Accounting-AW-Q299

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I. Introduction
 

This practice set will allow intermediate accounting students an opportunity to prepare a manual set of accounting records, including financial statements, for a company.
 
The process of submitting the practice set for grading purposes will be broken down into two phases – Phase I and II. The practice set is a challenging project. It cannot be successfully completed at the last minute. It is estimated it will take 8 – 13 hours to complete depending on how well a student remembers basic accounting principles. It is highly recommended that you work on the set in blocks of time, just like an accountant would do in real life.
 
As you work on the practice set, you may find that you need to refer back to your basic principles of accounting notes or book, or you may have to skip ahead in your intermediate book to refresh your mind about a topic. Students should not expect the answers to be given to them outright by the instructor or GA. Students should not expect the instructor or GA to look at a student’s practice set to find the student’s mistake. Time permitting, the instructor and the GA are willing to give hints or to let the student know if a particular answer is on the right track or not as well as provide overall guidance. The practice set is a learning project – it will be challenging at times but rewarding in the end.
 
A Moodle forum devoted to only practice set questions is available. All questions which pertain to the practice set must be posted on the practice set forum. Please start a new thread for each question to make it easier for everyone to navigate.
 
Honor Code: Each student is required to prepare his or her own practice set. Copying another student’s practice set is considered an academic violation. Students are allowed to ask questions and help each other, including working together, in a collaborative way – but simply copying answers is not permitted. In addition, students should not give their practice set to another student who will be taking Acc 310 in the future.
 
II. Practice Set Materials
 
The practice set is a downloadable word document. A student may print it out and write directly on it or type directly into it from the computer. There are detailed instructions for the practice set. Students should familiarize themselves with these instructions before beginning the project.
 
Recommendation: If printed out, use notebook dividers or small flags to make it easier to find the different sections.
 
III. Due Dates and Phase Requirements
 
Because an early transaction recording error will likely result in incorrect amounts being reported on financial statements, the practice set will be completed and graded in two phases to minimize the possibility of this occurring. This will allow student errors in Phase I to be corrected before Phase II is started.
 
Please see the syllabus for the exact phase due dates.
 
Specific phase requirements are as follows:
 
Phase I
 
• Record transactions in the applicable journal.
• Post from the journals to the general ledger.
• Update subsidiary ledgers when appropriate. At year-end, verify that the sum of the accounts receivable and accounts payable subsidiary ledger balances matches their respective accounts receivable and accounts payable general ledger balances.
• Prepare an “Unadjusted Trial Balance” for the year end.
 
Phase II
 
• If applicable, correct account balances in the general ledger.
• Prepare adjusting entries.
• Post adjusting entries to the general ledger.
• Prepare an “Adjusted Trial Balance” for the year end.
• Prepare an income statement, statement of stockholders’ equity, and balance sheet using proper accounting formatting rules.
• Prepare closing entries.
• Post closing entries to the general ledger.
• Prepare a “Post-Closing Trial Balance”.
 
IV. General Tips
 
• Make periodic copies of your practice set in case the original is lost or accidentally destroyed.

• Work on the set in blocks of time. Remember that students may also work together in a collaborative way.

• If you are completing your set by hand, use pencil or erasable ink. If you prefer to use permanent ink, you will need to use white out or correcting tape for error corrections. Neatness will be a factor during grading.
 
• Use tabs (ex. small post-its) or notebook dividers on the various areas in your practice set to find the sections more easily.

• See “Accounting Mistakes – Helpful Hints” in your course pack for other ways to find errors.
 
V. Turning in the Practice Set
 
Students who take this course on campus will turn in a hard copy of the set. Students who take this course online may either, (1) drop off their hard copy at my office, or (2) Upload a copy of the set (as a single file) into Moodle. Further instructions will be provided for option #2 at a later time to distance education students.
 
The student’s name should appear on the front page of the course pack. Students turning in a hard copy should have the set “bound” in either a three ring binder or with a large clip with the pages ordered sequentially. Students uploading a copy of their set should also have the pages ordered sequentially.
 
You can read more about our case study assignment help services here.
 

 

VI. Getting Started Suggestions
 
• Be sure you understand how special journals and subsidiary ledgers work before starting the actual practice set.

• Familiarize yourself with the various general ledger accounts the company uses.

• On the pages where the various transactions are listed, go ahead and label which special journal each of the transactions should be recorded in.
 
• Until you get used to the technique of using the journals, you may want to journalize some of the early December transactions on scrap paper before transferring them to the special journals. Scrap paper should not be turned in for grading.
 
• A comprehensive “Project Checklist” is included in the instructions. Read through this checklist as well as the components of Phase I before starting.
 
