CASE STUDY – THE COMPLETE ACCOUNTING CYCLE
Name:
___________________________________
This
Case Study is worth 100 points, or 10% of your final course grade.
This Case Study relates to
TCOs E and F, and Chapters 2 and 3.
MAKE
SURE TO COMPLETE ALL REQUIREMENTS WHICH ARE LISTED BELOW.
There are 10 sheets in the
Workbook, including this one.
All
of the information that you need for the project is located in this Workbook.
Requirements
Sheet in Workbook
Requirement 1—Prepare the
Journal Entries in the General Journal
Journal Entries
Requirement 2—Post Journal
Entries to the General Ledger
General Ledger
Requirement 3—Prepare a Trial
Balance
Trial Balance
Requirement 4—Prepare the
Adjusting Entries
Adjusting Entries
Requirement 5—Post Adjusting
Entries to the General Ledger
General Ledger
Requirement 6—Prepare an
Adjusted Trial Balance
Adjusted Trial Balance
Requirement 7—Prepare the
Financial Statements
Financial Statements
Requirement 8—Prepare the
Closing Entries
Closing Entries
Requirement 9—Post Closing
Entries to the General Ledger
General Ledger
Requirement 10—Prepare the
Post Closing Trial Balance
Post-Closing Trial Balance
Hint
for success: Review the Week 2 Lesson prior to starting this project.
There
are also hints contained within certain cells on some of the Worksheet
tabs.
You
can hover over the red pointer at the top right-hand corner of the cell to
read the hint.
Hints are provided for the
following balances:
1)
The debits for the journal entries are on the Journal Entries tab.
2)
The credits for the journal entries are on the Journal Entries tab.
3) The cash balance is on the
General Ledger tab.
4) The debits for the trial
balance are on the Trial Balance tab.
5) The credits for the trial
balance are on the Trial Balance tab.
6)
The debits for the adjusted trial balance are on the Adjusted Trial Balance
tab.
7)
The credits for the adjusted trial balance are on the Adjusted Trial Balance
tab.
8)
Net income for the income statement is on the Financial Statements tab.
9)
Retained earnings as of July 31 are on the Financial Statements tab.
10)
Total assets for the balance sheet are on the Financial Statements tab.
11)
Total liabilities and shareholders’ equity for the balance sheet are on the
Financial Statements tab.
12)
The debits for the post-closing trial balance are on the Post-Closing Trial
Balance tab.
13)
The credits for the post-closing trial balance are on the Post-Closing Trial
Balance tab.
Requirement #1:
During
its first month of operation, the Melvin Plumbing Corporation, which
specializes in residential plumbing,
completed the following transactions.
July 1
Began business by making a deposit
in a company bank account of $90,000, in exchange
for 9,000 shares of $10 par value
common stock.
July 3
Paid the current month’s
rent, $5,500.
July 5
Paid the premium on a
1-year insurance policy, $4,800
July 7
Purchased supplies on
account from Little Company, $900.
July 10
Paid employee salaries, $3,300
July 14
Purchased equipment from
Lake Company, $11,500. Paid $1,500 down and the balance was
placed on account.
Payments will be $500.00 per month for 20 months. The first payment is due
8/1.
Note: Use accounts
payable for the balance due.
July 15
Received cash for
plumbing revenue for the first half of July, $7,700
July 19
Made payment on account
to Lake Company, $500.
July 31
Received cash for
plumbing revenue for the last half of July, $8,505
July 31
Declared and paid cash
dividends of $600
Prepare
journal entries to record the July transactions in the General Journal below.
General Journal
Date
Description(Account Name)
Debit
Credit
0
0
Note:
Remember that debits must equal credits—All of your journal entries should
balance.
This Sheet will be used for
Requirements 2, 5, and 9.
Requirement #2:
Post
the July journal entries to the following T-accounts and compute ending
balances.
Cash (111)
Revenue (411)
Prepaid Insurance
(117)
Rent Expense (511)
Supplies (119)
Salaries Expense (512)
Equipment (144)
Insurance Expense (513)
Accumulated
Depreciation-Equipment (145)
Supplies Expense (514)
Accounts Payable
(212)
Depreciation Expense (515)
Income Tax Payable
(213)
Income Tax Expense (516)
Common Stock (311)
Retained Earnings (312)
Dividends (313
Requirement #3:
Prepare a trial balance for
July in the space below.
Melvin Plumbing
Corporation
Trial Balance
July 31
0
0
Requirement #4:
Prepare
adjusting entries using the following information in the General Journal
below. Show your
calculations!
a) One month’s insurance has expired.
b) The remaining inventory of supplies
is $375.
c) The estimated depreciation on
equipment is $175.
d) The estimated income taxes are
$3,200.
General Journal
Date
Description (Account Name)
Debit
Credit
Requirement #5:
Post
the adjusting entries to the General Ledger T-accounts and compute adjusted
balances.
Just add to the balances that
are already listed.
Requirement #6:
Prepare an adjusted trial
balance in the space below.
Melvin Plumbing
Corporation
Adjusted Trial
Balance
July 31
0
0
Requirement #7:
Prepare
the financial statements for the Melvin Plumbing Corporation as of July 31 in
the space below.
You
will only be preparing the income statement, statement of retained earnings,
and the balance sheet.
The
statement of cash flows is a required financial statement, but is not
required for this case study.
Melvin Plumbing
Corporation
Melvin Plumbing Corporation
Melvin Plumbing Corporation
Income Statement
Statement of Retained Earnings
Balance Sheet
For the Month
Ending July 31
For the Month Ending July 31
July 31
Revenues:
Retained Earnings, July 1
Assets:
Revenue
Add: Net Income
Cash
Subtotal
Supplies
Expenses:
Less: Dividends
Prepaid Insurance
Rent Expense
Retained Earnings, July 31
Equipment
Salaries Expense
Less: Accum. Depr.
Insurance Expense
Total Assets
Supplies Expense
Depreciation Expense
Liabilities:
Income Tax Expense
Accounts Payable
Total Expenses
Income Tax Payable
Total Liabilities
Net Income
Stockholders’ Equity:
Common Stock
Retained Earnings
Total Stockholders’
Equity
Total Liabilities and
Stockholders’ Equity
Requirement #8:
Prepare
the closing entries at July 31 in the General Journal below.
General Journal
Date
Description (Account Name)
Debit
Credit
Requirement #9:
Post
the closing entries to the General Ledger T-accounts and compute ending
balances.
Just add to the adjusted
balances already listed.
Requirement #10:
Prepare
a post-closing trial balance as of July 31 in the space below.
Melvin Plumbing
Corporation
Post-Closing Trial
Balance
July 31
0
0
