Complete an Accounting Cycle.
The directions needed are in the file named "Project"
The infomation needed to complete the accounting cycle is in the file named "info"
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Bright IdeasBright Ideas Light CenterLight Center
Alice Peterson, Owner
Bright Ideas Light Center
Alice Peterson, Owner
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Acknowledgments Christine Dunlap, Author
Editorial Staff
Janet Perry, BA, Vice President of Academics and Compliance
Brenda Blomberg, BA, CPC, Director of Curriculum
Douglas Larson, MS, Project Manager
Julia Bauernfeind, BS, Editorial Assistant
Jane Bullinger, Editorial Assistant
Jessica Babb-Raymundo, B.A., Graphic Designer
For more inFormation contact:
U.S. Career Institute 2001 Lowe Street • Fort Collins, CO 80525 • 1-800-347-7899
www.uscareerinstitute.edu
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Table of Contents
Final Project Background …………………………………………………………………………………………………………………….1 List of Transactions …………………………………………………………………………………………………………1 End-of-the-Week Procedures …………………………………………………………………………………………5 End-of-the-Week Procedures ………………………………………………………………………………………….9 End-of-the-Week Procedures ………………………………………………………………………………………..13 End-of-the-Week Procedures ………………………………………………………………………………………..21 End-of-the-Month Procedures ……………………………………………………………………………………..21 End-of-the-Year Procedures ………………………………………………………………………………………….22 Congratulations! ……………………………………………………………………………………………………………24 Chart of Accounts …………………………………………………………………………………………………………25 Customers …………………………………………………………………………………………………………………….26 Creditors ……………………………………………………………………………………………………………………….27 Audit Check Answers ……………………………………………………………………………………………………27
Previous Year’s Statements Previous Year’s Statements …………………………………………………………………………………………….31
Journals Sales Journal ………………………………………………………………………………………………………………….37 Cash Receipts Journal ……………………………………………………………………………………………………38 Cash Payments Journal ………………………………………………………………………………………………….40 Purchases Journal ………………………………………………………………………………………………………….42 General Journal …………………………………………………………………………………………………………….43
Bank Reconciliation Bank Reconciliation ………………………………………………………………………………………………………51
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General Ledger General Ledgers …………………………………………………………………………………………………………….55
Subsidiary Ledgers Accounts Receivable Subsidiary Ledgers ……………………………………………………………………….85 Accounts Payable Subsidiary Ledger ……………………………………………………………………………..89
Accounting Stationary One Column Accounting Paper …………………………………………………………………………………….93 One Column Accounting Paper …………………………………………………………………………………….95 One Column Accounting Paper …………………………………………………………………………………….97 Two Column Accounting Paper …………………………………………………………………………………….99 Two Column Accounting Paper …………………………………………………………………………………..101 Three Column Accounting Paper ………………………………………………………………………………..103 Three Column Accounting Paper ………………………………………………………………………………..105
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Bright Ideas Light Center
Background Alice Peterson, the sole proprietor of Bright Ideas Light Center, established her business 10 years ago. Bright Ideas Light Center provides custom light fixtures for contractors and has recently grown into a large store that offers a wide variety of light fixtures, as well as installations. Ms. Peterson currently has 16 employees: an office manager, a warehouse manager, a bookkeeper, four electricians, five sales persons, two delivery persons and two stockroom persons.
Ms. Peterson recently hired you as a temporary bookkeeper. You will fill in while the bookkeeper is on maternity leave. Ms. Peterson has asked you to complete the books for December, 20XX. You will journalize each of the transactions that have occurred for the month. Ms. Peterson uses the following journals: sales, cash receipts, cash payments, purchases and the general journal. Additionally, you will issue checks, enter deposits and maintain the checkbook. At the end of the month, Ms. Peterson will ask you to complete a worksheet, a schedule of accounts receivable and payable and the end-of-the-month financial statements. You should also know that Ms. Peterson contracts with an outside company to generate the company’s payroll. However, you will receive a payroll summary on the 15th and the 30th.
