For this project you will complete Hampton\'s entire accounting cycle. You will

Question

For this project you will complete Hampton's entire accounting cycle. You will be required to record entries in a journal, post to a ledger, complete a trial balance, and prepare financial statements. Transactions will include day to day operations, adjusting entries, dividends and closing entries. All of the work will be completed in the provided Excel workbook (make sure you save the file on to your computer!) Company Information Hampton Accounting Service Inc. is a public corporation that has been in business for 1 year. The company is authorized to issue 100,000 shares of common stock at 51 par value. The company provides accounting services and sells accounting software. To date the company has issued 20,000 shares of common stock, which are still outstanding. The issued shares were sold at S10 per share. A building and furnishings were purchased at the start of the year. The cost of the building was $140,000 and the cost of the furnishings was 530,000. The depreciation will be recorded annually. The estimated useful life of the building is 20 years with a residual value of $10,000. The company uses the Straight line method to depreciate the building. The estimated useful life of the furnishings is 5 years with a residual value of $2,500. The company uses the Double Declining Balance method to depreciate furnishings. The current inventory consists of 30 units of software at a cost of $140.00 each. Inventory is costed using LIFO and the perpetual inventory system. The company uses an allowance method to account for uncollectible accounts. It is estimated that 1% of net credit revenue will be uncollectible, adjusted monthly. Employees are paid $2,500 salary twice a month, on the 16th for the first half of the month and on the 2d of the following month for the last half of the month. Ignore income tax calculations. Project Requirements 1. Opening balances- The opening balances for select accounts are provided in the appropriate ledger accounts. Record the following transactions in the journal and post to the ledger: 12/02/xx- Purchased 10 Units of Software on Account for $1,300 12/02/xx Paid employees Salaries owed 12/02/xx- Provided Accounting Service on Account, $3,200 12/05/xx- Purchased Computer Equipment on Account, $4,800 2. Note: The equipment has an estimated useful life of 4 years, residual value of 550 and uses the DDB method. BUS-A 201 Introduction to Financial Accounting

Explanation / Answer

Hi Student !

I will explain you step by step as to how to proceed in these type of questions.

In this question, we have to prepare Journal entries, Ledger, Trial Balance and Financial statements.

To prepare all these accounting records, we have to start from the basics, i.e., from Journal entries.

we have to analyse and list each and every item / transaction asked in the question. if possible, also highlight certain facts such as dividend to be paid, stocks issued during the year etc. , so that you do not forget to make adjustments for the same in your answer.

So lets start !! first you have to pass journal entries for each transaction stated in the question. It will take some time but its easy.

I hope by now you have made all possible journal entries now.

Look below, i have also passed all the journal entries. Check from your answer and see if you have missed any item or have passed a wrong entry.

Great !! Now we are done with step 1 !! i hope you have passed all the correct entries :) and if you have doubts with respect to any entry...please feel free to ask :) ill be happy to explain...

Now, next step is posing these entries to ledger and dont forget to make adjustments for depreciation as well in the ledger accounts.

In the excel sheet of your assignment, there are various account balances already with you. Thse also include the opening balances. Now, what you have to do is to post the above entries which you have made, to these accounts

Great !! after you have finished posting , dont forget to make adjustments for depreciation as well :)

Now you have your closing balances ready with you !

These closing balances will be posted to Trial Balance from which we will prepare our financial statements.

Prepare the trial balance now from the Closing balance of your ledger.

Good! i am sure you have done that.

Now you may check the same from my trial balance.

                      4,44,850

Awesome !! i am sure you got the same answer!!

Now after this we can prepare our financial statements which includes Profit and loss account, Balance sheet , Notes to Accounts but the question has asked us to prepare Journal, Ledger and Adjusted trial balance.

Now since we have completed this question....do let me know if you have any queries....ill be happy to solve :)

Date Accounts and Explanation Debit ($) Credit ($) 02-Dec Purchases A/c Dr 13000 To Bank A/c Cr 13000 (Being Software purchased 10 units ) 02-Dec Salaries Payable Dr 2500 To Bank A/c Cr 2500 (Being Unpaid Salaries Paid) 02-Dec Account Receivable Dr 3200 Service Revenue on Account Cr 3200 (Being Smount Receivable on services rendered) 05-Dec Computer Equipment Account Dr 4800 To Bank A/c Cr 4800 (being Computer equipment Purchased) 08-Dec Supplies Dr 800 To Cash Ac/c Cr 800 (being payment made for supplies in cash) 10-Dec Bank Account Dr 3000 Account Receivable Cr 3000 (being amount due from debtor received) 11-Dec Bank Dr 4500 To Sales Cr 4500 (being software unots sold) 11-Dec Sales Dr 4500 To Inventory Cr 4500 12-Dec Accounts Payable Dr 1000 To Bank Cr 1000 14-Dec Purchases Dr 2400 TO Bank Cr 2400 (Being 20 Units purchased ) 15-Dec Advertising Expense Dr 250 To Bank Cr 250 (being advertising expense paid) 16-Dec Cash Dr 8000 Service Revenue on Account Cr 8000 (being cash received against services ) 17-Dec Salary Expense Dr 2500 to Bank Cr 2500 (being salary paid) 19-Dec Bank Dr 6000 Service Revenue on Account Cr 6000 (being amount received against services rendered) 22-Dec Bank Dr 3000 To Sales Cr 3000 (being software units sold) 23-Dec Sales Dr 3000 To Inventory Cr 3000 24-Dec Bank Account Dr 2500 Account Receivable Cr 2500 (being amount received from debtor) 24-Dec Account Payable Dr 2500 To Bank Account Cr 2500 (being outstanding amount paid) 27-Dec Utility Expense Dr 850 To Bank Account Cr 850 (being utility expenses paid) 29-Dec Cash Account Dr 2000 To Amount received in Advance Cr 2000 (being amount received in advance for services ) 29-Dec Cash Account Dr 5000 Service Revenue on Account Cr 5000 (being servces provided on cash) 30-Dec Bank Account Dr 15000 To Common Stock Account Cr 1500 To Retained Earnings Cr 13500 (being new equity stock issued) 31-Dec Shareholders Account Dr 32250 To Dividend Payable Cr 32250 (being dividend payable to shareholders)

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