accounting project

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ACCOUNTING PRINCIPLES I

ACCOUNTING PROJECT 2

DATA AND REQUIREMENTS

Spring 2013

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Below are the financial statements of Zipparoo, Inc. Zipparoo sells rubber work boots called “Zips”. In this assignment, you will account for complex transactions and update existing account balances. Students are asked to complete the assignment on their own, but may obtain instructional assistance from the professor or TAs. The assignment is meant to help the student get ready for the second exam. Below are the financial statements for the previous month. Income Statement (previous month) Sales Revenue 60,000 Cost of Goods Sold 12,000 Gross Profit 48,000 Salaries Expense 9,000 Bad Debt Expense 6,000 Rent Expense 7,000 Office Supplies Expense 3,000 Depreciation Expense 8,000 33,000 Operating Income 15,000 Gain on Sale of Equipment 3,000 Interest Expense (5,000) (2,000) Net Income 13,000 Statement of Retained Earnings

(previous month)

Beginning Retained Earnings 40,000 Net Income 13,000 Dividends (3,000) Ending Retained Earnings 50,000 Balance Sheet (previous month) Assets Liabilities Cash 54,000 Accounts Payable 9,000 Accounts Receivable 30,000 Salaries Payable 2,000 Allow For Doubtful Accts (3,000) Unearned Revenues 20,000 Office Supplies 7,000 Long-term Debt 27,000 Inventory 18,000 Total Liabilities 58,000 Prepaid Rent 48,000 Equipment 100,000 Equities Accumulated Depreciation (35,000) Common Stock 111,000 Retained Earnings 50,000 Total Equities 161,000 Total Assets 219,000 Total Liab and Equities 219,000

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Below are the transactions for the current month. You will notice that there is an “X” or “Y” or “Z” in many of the numbers. You MUST substitute the appropriate number from your ZipCard to get the correct answers. Each letter corresponds to the following number of your ZipCard.

X = third from last number of ZipCard Number Y = second from last number of ZipCard Number Z = last number of ZipCard Number

For example, if your ZipCard Number is 1234567: X = 5 Y = 6 Z = 7

You must do this substitution correctly or you will not obtain the correct answers. Additional information at the BEGINNING of the month:

1. Inventory consists of 1,000 pairs of “Zips”, each costing $18. Zipparoo uses the LIFO inventory method. Round all inventory calculations to the nearest dollar.

2. The net method is used for recording purchases. 3. The Equipment of $100,000 was originally purchased 10 years ago. At that time, it was

estimated that the equipment would have a useful life of 20 years and a salvage value of $30,000. Zipparoo uses the straight-line depreciation method.

4. Zipparoo uses the Balance Sheet method of accounting for bad debts. 5. Round all calculations to the nearest dollar.

Transactions during the month: Jan. 1 Paid $1,800 for a one year premium on property and casualty insurance. The policy covers the period January 1, 20X1 to December 31, 20X1. Jan. 1 Sold 6X0 pairs of “Zips” to Joey on account for $6X each, terms 2/10, net 30. Jan. 2 Zipparoo purchased additional equipment for cash for $2Y,000. The equipment has an expected life of 10 years and an estimated salvage value of $4,Z00. Jan. 5 Joey returned 7X pairs of “Zips” because of defections. The inventory could not be resold and was disposed of. Jan. 8 Purchased 7X0 pairs of “Zips” from Bluey on account for $2X each, terms 3/10, net 60. Jan. 9 Office supplies totaling $7,Y00 were purchased on account. Jan. 10 Joey paid full amount owed. Round calculations to the nearest dollar. Jan. 12 Sold 7X0 pairs of “Zips” to Pete on account for $7X each, terms 2/10, net 30. Jan. 14 Purchased 4Z0 pairs of “Zips” from Kanga on account for $1Z each, terms 2/10, net 30. Jan. 17 Paid full amount owed to Bluey from Jan. 8 purchase. Jan. 18 Paid $1X,000 for workers’ salaries. This amount includes amounts owed from the previous month. Jan. 23 Delivered 3Y0 pairs of “Zips” to Flash who had purchased them in advance last month, $1Y,000. Jan. 24 Paid interest on Long-Term Debt, $5,Z00. Jan. 25 Paid dividends to stockholders, $3,Z00. Jan. 26 Received cash from customers billed in the previous month, $1X,000. Jan. 27 Pete paid full amount owed. Jan. 27 Paid full amount owed to Kanga from Jan. 14 purchase. Jan. 28 One of Zipparoo’s customers, Rooth, owes $2,Y00 but has informed Zipparoo that he will not pay because of bankruptcy. Zipparoo writes off Rooth’s account as uncollectible. Jan. 30 Paid utilities for January of $475.

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REQUIREMENTS: 1. Make copies of the required forms (see attached forms and instructions). Then, using the chart of

accounts shown below, set up the general ledger. NOTE: YOU MUST USE THE DOWNLOADED FORMS TO RECEIVE CREDIT FOR THE PROBLEM.