Practice Set Instructions and Materials
 
Background Information: Wolfpack Corp, a calendar year-end company, is located in Raleigh, NC. It purchases inventory for resale to mainly local customers. It uses the periodic inventory system and the gross method for recording purchase and sales discounts. Wolfpack uses a manual accounting system with the following five types of journals:
 
• Sales Journal (SJ) – this journal is exclusively used to record all credit sales.
• Purchases Journal (PJ) – this journal is exclusively used to record all purchases of asset items on account.
• Cash Receipts Journal (CRJ) – this journal is exclusively used to record all transactions that involve a receipt of cash.
 
• Cash Disbursements Journal (CDJ) – this journal is exclusively used to record all transactions that involve a cash payment.
• General Journal (GJ) – this journal is used to record all transactions that are not recorded in one of the special journals above.
 
Wolfpack also uses subsidiary ledgers for its accounts receivable and accounts payable accounts. Further details regarding these two ledgers as well as the chart of accounts are provided later in these instructions.
 
January through November transactions for 20X5 have already been recorded and posted to the general ledger.
 
It is currently December 1, 20X5. As a recently hired accountant, you have been asked to complete the accounting cycle for 20X5 by doing the following in two phases:
 
Phase I
 
• Record December transactions in the applicable journal.
• Post from the journals to the general ledger.
• Update subsidiary ledgers when appropriate. At year-end, verify that the sum of the accounts receivable and accounts payable subsidiary ledger balances matches their respective accounts receivable and accounts payable general ledger balances.
• Prepare an “Unadjusted Trial Balance” for the year end.
 
Phase II
 
• If applicable, correct account balances in the general ledger.
• Prepare adjusting entries.
• Post adjusting entries to the general ledger.
• Prepare an “Adjusted Trial Balance” for the year end.
• Prepare an income statement, statement of stockholders’ equity, and balance sheet using proper accounting formatting rules.
• Prepare closing entries.
• Post closing entries to the general ledger.
• Prepare a “Post-Closing Trial Balance”.
 
Subsidiary Ledger Information
 
Wolfpack uses subsidiary ledgers to maintain extra details related to its accounts receivable and accounts payable accounts.
 
The subsidiary ledgers provided later in this practice set show the customer/vendor names and amounts due or owed, but you will need further details for each subsidiary ledger in order to properly record some of the December transactions. These further details are as follows:
 
Accounts Receivable Subsidiary Ledger Details
 
Customer Name Customer Account # Date of Sale to Customer Sales Discount Terms Balance Owed on Dec 1
Clayton 110-12 7/20/X5 2/15, n/30 $ 10,000
Murphy 110-25 9/13/X5 2/15, n/30 18,000
Summers 110-33 10/25/X5 2/15, n/30 12,000
Evans 110-44 11/24/X5 2/15, n/30 64,000
Warren 110-46 11/24/X5 2/15, n/30 16,000
Carroll 110-47 11/28/X5 2/15, n/30 30,000
Total $150,000
 
Other Notes: A payment received from a customer is first applied towards the customer’s oldest balance in determining any applicable discount. All sales on account have discount terms of 2/15, n/30.
 
Accounts Payable Subsidiary Ledger Details
 
Supplier/Vendor Name Vendor Account # Date of Purchase Purchase Discount Terms Balance Owed on Dec 1
Tarheel Industries 210-17 11/07/X5 2/30, n/60 $30,000
Pirates Inc. 210-20 11/18/X5 3/15, n/30 18,000
Goodson Corp. 210-22 11/27/X5 n/30 42,000
Total $90,000
 
Note: Discount terms for a particular vendor are consistent (ex. Tarheel Industries always has discount terms of 2/30, n/60)
 
Chart of Accounts Information
 
Account Number Account Title
100 Cash
110 Accounts Receivable
115 Allowance for Doubtful Accounts (AFDA)
120 Interest Receivable
130 Inventory
135 Supplies
140 Prepaid Rent
145 Prepaid Insurance
150 Investments (non-current)
160 Land
170 Buildings
175 Accumulated Depreciation – Buildings
180 Equipment
185 Accumulated Depreciation – Equipment
190 Patents
210 Accounts Payable
220 Salaries Payable
225 Utilities Payable
230 Interest Payable
235 Unearned Rent
240 Income Taxes Payable
245 Dividends Payable
250 Notes Payable (non-current)
300 Common Stock ($1 par)
310 Additional Paid-In Capital
320 Retained Earnings
325 Dividends
330 Accumulated Other Comprehensive Income
350 Treasury Stock
400 Sales Revenue
402 Sales Returns & Allowances
404 Sales Discounts
410 Interest Revenue
420 Rent Revenue
430 Dividend Revenue
500 Cost of Goods Sold
505 Purchases
507 Purchase Returns & Allowances
508 Purchase Discounts
510 Salaries Expense
515 Bad Debt Expense
520 Rent Expense
525 Supplies Expense
530 Depreciation Expense – Buildings
535 Depreciation Expense – Equipment
540 Patent Amortization Expense
550 Utilities Expense
560 Insurance Expense
570 Interest Expense
590 Income Tax Expense

