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Elf Village Productions 50 Sheet Legal Pad Building Blocks of Accounting .. A Financial Perspective Welcome Page 1 Welcome to the world's first ePractice case, an individualized, internet generated and and graded case study that focuses on the analytically portion of the accounting cycle. All sheets have been locked to protect the "HELP" messages built into this case. Enter the required data into the yellow filled cells on the General Journal, Worksheet and Financial Statement sheets. Unless limited by your instructor you have unlimited attempts and only the highest score is counted. Step 1 The Chart of Accounts includes all of the accounts that you can use to solve your case. You may want to print the chart of accounts and use it as an easy reference guide. Step 2 Journalize the First 29 Transactions Using your unique transactions record the corresponding general journal entry, rounding to two decimal places, =Round(value, 2). Step 3 Completed adjusting entries 30 - 39 Use the information in the Adjusted Trial Balance columns of the Worksheet. Step 4 Complete the Bank Reconciliation a. Information will be displayed after required Journal Entries are correct. b. The ending balance of the bank statement and the book statement must be the same. Step 5 Completed adjusting entries 40 - 42 Step 6 Complete the Worksheet verifying that the Net income is the same in the Income Statement and in the Balance Sheet columns. If you have questions See FAQ 05. Step 7 Using the Worksheet as a reference, prepare the Income Statement, Statement of Changes in Retained Earnings and the Balance Sheet. Step 8 Check your work by Creating General Ledger using a Pivot Table. Note: This non-graded step will help you verify your work Elf Village Productions 50 Sheet Legal Pad Building Blocks of Accounting .. A Financial Perspective Chart of Accounts Number Name Normal Balance 1110 Cash Debit 1120 Accounts Receivable Debit 1121 Allowance for Doubtful Accounts Credit 1130 Prepaid Insurance Debit 1140 Prepaid Rent Debit 1150 Office Supplies Debit 1211 Office Equip Debit 1212 Accum. Depr.-Office Equip. Credit 1311 Computer Equip. Debit 1312 Accum. Depr.-Computer Equip. Credit 1411 Building Debit 1412 Accum. Depr.-Building Credit 1510 Land Debit 2101 Accounts Payable Credit 2102 Advanced Payments Credit 2103 Interest Payable Credit 2105 Salaries Payable Credit 2106 Income Taxes Payable Credit 2201 Mortgage Payable Credit 2202 Notes Payable Credit 3100 Capital Stock Credit 3110 Paid-in Capital in Excess of Par Value Credit 3200 Retained Earnings Credit 3300 Dividends Debit 3400 Income Summary Credit 4100 Computer & Consulting Revenue Credit 5010 Rent Expense Debit 5020 Salary Expense Debit 5030 Advertising Expense Debit 5040 Repairs & Maint. Expense Debit 5050 Oil & Gas Expense Debit 5080 Supplies Expense Debit 5090 Interest Expense Debit 5100 Insurance Expense Debit 5110 Depreciation Expense Debit 5120 Bad Debt Expense Debit 5130 Bank Expense Debit 5140 Telephone Expense Debit 5150 Income Tax Expense Debit Briston Warren 1688 50 Sheet Legal Pad Transacti Description of transaction June 1: Jeremy made an investment in Dyte of Accounting, Inc., by purchasing -,000 shares of its common stock paying $30,910.30 in cash and by contributing computer 01. equipment with a fair market value of $47,115.70. The par value of the common stock 02. June 1: Courtney made an investment in Byte of Accounting, Inc., by purchasing 552 shares of its common stock by contributing computer equipment with a fair market value of $15,605.20 and office equipment with a fair value of $960.32. The par value of the common stock was $0.01 per share. 03. June 1: Briston Warren made an investment in Byte of Accounting, Inc. by purchasing 3,750 shares of its common stock for $112,537.50 cash. The par value of the common stock was $0.01 per share. 04. June : Check F 500- was used to make a down payment of $20,000.00 on additional computer equipment that was purchased from Royce Computers, invoice number 76542. The full price of the computer was $140,000.00. A five-year note was executed 05. June 4: Additional office equipment costing $700.00 was purchased on credit from Discount Computer Corporation. The invoice number was 98432. 