the art display PP&E that was sold from the books because it hasn’t been done yet: Debit: Gain on Sale of PPE and Credit: Art Displays.

Step 13: Compare Check Figures Check figures are the correct account balances for a select number of accounts. You should compare the check figures below to your account balances. Discrepancies can be traced by reviewing General Ledger account balances to detect transactions that may have caused your account balance to differ.

Table 14: Check Figures – correct account balances for select accounts

Review Accounts:

Balance Sheet ACCRUAL BASIS Report period: ALL DATES

Check Figures

A/R $1,102.50 Inventory Asset $3,535.00

Refundable Deposits $3,400.00 Fixed Assets $5,360.99 Total Assets $37,611.96 All Payables $0.00

Owner Distributions - $1,600 Net Income $3,478.22

Opening Balance Equity $0.00

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Note, make sure the basis for the financial statement is in the correct basis for your comparison. The best practice is to review in both bases to ensure you do not have errors in the statements. Other than the accounts listed above, make sure you scan and make sure all balances make sense. For example, the only negative numbers in the financials should be the Owner Distributions and Discounts given. Step 14 – Print and save the following reports: P&L, Balance Sheet, and General Ledger in PDF format  Print the P&L, Balance Sheet, and General Ledger in PDF.

o Choose All Dates for the reporting period o Choose Accrual as the accounting/report basis o Table 15 below summarizes the reports deliverable

Table 15: Summary of Report Deliverables Report Reporting Period Accounting Basis Print to PDF

P&L All Dates Accrual Yes

Balance Sheet All Dates Accrual Yes

General Ledger All Dates Accrual Yes

Bank Reconciliation Month Ending N/A Yes

Step 15: Combine the four (4) PDF report files into one PDF. If you do not have Acrobat Pro, you may use the free APP: CombinePDF.com to combine the report files listed below and in Table 15.

a) Profit & Loss, accrual basis for report period All dates b) Balance Sheet, accrual basis report period All dates c) General Ledger accrual basis for report period All dates d) Bank Reconciliation report for the month ending

Table 16: Combine Report Files into One (1) PDF

Deliverable: Page # Combine into 1 PDF P&L 1

Yes Balance Sheet 2

Bank Reconciliation 3

General Ledger Starts on page 4

Step 16: Review the rubric Review the rubric one last time to ensure you know how your deliverable will be graded.

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IV. Deliverables Submit the one (1) PDF Reports file you created in Step 15 above. There are multiple free software options to combine PDF files on the Internet, such as Combine PDF. V. Rubric: You will find the rubric in LEO under Content>Learning Resources>Assessments: Projects, Discussions, Quizzes, & Rubrics>Project 2. VI. Hints and Tips: General Hints and Tips:  Read the entire Project before beginning the project; make notes as you read  Read the Rubric before beginning the project  In QBO:

1. Do NOT track Classes 2. Do NOT track Locations

 Submit the Project deliverables on or before the due date.

1. Review the Late Policy in advance of the due date; your professor is required to enforce the late policy.

 Ask your supervisor (professor) questions as needed. Inventory Hints and Tips:  When first setting up the inventory account, associate each inventory item with the

correct Sales account.  Be cautious not to confuse Custom Artwork with Consignment artwork  The inventory account includes two types (only) of inventory:

o Original artwork created by Casey  Casey’s originals have a cost basis of $0

o Prints of Casey’s original artwork  When inputting the print inventory items, record the costs incurred to pay

the print shop to make the prints

Non-Inventory Hints and Tips:  Casey’s Custom Artwork does not pass through the inventory account because these

paintings are delivered to the customers immediately upon completion, thus they not held long enough to be considered inventory.

 Casey’s Crafts also sells artwork created by other artists. The items belong to the other artists and therefore do not pass through the inventory account of Casey Crafts.

 As a reminder, the Opening Balance Equity account must be zero ($0) before printing your deliverables. If the Opening Balance Equity account has a balance other than zero ($0), prepare a journal entry to eliminate its balance and credit the appropriate account, which in this case will likely be the Owner’s Investment account.

Chart of Accounts:

 Do not create account numbers for the accounts.