Acc5100 & Acc7040: Accounting Cycle Project - B&G Co.

Accounting Cycle Project 
Transaction Practice Set – B&G Co. 
ACC5100 & 7040 - Fall 2015 

You have been hired as an accountant for B&G Co., a corporation performing diverse consulting services in Detroit, Michigan. B&G Co. prepares financial statements on monthly bases. 

Project Scope: You are to record the transactions for December, prepare the monthly adjustments, and prepare the financial statements using the Excel workbook provided. Then you will close the fiscal year and prepare the books for next year. 

Directions: The assignment encompasses two files: Project Directions and Transactions (this Word document) and Forms (a separate Excel workbook). Your solution should be worked in Excel and the completed Excel workbook submitted for grading. 
You should use Excel formula where appropriate and cell references to carry forward values and numbers between worksheets within the workbook. Simply typing values in Excel will result in a reduced score, even if the correct solution is provided. You should use formula wherever possible. 
1.  Analyze the narrative to prepare and record the transactions for December to the General Journal. 
2.  Post the journal entries to ledger accounts using T-accounts (Don’t forget the opening balances from the information given on the post-closing trial balance on Nov. 30th.) 
3. Complete the trial balance on the worksheet. 
4. Analyze the narrative to prepare Adjusting Entries and record them to the T-accounts and the worksheet. 
5. Prepare the Adjusted Trial Balance on the worksheet. 
6. Carry forward the appropriate balances to the Income Statement and Balance Sheet columns on the worksheet. 
7. Prepare Income Statement and the Retained Earnings Statement for the month ended December 31, 2015 and Balance Sheet as of December 31, 2015 in good forms. Use the multi-step format for the Income Statement. 
8. Close the income statement accounts, posting any net income or loss to retained earnings. Post the closing entry to the general journal and the T-accounts. 

Note: You can work on this project individually or with your classmates as a team (the number of members up to three). 

The following is the post-closing trial balance of the B&G Co. on Nov. 30th, 2015: 
B&G Co. 
Post-closing Trial Balance 
November 30th, 2015 
ACCOUNT DEBIT CREDIT
Cash 41,500 
Accounts Receivable 20,000 
Supplies 9,000 
Equipment 10,000 
Accumulated Depreciation 5,000 
Land 10,500 
Accounts Payable 8,000 
Salaries Payable 10,000 
Common Stock* 50,000 
Retained Earnings 18,000 
$91,000 $91,000 

* 50,000 shares authorized, 20,000 shares issued and outstanding 

Transactions in December 2015: 
Dec. 1 The equipment was completely destroyed by the regional earth quake. “Loss by earthquake” was recognized. Assume that the transaction meets the requirements of an extraordinary item. 
1 Lent 20,000 to another company and received a 2 year note. The note has a 9% interest rate. Interest will be paid annually on Dec. 1st of 2016 and2017. 
2 Purchased new equipment that costs $12,000 and issued 1,000 shares of common stock (no-par stock) to the equipment seller. 
3 Cash payment on accounts payable amounted to $6,000. 
4 Sold land for $13,000 cash. 
10 Collected $15,000 as payment for amounts previously billed. 
15 Paid monthly salaries of $20,000 to employees 
16 Issued 1,000 shares of preferred stock at $10 per share 
17 Purchased 500 shares of ABC corporation’s common stock at $15 (per share) and classify the securities as available-for-sales securities 
20 Found that the company incorrectly overstated its November account receivable and sales revenue by $1,000 and made a journal entry to correct the error. 
31 Performed services for various customers for $30,000 cash and another $30,000 on account during December. 
31 Dividends of $5,000 were declared and paid. $ 1,025 is paid to preferred stockholders and the rest is paid to the common stock holders. 
31 ABC corporation declared $ 5 dividend per share (to common stock holders). It will be paid in 2016. 

* Additional information 
1. Ignore tax effect. 
2. Salaries expenses incurred but not paid prior to Dec. 31st totaled $10,500. 
3. The company received the bill for utility services (electricity) that the firm used during December in the amount of $6,000. The company will pay the bill in Jan. 2016. 
4. $3,000 of supplies remained at the end of December. 
5. The company decided to use the “Allowance” method for possible accounts receivable write-offs in the future and recorded the 5% of the outstanding account receivable as “Allowance for doubtful account” and “Bad debt expense”. Since the company did not use the method before, the beginning balance of the allowance is zero. 
6. The equipment purchased on Dec. 2nd depreciates $200 per month. 
7. The common stock price of ABC Corporation on December 31st is still $ 15 per share.
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