06 June 8: Unsatisfactory office equipment costing $140.00 from invoice number 98432 was returned to Discount Computer for credit to be applied against the outstanding balance owed by Byte. 07. June 10: Check # 5003 was used to make a $21,500.00 payment reducing the principal owed on the June 2 purchase of computer equipment from Royce Computers. 08 June 10: Purchased orice supplies Tor >1,750.00 from Staples on account. The invoice number was 61298. Included in the purchase was 10 units of Super RoutePro at a cost 09 June 14: Check # 5004 was used to purchase a one-year insurance policy covering its computer equipment for $6,312.00 from Seth's Insurance. The effective date of the policy was June 16 and the invoice number was 2387. ) 10. June 16: Checks in the amount of $8,510.00 was received for services performed for cash customers. 2 3 11. June 10: Dyre purchased a building and the land it is on tor >5,000.00 to nouse its repair facilities and to store computer equipment. The lot on which the building is located is valued at $15,000.00. The balance of the cost is to be allocated to the building. Check # 5005 was used to make the down payment of $9,500.00. A thirty year mortgage with an inital payement due on August 1st, was established for the Ll. 5 12. June 17: Check # 5006 for $6,400.00 was paid for rent of the office space for June, July, August and September. 7 13. June 17: Received invoice number 26354 in the amount of $375.00 from the local newspaper for advertising, 3 3 14. June 21: Billed various miscellaneous local customers $4,800.00 for consulting services performed. 15. June 21: Check # 5007 was used to purchase a fax machine for the office from Office Machines Express for $650.00. The invoice number was 975-328. 2 3 16. June 21: Accounts payable in the amount of $560.00 were paid with Check # 5008. 5 B 7 17. June 22: Check # 5009 was used to pay the advertising bill that was received on June 18. June 22: Received a bill for $1,165.00 from Computer Parts and Repair Co. for repairs to the computer equipment. The invoice number was 43254. 3 3 19. June 22: Check # 5010 was used to pay salaries of $935.00 to equipment operators for the week ending June 18. Ignore payroll taxes. 1 2 3 20. June 23: Cash in the amount of $3,845.00 was received on billings. . 21. June 23: Purchased office supplies for $975.00 from Staples on account. The invoice number was 65498. Included in the purchase was 10 units of Super RoutePro at a cost June 20: Diled 30,015.00 to miscellaneous customers or services performed to June 5 22. 7 3 23 June 29: Cash in the amount of $5,699.00 was received for billings. 24. June 29: Paid the bill received on June 22, from Computer Parts and Repairs Co with Check # 5011. ) 1 25. June 29: Check # 5012 was used to pay salaries of $935.00 to equipment operators for the week ending June 25. Ignore payroll taxes. 2 3 26. June 30: Received a bill for the amount of $915.00 from O & G Oil and Gas Co. The invoice number was 784537. 27. June 30: Check # 5013 was used to pay for a cash dividend of $0.22 per share to Jeremy, a shareholder of Byte. S 7 28. June 30: Check #5014 was used to pay for a cash dividend of $0.22 per share to Briston Warren a shareholder of Byte. 3 3 29. June 30: Check # 5015 was used to pay for a cash dividend of $0.22 per share to Courtney, a shareholder of Byte. ) 1 2 3 Adjusting Entries - Round to two decimal places. 30. The rent payment made on June 17 was for June, July, August and September. Expense the amount associated with one month's rent. + 7 A physical inventory showed that only $414.00 worth of general office supplies remained on hand as of June 30. This did not include any of the Super RoutePro. There were 5 units of Super RoutePro on hand. We use FIFO to determine the 31. 31. A physical inventory showed that only $414.00 worth of general office supplies remained on hand as of June 30. This did not include any of the Super RoutePro. There were 5 units of Super RoutePro on hand. We use FIFO to determine the valuation of the supplies. 32. The annual interest rate on the mortgage payable was 8.75 percent. Interest expense for one-half month should be computed because the building and land were purchased and the liability incurred on June 16. 