List of Transactions Enter each of the following transactions into the appropriate journal that follows the list of transactions. (See journals section beginning on page 37.) Make sure you do not duplicate your entries. (Note: Transactions entered into any of the specialized journals are not also entered into the general journal. Enter each transaction once only.) When making your entries, be sure to use specific account titles. You may refer to the Chart of Accounts on page 25 to assist you.
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December 1, 20XX Trans. 1 Cash register summary
Cash sales merchandise $1,822.41
Sales tax 91.12
Received on account Monique Gonzales 200.00
Total cash 2,113.53
Sales on account Robert Max
Invoice #14892 $326.82
Sales tax 16.34
Total sale 343.16
Enter the cash sales and the received on account into the cash receipts journal; enter each on its own line. Enter the sale on account into the sales journal. The total cash was deposited into the bank account at the close of the day. Make the appropriate adjustments to the checkbook. You will need to follow this same procedure for every cash register summary.
Trans. 2 Issued check 281 in the amount of $2,800.53 to First Steamboat Bank for the monthly mortgage payment for the business. $2,000.00 was applied to the principal, and $800.53 was applied to interest. (Be sure to list the principal separate from the interest. Use the Interest Expense account to record the interest.)
Trans. 3 Issued check 282 in the amount of $568.42 to Public Service to pay for November utilities.
Trans. 4 Issued check 283 in the amount of $5,085.00 to Electrifying Bulb Company to pay for November invoice number 1282.
December 2, 20XX Trans. 5 Cash register summary
Cash sales merchandise $2,942.61
Sales tax 147.13
Received on account Schmidt Contracting 1,193.93
Total cash 4,283.67
Sales on account Julie Adams
Invoice #14893 $142.50
Sales tax 7.13
Total sale 149.63
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Trans. 6 Issued check 284 in the amount of $352.50 to Office Co. for office supplies invoice 282. (Remember to record this transaction to the asset account.)
Trans. 7 Issued check 285 to Webmasters, Inc. in the amount of $350.52 for maintenance of website. This is an advertising expense.
December 3, 20XX Trans. 8 Cash register summary
Cash sales merchandise $2,892.31
Sales tax 144.62
Received on account 0.00
Total cash 3,036.93
Sales on account Racheal Simpson
Invoice #14894 $21.93
Sales tax 1.10
Total sale 23.03
Trans. 9 Issued check 286 to Hospital Texaco for repairs to delivery truck in the amount of $289.89, invoice 652.
Trans. 10 Purchased $2,852.00 in resale items from Light House Supply, terms 2/15, n/30. Purchase order A75587 was issued.
December 4, 20XX Trans. 11 Cash register summary
Cash sales merchandise $2,234.02
Sales tax 111.70
Received on account Rosebud Designers 1,000.00
Total cash 3,345.72
Sales on account Rosebud Designers
Invoice #14895 $120.00
Sales tax 6.00
Total sale 126.00
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Trans. 12 Issued check 287 to the Steamboat Gazette for the amount of $128.98 for an advertisement in Sunday’s newspaper.
Trans. 13 Issued check 288 to Edison’s, a light bulb supplier for resale items purchased in December, purchase order 28999. The amount of the check was $1,971.75, which includes a 2% discount. The total invoice was $2,011.99.
December 5, 20XX Trans. 14 Cash register summary
Cash sales merchandise $3,082.44
Sales tax 154.12
Received on account 0.00
Total cash 3,236.56
Sales on account Ed Miller
Invoice #14896 $592.63
Sales tax 29.63
Total sale 622.26
Trans. 15 Issued check 289 to Mail Ex in the amount of $120.00 for freight on specialty bulbs delivered to the store.
Trans. 16 Issued check 290 to Hospital Texaco for gas purchased for delivery trucks in the amount of $389.95.
December 6, 20XX Trans. 17 Cash register summary
Cash sales merchandise $3,189.22
Sales tax 159.46
Received on account 0.00
Total cash 3,348.68
Sales on account Rosebud Designers
Invoice #14897 $576.76
Sales tax 28.84
Total sale 605.60
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Sales on account Schmidt Contractors
Invoice #14898 $128.99
Sales tax 6.45
Total sale 135.44
Trans. 18 Purchased $2,150.03 in resale items from Starry Night; terms 1/15, n/30. Purchase order 95687 was issued.