 

Phase I Requirement:	Detailed checklist:	Put a √ once the detail has been completed.
·      Record December transactions in the applicable journal.	·  Read through each transaction and note in the margin which type of journal should be used.   ·   Record the transaction in the appropriate journal.   ·   With respect to the SJ, PJ, CRJ, and CDJ, be sure dr = cr on each row for each transaction recorded.   ·   If one of the subsidiary ledgers is affected by the transaction, also update the subsidiary ledger. Put a √ in the “Post Ref” column once this occurs. ·  After all transactions have been recorded, total up each amount column. Verify that total debits equal total credits.
·      Post from the journals to the general ledger.	·  For the SJ, PJ, CRJ, and CDJ, post column amount totals devoted to a single account to the applicable general ledger account. Suggestion: put a checkmark beside each total once you’ve done this.   ·  If the journal has an “other account” column, post the individual “other” account amount to the applicable general ledger. ·  Indicate in the general ledger the source of the posting. ·  Update general ledger balances. ·  Verify that each general ledger account balance appears on its normal balance side.
·      Update subsidiary ledgers when appropriate. At year-end, verify that the sum of the accounts receivable and accounts payable subsidiary ledger balances matches their respective accounts receivable and accounts payable general ledger balances.	·  Subsidiary ledgers should already be updated. Total up the AR subsidiary ledger balances. Verify that this balance agrees to the AR general ledger balance. ·  Total up the AP subsidiary ledger balances. Verify that this balance agrees to the AP general ledger balance.
·      Prepare an “Unadjusted Trial Balance” for the year end.	·  Transfer each general ledger account balance to an unadjusted trial balance. ·  Verify that total debits equal total credits.

 

 

 

 

 

Phase II Requirement:	Detailed checklist:	Put a √ once the detail has been completed.
·      If applicable, correct account balances in the general ledger using the unadjusted trial balance solution provided by the instructor.	·  Make sure each individual general ledger balance matches the solution. Journals do not need to be corrected for purposes of our practice set.
·   Record adjusting entries in the general journal.	·   Record adjusting entries in the general journal.
·   Post adjusting entries to the general ledger.	·   Post adjusting entries to the general ledger.   ·  Indicate in the general ledger the source of the posting. ·  Update general ledger balances. ·  Verify that each general ledger account balance appears on its normal balance side.
·      Prepare an “Adjusted Trial Balance” for the year end.	·  Transfer each general ledger account balance to the adjusted trial balance. ·  Verify that total debits equal total credits.

 

 

·      Prepare an income statement, statement of stockholders’ equity, and balance sheet using proper accounting formatting rules.	·  Transfer each account balance on the adjusted trial balance to its proper location on a financial statement. ·  Make sure the financial statement has a proper heading. ·  Make sure proper accounting formatting rules are being followed (ex. correct use of $, single underlining, and double-underlining) ·  Verify that the balance sheet balances.
·   Record closing entries in the general journal using the income summary account.	·   Record closing entries in the general journal using the income summary account.
·   Post closing entries to the general ledger.	·   Post closing entries to the general ledger.   ·  Indicate in the general ledger the source of the posting. ·  Update general ledger balances. ·  Verify that each general ledger account balance appears on its normal balance side. ·  Verify that all temporary accounts have a zero account balance.
·      Prepare a “Post-Closing Trial Balance” for the year end.	·  Transfer each general ledger account balance to the post-closing trial balance. ·  Verify that total debits equal total credits. ·  Verify that the ending Retained Earnings balance matches the Retained Earnings balance on the balance sheet.

 

December Transactions for Wolfpack
 

Dec 1 Purchased 12,000 shares of its own common stock ($1 par) for $120,000 (check #500). The company expects to reissue these shares at a later date.
 
Paid weekly cash payroll of $2,500. December 1 is a Friday–$2,000 of salaries were accrued on November 30 and reported appropriately as part of salaries expense on the previous months’ income statement. There are no withholdings from employees’ paychecks. (check #501)

Sold $25,000 of inventory to Summers on credit (invoice #12010).

Made cash sales of $8,000.

 

Dec 4 Received cash payment from Evans for balance owed.