Zipparoo

Chart of Accounts 11 Cash 12 Accounts Receivable

13 Allowance for Doubtful Accounts 14 Office Supplies 15 Prepaid Rent 16 Inventory 17 Prepaid Insurance 18 Equipment 19 Accumulated Depreciation 21 Accounts Payable 22 Salaries Payable 23 Unearned Revenues 25 Long-term Debt 31 Common Stock 34 Retained Earnings 35 Dividends 37 Income Summary 41 Sales Revenue 42 Sales Returns and Allowances 43 Sales Discounts 51 Insurance Expense 52 Uncollectible Account Expense 53 Rent Expense 54 Cost of Goods Sold 55 Office Supplies Expense 56 Interest Expense 57 Depreciation Expense 58 Utilities Expense 59 Salaries Expense 60 Purchase Discount Lost/Taken

2. Journalize each of the above transactions. EXPLANATIONS ARE NOT REQUIRED. 3. Post the entries to the ledger. 4. Prepare a trial balance as of January 31, 20X1. USE THE FORMAT SHOWN ON PAGE 109

OF THE CLASS TEXT. 5. Journalize and post the adjusting entries using the following information:

a. Zipparoo estimates that 10% of accounts owed to the company would not be collected. Round to the dollar.

b. Office Supplies at the end of the year totaled $2,500. c. Must take depreciation for equipment use this month for both old and new equipment. Round

Total depreciation to the dollar. d. Salaries of $2,Y00 for January will not be paid until February 5 of next month.

Set up the entire general ledger using these accounts before you start into the project. Keep the accounts in numeric order.

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e. In a prior month, 12 months rent had been purchased in advance for $96,000. f. Must record insurance use this month. g. A physical count of inventory indicates there is $1,500 of inventory on hand.

6. Prepare an adjusted trial balance. USE THE FORMAT SHOWN ON PAGE 158 OF THE CLASS TEXT.

7. Using the adjusted trial balance, prepare an income statement, a statement of retained earnings, and a balance sheet. USE THE FORMATS SHOWN ON PAGE 194 OF THE CLASS TEXT. You will have to include the Merchandising Company requirements of the Income Statement. Note: For our problem, there are no income taxes.

8. Journalize and post the closing entries. 9. Prepare a post-closing trial balance. USE THE FORMAT SHOWN ON PAGE 203. 10. After you have completed the problem, arrange the pages of your solution in the following

order (DO NOT turn in the problem requirements packet or any pages other than those listed below!):

a. Project Title Page b. Journals c. Ledger d. Trial Balance e. Adjusted Trial Balance f. Post-closing Trial Balance g. Income Statement h. Statement of Retained Earnings i. Balance Sheet

PRINT your name in the lower right corner of each page. STAPLE the pages together in the upper left hand corner.

IMPORTANT NOTES

1. The instructor will not accept the problem if the pages are not arranged as described in paragraph 10, above.

2. 3. Do not type the answers or use a computer.

4. Do not write your answer in ink. Use a #2 pencil to complete the problem.

5. Form, style, and neatness will be graded.

6. THE PROBLEM MUST BE COMPLETED AND SUBMITTED ON THE

DATE ANNOUNCED BY THE INSTRUCTOR. NO TIME EXTENSION WILL BE GRANTED.

CHECK FIGURES

There is an excel spreadsheet on Springboard where you can enter the LAST 3 digits of your Akron Student ID # (on the back of your Zip Card) to obtain your personal check figures for the project.

Attached are copies of the forms required for the project. You will need to make copies, as shown below, to complete the project.

You must use the attached forms. DO NOT MAKE UP FORMS OF YOUR OWN.

# of Copies You will

Form Need Cover Sheet 1 General Journal 2-3 General Ledger 5 Trial Balance 1 Adjusted Trial Balance 1 Post Closing Trial Balance 1 Income Statement 1 Balance Sheet 1 Statement of Retained Earnings 1

FORMS FOR THE PROJECT

Accounting 201

Spring 2013

Project 2

Section # ________ Instructor ________________

Student's Name:____________________________ Student's UA ID # (Zip Card #): _____________

Zipparoo General Journal

January 1 to January 31, 20X1 Page: _____

Post. Date Description Ref. Debit Credit

Section # ________ Instructor ________________ Student's Name:____________________________

Zipparoo General Ledger

January 1 to January 31, 20X1

Acct Name: Acct No: Acct Name: Acct No: Date Debit Credit Balance Date Debit Credit Balance

Acct Name: Acct No: Acct Name: Acct No: Date Debit Credit Balance Date Debit Credit Balance

Acct Name: Acct No: Acct Name: Acct No: Date Debit Credit Balance Date Debit Credit Balance

Student's Name:_____________________________

Zipparoo Trial Balance

January 31, 20X1

Debit Credit

Student's Name:______________________________

Zipparoo Adjusted Trial Balance

January 31, 20X1

Debit Credit

Student's Name:______________________________

Zipparoo Post-Closing Trial Balance

January 31, 20X1

Debit Credit

Student's Name:______________________________

Zipparoo Income Statement

January 1 to January 31, 20X1

Student's Name ______________________________

Zipparoo Statement Of Retained Earnings

For The Month Ended January 31, 20X1

Student's Name ______________________________

Zipparoo Balance Sheet

For the Month Ended January 31, 20X1

Student's Name ______________________________