33. Record a journal entry to reflect that one half month's insurance has expired. 34. A review of Byte's job worksheets show that there are unbilled revenues in the amount of $15,750 for the period of June 28-30. 35. The Building and the Office Equipment have the following estimated useful lives: Building - 31.5 years Office Equipment - 7.0 years Management has decided that assets purchased during a month are treated as if purchased on the first day of the month. The building's salvage value is $8,000.00. The office equipment has a salvage value of $450.00. Calculate the depreciation for one month using the straight-line method of depreciation. The Computer Equipment has an estimated useful life of 5.00 years. Management has decided that assets purchased during a month are treated as if purchased on the first day of the month. The computer equipment's scrap value is $20,000.00. Calculate the depreciation for one month using the double declining method of donnectation 36. 37. A review of the payroll records show that unpaid salaries in the amount of $561.00 are owed by Byte for three days, June 28 - 30. Ignore payroll taxes. 38. The note payable to Royce Computers (transactions 04 and 07) is a five-year note, with interest at the rate of 12 percent annually. Interest expense should be computed based on a 360 day year. [IMPORTANT NOTE: The original note on the computer equipment purchased on June 2 was $112,000.00. On June 10, eight days later, $21,500.00 was repaid. Interest expense must be calculated on the $112,000.00 for eight days. In addition, interest expense on the 590,500.00 balance of the loan ($112,000.00 less $21,500.00 = $90,500.00) must be calculated for the 20 days remaining in the month of June.] 39. Based on the information on the "Bank Reconciliation" sheet prepare the journal entry required to increases cash. 40. Based on the information on the "Bank Reconciliation" sheet prepare the journal entry required to decreases cash. 41. Our CPA has informed us to estimate that 2.00% of Computer & Consulting Revenue will be uncollectable. 12. Income taxes are to be computed at the rate of 25 percent of net income before taxes. [IMPORTANT NOTE: Since the income taxes are a percent of the net income you will want to prepare the Income Statements through the Net Income Before Tax line. The worksheet contains all of the accounts and their balances which you can then transfer to the appropriate financial statement.] Closing Entries 13. Close the revenue accounts. 44. Close the expense accounts. 45. Close the income summary account. 46. Close the dividends account. A Byte of Accounting General Journal Note: You can only enter data into the yellow filled cells. Account Transaction Name Date Description Debit Credit 01 021 03 04 051 06 07 08 091 10 11 12 13 14 151 16 17 18! Welcome Chart of Accounts Transactions General Journal Bank ... A Byte of Accounting, Inc. Worksheet For Period Ending January 0, 1900 Income Statement Debit Credit Balance Sheet Debit Credit Account Number Name 1110 Cash 1120 Accounts Receivable 1121 Allowance for Doubtful Accounts 1130 Prepaid Insurance 1140 Prepaid Rent 1150 Office Supplies 1211 Office Equip. 1212 Accum. Depr.-Office Equip 1311 Computer Equip 1312 Accum. Depr.-Computer Equip. 1411 Building Cost 1412 Accum. Depr.-Building 1510 Land 2101 Accounts Payable 2102 Advanced Payments 2103 Interest Payable 2105 Salaries Payable 2106 Income Taxes Payable 2201 Mortgage Payable 2202 Notes Payable 3100 Capital Stock 3110 Paid-in Capital in Excess of Par Vald 3200 Retained Earnings 3300 Dividends Unadjusted Trial Balance Debit Credit 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001 0.00 0.00 0.00 Adjusting Entries Debit Credit 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001 0.00 0.00 0.00 Adjusted Trial Balance Debit Credit 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4100 Computer & Consulting Revenue 5010 Rent Expense 5020 Salary Expense 5030 Advertising Expense 5040 Repairs & Maint. Expense 5050 Oil & Gas Expense 5080 Supplies Expense 5090 Interest Expense 5100 Insurance Expense 5110 Depreciation Expense 5120 Bad Debt Expense 5130 Bank Expense 5140 Telephone Expense 5150 Income Taxes Expense 0.00 0.00 0.00 0.00 0.00 0.00 Total NET INCOME Balance

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