Acc 207 Project

Description

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ACCT 207 PROJECT
Adjusting Journal Entries and Financial Statements
Purpose
Improve your understanding of the relationships between the financial statements; increase your
confidence in preparing and recording accounting entries; increase your ability to understand the
preparation of formal financial statements.
Instructions
Included are the unadjusted trial balance for Sinfully Sweet Desserts at December 31, 2018, and a
list of adjusting journal entries required at year-end.
• First, enter the December 31, 2018, beginning balances from the Unadjusted Trial Balance
into your accounting “system” (i.e., enter the beginning balances into the T-accounts
provided on pp. 4-7).
• Second, “record” (i.e., write out in proper journal entry format) each of the adjusting entries
from page 3 on page 8 (i.e., on blank page with the header “Adjusting Entries”).
IMPORTANT – Don’t forget to post each of these adjusting entries to the correct Taccounts
on pp. 4-7 – this ensures that your adjusting entries are properly updating the
various accounts in your “system”.
• After journalizing and posting all of your adjusting entries, tally up all the ending balances
in the T-accounts on pp. 4-7. Then, use these ending balances to fill out the Adjusted Trial
Balance on page 9.
• From the Adjusted Trial Balance, then your accounting “system” (i.e., you) will complete
the Multiple-Step Income Statement (p. 10), Statement of Retained Earnings (p. 11) for the
year ended December 31, 2018, and the Classified Balance Sheet (p. 12) as of December 31,
2018. (Hint: One of your asset accounts will have a zero balance.)
Expectations
This is an individual project. Therefore, each student will turn in his/her own copy of this completed
packet. However, I want this to be a pleasant learning experience. Therefore, while I want everyone
to complete their own packet, I encourage you to work together! Have “fun” with it!
Due Date
All packets must be submitted to me by Thursday, December 6th. If you do not turn in the
project by December 6th
, you will receive a zero – no exceptions. Further, if you decide that you
want to turn in the project before the deadline, that’s fine by me! In fact, I encourage you to do so!
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ADDITIONAL NOTES
• Do not wait until the last minute to do this project – things always take longer than you
expect them to. I suggest you knock this project out in one shot – i.e., set aside a block of
time and complete it.
• For assistance with this project, I would refer to Chapter 4 in your textbook. Specifically,
take look at Problem 4-3A!
• You are NOT required to prepare closing entries for this project.
• This is a project that nobody should have a real problem completing. We have reviewed
problems like this in class. Therefore, do not expect me to sit down with you and walk
you through this project (I will only answer very simple questions about this project).
Get together, set aside a block of time, and knock it out!
• When you are ready turn in the project, make sure the packet is stapled together (assuming
you took it apart to complete it). I will not accept unstapled packets!
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Sinfully Sweet Desserts
Unadjusted Trial Balance
December 31, 2018
Accounts Debit Credit
Cash 105,800
Accounts Receivable 14,600
Allowance for Bad Debts 1,900
Inventory 10,000
Prepaid Advertising 1,200
Supplies 2,200
Accounts Payable 14,200
Unearned Revenue 4,000
Long-Term Note Payable 7,000
Common Stock 70,900
Retained Earnings 28,800
Sales Revenue 74,200
Cost of Goods Sold 34,200
Wages Expense 8,700
Utility Expense 3,400
Advertising Expense 20,900
Totals 201,000 201,000
Adjusting Entries:
December 31: While reviewing the bank statement, determined that during December, $900 in
revenue had been incorrectly debited to accounts receivable instead of cash (the
credit was correct).
December 31: Determined that we earned (but haven’t received) $1,700 in interest revenue on our
savings account during the year.
December 31: We earned $2,850 of revenue from sweets sales during December 2018 that had been
paid for in advance by our customers. The cost of those sweets was $1,000. Prepare
entries to record both the sale and cost of goods sold.
December 31: The entire year’s advertising campaign ($1,200 per month) was paid in advance on
January 1, 2018 (recorded in January) – one month of Prepaid Advertising remains.
December 31: Determined that there were $350 of supplies remaining at the end of the period.
December 31: December utilities are $1,900. The bill will be paid in January 2019.
December 31: Unrecorded bad debt expense for 2018 has been estimated at $2,100.
December 31: The long term note payable was recorded on June 1, 2018. The interest and the note
are due on July 31, 2025. The interest rate is 12% לויטרה 20 מ”ג מחיר. Record the 2018 interest expense.
December 31: Calculate Net Income Before Taxes and then record income taxes as 35% of this
number (use the Multiple-Step Income Statement) – use this tax # to record the final
adjusting entry for Income Tax Expense & Income Tax Payable AND as the Income
Tax Expense figure in your Multiple-Step Income Statement. Note  The taxes will
be paid in March 2019.
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Adjusting Entries
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Adjusted Trial Balance
Sinfully Sweet Desserts
Adjusted Trial Balance
December 31, 2018
Accounts Debit Credit
Cash
Accounts Receivable
Allowance for Bad Debts
Interest Receivable
Inventory
Prepaid Advertising
Supplies
Accounts Payable
Utilities Payable
Income Tax Payable
Unearned Revenue
Interest Payable
Long-Term Note Payable
Common Stock
Retained Earnings
Sales Revenue
Interest Revenue
Cost of Goods Sold
Wages Expense
Utilities Expense
Advertising Expense
Supplies Expense
Bad Debt Expense
Interest Expense
Income Tax Expense
Totals
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Multiple-Step Income Statement
Sinfully Sweet Desserts
Income Statement
For the Year Ended December 31, 2018
Sales Revenue
Less: Cost of Goods Sold
Gross Profit
Operating Expenses:
Wages Expense
Utility Expense
Advertising Expense
Supplies Expense
Bad Debt Expense
Total Operating Expenses
Total Operating Income
Other Revenues and Expenses
Interest Revenue
Interest Expense
Total Other Rev. (Exp.)
Net Income Before Taxes
Income Tax Expense
Net Income
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Statement of Retained Earnings
Sinfully Sweet Desserts
Statement of Retained Earnings
For the Year Ended December 31, 2018
Retained Earnings, Jan. 1, 2018
Add: Net Income
Less: Dividends NA
Retained Earnings, Dec. 31, 2018
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Balance Sheet
Sinfully Sweet Desserts
Balance Sheet
As of December 31, 2018
ASSETS LIABILITIES
Current Assets Current Liabilities
Cash Accounts Payable
Accounts Receivable Utilties Payable
Less: Allowance for Bad Debts Income Tax Payable
Net Accounts Receivable Unearned Revenue
Interest Receivable Total Current Liabilities
Inventory
Prepaid Advertising Non-Current Liabilities
Supplies Interest Payable
Notes Payable
Total Current Assets Total Non-Current Liab.
Total Liabilities
STOCKHOLDERS’ EQUITY
Common Stock
Retained Earnings
Total Owners’ Equity
Total Liab. & SE