Lesson 1: Business, Accounting, and You
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G r aded P r oj ect G r aded P r oj ect
The goal of this graded project is to create the following financial statements for J & L Accounting, Inc.: Balance sheet Income statement
Statement of retained earnings Post-closing trial balance
The financial statements must be created in one Microsoft Word document (.doc or .docx file). Alternatively, an Excel workbook may be used (.xls or .xlsx file). The Word or Excel file will be uploaded for grading.
Read the following instructions thoroughly before beginning your work. This will help you to become familiar with what is involved in the project. Some students start on ...view middle of the document...
Debits not equaling credits allows for “cooking of the books,” which is presenting false information. It also allows for embezzlement, which is theft by management or employees. If debits don’t equal credits, the cause may be a lack of understanding of accounting principles, such as those presented in the textbook and assigned homework problems, or a lack of focus and concentration when making journal entries, posting to ledger accounts, or completing math. Remember—instructors are available to help you with material you may be struggling with. Mistakes of the lack-of-focus variety are best corrected by going back over the work until the error is found.
The following financial statements are provided from the prior accounting period for J & L Accounting, Inc.: a) Post-closing trial balance b) Balance sheet
The accounting equation must balance on the balance sheet. This is another fundamental principle of accounting that can’t be violated and if so is completely unacceptable. When the equation doesn’t balance and the numbers are “fudged,” this is easily detectable by someone who knows accounting. If your debits equal your credits and you understand which general ledger accounts belong on which financial statements, then the accounting equation should balance. It’s really all about understanding the concepts and applying that understanding.
d) Statement of retained earnings
c) Income statement
Graded Project Instructions
J & L Accounting, Inc. Post-Closing Trial Balance December 31, 2012 BALANCE ACCOUNT TITLE Cash, Business Checking Accounts Receivable Prepaid Rent Vehicles Accumulated Depreciation, Vehicles Equipment Accumulated Depreciation, Equipment Accounts Payable Common Stock Retained Earnings Dividends Service Revenue Advertising Expense Rent Expense Office Supplies Expense Telephone Expense Utilities Expense Depreciation Expense TOTALS 72,100.00 72,100.00 38,000.00 21,500.00 3,600.00 600.00 48,000.00 12,000.00 DEBIT 20,500.00 CREDIT
J & L Accounting, Inc. Balance Sheet As of December 31, 2012 ASSETS Cash, Business Checking Accounts Receivable Prepaid Rent Vehicles Less: Accumulated Depreciation, Vehicles Equipment Less: Accumulated Depreciation, Equipment TOTAL ASSETS 48,000.00 12,000.00 3,600.00 600.00 3,000.00 59,500.00 36,000.00 20,500.00 0.00 0.00
LIABILITIES Accounts Payable TOTAL LIABILITIES 0.00 0.00
STOCKHOLDERS’ EQUITY Common Stock Retained Earnings TOTAL STOCKHOLDERS’ EQUITY 38,000.00 21,500.00 59,500.00
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
Business, Accounting, and You
J & L Accounting, Inc. Income Statement For the Month Ending December 31, 2012 REVENUES Service Revenue EXPENSES Advertising Expense Rent Expense Office Supplies Expense Telephone Expense Utilities Expense Depreciation Expense TOTAL EXPENSES NET INCOME 2,300.00 1,000.00 300.00 750.00 3,200.00 1,100.00 8,650.00 1,625.00 10,275.00
J & L Accounting,...