Trans. 19 A defective lamp was returned by a customer Jan Smith. Check number 291 was issued in the amount of $152.25. This included $145.00 for the sale price, and $7.25 for the sales tax.
End-of-the-Week Procedures Give yourself a pat on the back! You’ve already completed the first week of transactions. Now, complete the following end-of-the-week procedures:
1. Foot all the columns in all of the specialized journals. Enter the totals beneath the last entry in the journal. Add the debits and the credits (cross- foot), ensuring that they balance. If you find an error, take time to make a correction. (Do not post these column totals at this point. Wait until the end of the month.)
2. Without posting anything to the cash account, determine its current account balance. Then add the footing from the cash receipts journal to the current account balance, and subtract the footing from the cash payments journal. Check this balance against your checkbook. They should match. If they do not match, you have an error. Take a few moments to find your error and make the correction.
3. Alice Peterson likes to have up-to-date information on her customers’ accounts. Post all accounts receivable transactions into the subsidiary ledger. It is not necessary to post to the general ledger at this time. You will post this amount as a column total at the end of the month.
4. Post all accounts payable transactions into the subsidiary ledger. It is not necessary to post the general ledger at this time. You will post this amount as a column total at the end of the month.
5. Post all of the entries entered into the other accounts columns from the cash payments journal.
6. Post any entries that may have been made to the general journal.
7. Answer the following audit check questions:
a. What are Bright Ideas’ total sales for the week? b. What are Bright Ideas’ total purchases for the week? c. What is Robert Max’s account balance?
8. Check your audit check answers on page 27 of this book.
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December 8, 20XX Trans. 20 Cash register summary
Cash sales merchandise $2,426.52
Sales tax 121.33
Received on account 0.00
Total cash 2,547.85
Sales on account Monique Gonzales
Invoice #14899 $89.99
Sales tax 4.50
Total sale 94.49
Trans. 21 Issued check 292 in the amount of $4,856.76 to First Steamboat Bank. A federal deposit was made for this payroll period. Remember that Bright Ideas separates FICA into Social Security Tax Payable and Medicare Tax Payable. An example of this transaction can be found on page 15-22. The deposit breaks down as follows:
Social Security withholdings $993.79
Medicare withholdings 232.42
Federal income tax withholdings 2,404.34
Employer’s contribution to Social Security 993.79
Employer’s contribution to Medicare 232.42
December 9, 20XX Trans. 22 Cash register summary
Cash sales merchandise $3,282.49
Sales tax 164.12
Received on account $0.00
Total cash 3,446.61
Sales on account Schmidt Contracting
Invoice #14900 $1,899.04
Sales tax 94.95
Total sale 1,993.99
Trans. 23 Issued check 293 to Q-cell in the amount of $56.99 for November’s use of the cellphone.
Trans. 24 Issued check 294 to Steamboat Bell in the amount of $189.99 for May’s local phone service.
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December 10, 20XX Trans. 25 Cash register summary
Cash sales merchandise $3,444.89
Sales tax 172.24
Received on account Monique Gonzales 280.42
Total cash 3,897.55
Sales on account Ed Miller
Invoice #14901 $42.45
Sales tax 2.12
Total sale 44.57
Trans. 26 Issued check 295 in the amount of 1,008.42 to Gecko Insurance Company for six months coverage on the delivery trucks.
Trans. 27 Issued check 296 to First Steamboat Bank for the amount of $282.42 for the deposit of the state income tax withholdings.
December 11, 20XX Trans. 28 Cash register summary
Cash sales merchandise $2,392.88
Sales tax 119.64
Received on account Robert Max 499.84
Total cash 3,012.36
Sales on account Ed Miller
Invoice #14902 $82.99
Sales tax 4.15
Total sale 87.14
Trans. 29 Issued check 297 to Hospital Texaco in the amount of $254.55 for delivery truck gas.
Trans. 30 Issued check 298 to Clearly Clean’s Window Washing Service for the amount of $32.99. This is considered maintenance.