Paid Tarheel Industries invoice for balance owed. (check #502)

Accepted a sales return from Warren for a $6,000 item. Warren paid her balance due after the return.

 

Dec 5 Paid the November Utilities bill of $6,500 (this was recognized as an expense in November). (check #503)

Specifically wrote off the receivable balance owed by Clayton as uncollectible.

Received a payment from Summers that reduced his balance owed by $12,000.
 

Dec 6 Bought inventory from a new supplier, Philmont Corp (Vendor# 210-25) on credit in the amount of $60,000 (invoice #CC1206). Philmont’s terms for repayment are 3/10, n/30.

Received payment in full from Carroll.

Made a credit sale to a new customer, Riley (customer # 110-48), in the amount of $35,000 (invoice #12011).

 

Dec 7 Returned $15,000 of merchandise purchased from Goodson Corp. (wrong items). Paid balance due after return. (check #504)

Received a check for payment in full from Murphy.

 

Dec 8 Recorded weekly cash sales of $24,000.

Paid weekly cash payroll of $2,500 (no taxes were withheld). (check #505)

 
Dec 11 Paid Pirates, Inc. balance owed. (check #506)

Paid Philmont Corp balance owed. (check #507)

Bought inventory items from Tarheel Industries on credit for $20,000 (invoice #NI1211). Terms 2/30, n/60.

 

Dec 12 Received a check from Summers that reduced his balance owed by $16,000.

Received dividends of $30,000 from our investment in Hokie, Inc.

Sold additional merchandise on credit to Riley for $30,000 (invoice #12012).

 

Dec 13 Bought inventory from Pirates, Inc. for $25,000 on credit (invoice #TH1213).

Riley returned an item purchased on Dec 12 (amount = $4,000).

Received a check from Riley for 12/6 purchase. Amount fully satisfied balance owed for that purchase.

 

Dec 14 Sold merchandise to Evans ($6,000—invoice #12013) and Carroll ($9,000—invoice #12014)—both on credit.

Returned $8,000 of merchandise to Tarheel Industries (wrong sizes) and paid balance due.
(check #508)

 

Dec 15 Recorded weekly cash sales of $23,000.

Paid weekly cash payroll of $2,500. (check #509)

Received a check from Riley in full settlement of balance owed.

 

Dec 18 Bought office supplies on credit for $18,000 from OfficeMin (open a new A/P in the subsidiary ledger–Vendor # 210-30). Invoice # is OM1218. OfficeMin’s terms are n/30.
 
Purchased inventory from Philmont Corp on credit for $25,000 (invoice #CC1218).

Purchased inventory from an independent artist for $20,000 cash. (check #510)
 
Dec 19 Received the December Utilities bill (to be paid in January) in the amount of $9,000. No A/P account needs to be created—credit Utilities Payable for balance owed.
 
The annual dividend of $1/share is declared. The dividend will be distributed to shareholders on January 19, 20X6.

 
Dec 20 Paid staff a holiday bonus of $10,000 (record as Salaries Expense). (check #511)

Received a check from Carroll for payment of balance owed.

 
Dec 21 Paid Pirates, Inc. balance due. (check #512)

Sold merchandise to Summers on credit for $20,000 (invoice #12015).

Purchased land for $500,000. A $50,000 cash down payment was required and a $450,000 note was accepted by the seller for the balance. (check #513)

 

Dec 22 Paid weekly cash payroll of $2,500. (check #514)

Recorded weekly cash sales of $29,000.

 
Adjusting Entry Information

 
1. Rent Expense is $5,000/month and was prepaid on January 1, 20X5 for two years. The January through November amounts have already been allocated to Rent Expense.

 
2. The remaining prepaid insurance amount as of Dec 31, 20X5 should be $3,500.
 

3. A physical count of inventory finds the 12/31/X5 balance to be $280,000.

4. Interest earned in December equals $3,000. This interest will not be collected until 20X6.

 
5. An aging analysis of the A/R subsidiary ledger reveals that an allowance of $18,000 is necessary for anticipated uncollectible account balances.

6. Depreciation on the Buildings is $3,000 per month. Depreciation on the remaining Equipment is $2,000 per month. Depreciation has not yet been recorded for the month of December. Depreciation through November has been recorded.

 
7. The amortization amount for the patent is $1,500 for the month. Amortization has been recorded through November. December’s amortization has not yet been recorded.

8. Supplies on hand at 12/31/X5 were $13,000.

9. Accrued interest on the $300,000 note payable and the new $450,000 note for the month of December totals $6,000 (to be paid in 20X6).

 
10. The remaining unearned rent revenue amount as of Dec 31, 20X5 should be $50,000.

 
Product Code-Accounting-AW-Q299
 
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