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December 12, 20XX Trans. 31 Cash register summary
Cash sales merchandise $3,499.44
Sales tax 174.97
Received on account 0.00
Total cash 3,674.41
Sales on account Schmidt Contracting
Invoice #14903 $242.82
Sales tax 12.14
Total sale 254.96
Trans. 32 Issued check 299 to Light House Supply for resale items purchased in December, purchase order A75587. The amount of the check was $2,794.96, which includes a 2% discount. The total invoice was $2,852.00.
Trans. 33 Issued check 300 to Starry Night for resale items purchased in December, purchase order 95687. The amount of the check was $2,128.53, which includes a 1% discount. The total invoice was $2,150.03.
December 13, 20XX Trans. 34 Cash register summary
Cash sales merchandise $2,842.44
Sales tax 142.12
Received on account 0.00
Total cash 2,984.56
Sales on account None
Trans. 35 Purchased $3,842.00 in resale items from Light House Supply, terms 2/20, n/30. Purchase order B76584 was issued.
Trans. 36 Issued check 301 to First Steamboat Bank in the amount of $852.59 for a note on the delivery trucks. $800.00 was applied to principal and 52.59 to interest.
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End-of-the-Week Procedures Now you have made it through the second week. You have accomplished a lot! Please complete the following end-of-the-week procedures.
1. Foot all the columns in all of the specialized journals. Add the previous footing to your current balances. You will want to keep a cumulative balance versus a balance for each week. Cross foot for accuracy, and correct any errors you may have.
2. Without posting anything to the cash account, determine its current account balance. Add the footing from the cash receipts journal to the current account balance, and subtract the footing from the cash payments journal. Check this balance against your checkbook. They should match. If they do not match, you have an error. Take some time to figure out your error and make the correction.
3. Post all accounts receivable transactions.
4. Post all accounts payable transactions.
5. Post all of the entries entered into the other accounts columns from the cash payments journal.
6. Post any entries that may have been made to the general journal.
7. Answer the following audit check questions: a. Check number 295 issued to Gecko Insurance Company was posted
to which account? b. What was the purchase discount for Starry Night, purchase
order 95687? c. What are the total credit sales for the month thus far?
8. Check your audit check answers on page 27 of this book.
December 15, 20XX Trans. 37 Cash register summary
Cash sales merchandise $3,221.42
Sales tax 161.07
Received on account 0.00
Total cash $3,382.49
Sales on account Schmidt Contracting
Invoice #14904 $192.47
Sales tax 9.62
Total sale 202.09
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Trans. 38 Use the following payroll summary produced by Paid-Rite to make the payroll entries for Bright Ideas Light Center.
Paid-Rite Payroll Summary
Company: Bright Ideas Light Center Payroll period ending: December 15, 20XX
Gross Social Medicare Federal State Net Earnings Security Tax Inc. Tax Inc. Tax Pay 15,888.49 985.09 230.38 2,383.27 476.65 11,813.10
1. Enter the expense and liabilities generated by this payroll period in the general journal. Record the net pay to salaries payable. Refer to lesson 15 if you need assistance.
2. Make an entry in the general journal to record the employer’s contribution to Social Security and to Medicare.
3. Issue check 302 for the total of the net pay to the Bright Ideas Light Center’s payroll account. Make an entry in the Other Accounts column to the salaries payable account in the cash payments journal.
December 16, 20XX Trans. 39 Cash register summary
Cash sales merchandise $1,824.42
Sales tax 91.22
Received on account 0.00
Total cash 1,915.64
Sales on account None
Trans. 40 Issue check 303 in the amount of $56.23 to a customer, Fran Jones, for a defective light fixture that was returned. The original sale was $53.55, and the tax was $2.68.
Trans. 41 Issue check 304 in the amount of $80.87 to Office Co. for supplies to be used in the store.
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December 17, 20XX Trans. 42 Cash register summary
Cash sales merchandise $842.44
Sales tax 42.12
Received on account Julie Adams 289.99
Total cash 1,174.55
Sales on account Monique Gonzales
Invoice #14905 $102.07
Sales tax 5.10
Total sale 107.17
Trans. 43 Issue check 305 to Hospital Texaco for gas purchased for delivery trucks in the amount of $482.65.
Trans. 44 Issue check 306 to the Colorado Department of Revenue in the amount of $1,423.82 for sales tax collected for the month of November 20XX.
December 18, 20XX Trans. 45 Cash register summary
Cash sales merchandise $1,642.43
Sales tax 82.12
Received on account 0.00
Total cash 1,724.55
Sales on account Monique Gonzales
Invoice #14906 $82.37
Sales tax 4.12
Total sale 86.49
Trans. 46 Purchased $5,892.50 in resale items from Light House Supply, terms 2/28, n/30. Purchase order C75657 was issued.
Trans. 47 Issued check 307 to Light House Supply for resale items purchased in December purchase order B76584. The amount of the check was $3,765.16, which includes a 2% discount. The total invoice was $3,842.00.
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December 19, 20XX Trans. 48 Cash register summary
Cash sales merchandise $1,282.99
Sales tax 64.15
Received on account 0.00
Total cash 1,347.14
Sales on account Rosebud Designers
Invoice #14907 $802.37
Sales tax 40.12
Total sale 842.49
Trans. 49 Purchased $5,092.00 in resale items from Edison’s, terms n/30. Purchase order 87127 was issued.
Trans. 50 An investment made by the business matures. Record the principal of $5,000.00, and the interest of $521.22 in the cash receipts journal. Enter the total amount as a cash debit, and make a note of the deposit in the checkbook. (Remember to record the principal separate from the interest. Record the interest as Interest Income.)
December 20, 20XX Trans. 51 Cash register summary
Cash sales merchandise $1,495.00
Sales tax 74.75
Received on account 0.00
Total cash 1,569.75
Sales on account Robert Max
Invoice #14908 $82.47
Sales tax 4.12
Total sale 86.59
Trans. 52 Customer Monique Gonzales returns light bulbs she was unable to use. Alice credits Monique’s account for $94.49—the total sale. The original sale included $4.50 in sales tax.
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End-of-the-Week Procedures Now you have made it through the third week. You are doing great! You only have one more week. Take a few moments to complete the following end-of- the-week procedures.
1. Foot all the columns in all of the specialized journals. Add the previous footing to your current balances. Cross foot for accuracy, and correct any errors you may have.
2. Without posting anything to the cash account, determine its current account balance. Check this balance against your checkbook. They should match. If they do not match, you have an error. Take a few moments to find the error and make the correction.
3. Post all accounts receivable transactions.
4. Post all accounts payable transactions.
5. Post all of the entries entered into the other accounts columns from the cash payments journal.
6. Post any entries that may have been made to the general journal.
7. Answer the following audit check questions: a. What was the net pay for the payroll period ending December 15, 20XX? b. What is the current balance of the sales tax payable account? c. In transaction 50, what three accounts were involved with the recording
of this transaction?
8. Check your audit check answers on page 27 of this book.
December 22, 20XX Trans. 53 Cash register summary
Cash sales merchandise $495.85
Sales tax 24.79
Received on account Ed Miller 452.99
Total cash 973.63
Sales on account Ed Miller
Invoice #14909 $42.47
Sales tax 2.12
Total sale 44.59
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Trans. 54 The bank statement has arrived. Record the service charges in the cash payments journal and the interest in the cash receipts journal. Complete a bank reconciliation for Bright Ideas Light Center. See page 72. Also, make the appropriate adjustments to the checkbook.
First Steamboat Bank Statement from November 15, 20XX to December 15, 20XX
Beginning Balance $18,525.88
Plus 27 Deposits 84,116.12
Minus 45 Withdrawals 73,434.80
Ending Balance 29,207.20
Deposits Date Amount Description Date Amount Description
11-16 $3,448.82 Commercial deposit 12-1 2,113.53 Commercial deposit
11-18 2,894.65 Commercial deposit 12-2 4,283.67 Commercial deposit
11-19 3,764.14 Commercial deposit 12-3 3,036.93 Commercial deposit
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