Penn Foster 061579

Penn Foster 061579
Lesson 1: Business, Accounting, and You
The goal of this graded project is to create the following financial statements for J & L Accounting, Inc.:
Balance sheet
Income statement
Statement of retained earnings
Post-closing trial balance
The financial statements must be created in one Microsoft Word document (.doc or .docx  file). Alternatively, an Excel workbook may be  used (.xls or .xlsx file). The Word or Excel file will be  uploaded  for grading.
INSTRUCTIONS
The project is to be  done by  hand with a pencil and paper. Use the blank forms provided. At the end of the project, you’ll be  given instructions  for creating  and uploading  the financial statements  in a Word or Excel file for grading.
Note:  The formatting of financial statements is important. They follow  Generally Accepted Accounting Principles (GAAP), which creates a uniformity of financial statements for analyz- ing. This allows for an easier comparison, as all businesses follow  GAAP. Therefore, the financial statements should be created exactly the same way shown or referenced in the text- book. Failure to do  so will result in a loss of points.
The project references “debits equaling credits.” This is a fun- damental principle of accounting that can’t be  violated and if so is not  acceptable under any circumstance. Debits not equaling credits  allows for “cooking of the books,” which is presenting false information. It also allows for embezzlement, which is theft by  management or employees. If debits don’t equal credits, the cause may be  a lack of understanding of accounting principles, such as those presented in the text- book and assigned homework problems, or a lack of focus
and concentration when making journal entries, posting to ledger accounts, or completing math. Remember—instructors are available to help you with material you may be  struggling with. Mistakes of the lack-of-focus variety are best corrected by  going back over the work until the error is found.
The accounting equation must balance on the balance sheet. This is another fundamental principle of accounting that can’t be  violated and if so is completely unacceptable. When the equation doesn’t balance and the numbers are “fudged,”
this is easily detectable by  someone who knows accounting. If your debits equal your credits and you understand  which general ledger accounts belong on which financial state- ments, then the accounting equation should balance. It’s really all about understanding the concepts and applying
that understanding.
The following financial statements are provided from the prior accounting period for J & L Accounting, Inc.:
a)  Post-closing trial balance b)  Balance sheet
c)  Income statement
d)  Statement of retained earnings
J & L Accounting, Inc. Post-Closing Trial Balance December 31, 2012
               BALANCE
            ACCOUNT TITLE                                                      DEBIT                  CREDIT  
Cash, Business Checking
20,500.00
Accounts Receivable
Prepaid Rent
Vehicles
48,000.00
Accumulated Depreciation, Vehicles
12,000.00
Equipment
3,600.00
Accumulated Depreciation, Equipment
600.00
Accounts Payable
Common Stock
38,000.00
Retained Earnings
21,500.00
Dividends
Service Revenue
Advertising Expense
Rent Expense
Office Supplies Expense
Telephone Expense
Utilities Expense
Depreciation Expense
TOTALS
72,100.00
72,100.00
J & L Accounting, Inc.
Balance Sheet
As of December 31, 2012
ASSETS
Cash, Business Checking
20,500.00
Accounts Receivable
0.00
Prepaid Rent
Vehicles
48,000.00
0.00
Less: Accumulated Depreciation, Vehicles
12,000.00
36,000.00
Equipment
3,600.00
Less: Accumulated Depreciation, Equipment
600.00
3,000.00
 TOTAL ASSETS
59,500.00
LIABILITIES
Accounts Payable                                                                                                 0.00
 TOTAL LIABILITIES                                                                                            0.00
STOCKHOLDERS’ EQUITY
Common Stock
38,000.00
Retained Earnings
21,500.00
TOTAL STOCKHOLDERS’ EQUITY
59,500.00
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                      59,500.00
J & L Accounting, Inc. Income Statement
For the Month Ending December 31, 2012
REVENUES
Service Revenue                                                                                          10,275.00
EXPENSES
Advertising Expense
2,300.00
Rent Expense
1,000.00
Office Supplies Expense
300.00
Telephone Expense
750.00
Utilities Expense
3,200.00
Depreciation Expense
1,100.00
TOTAL EXPENSES
8,650.00
NET INCOME
1,625.00
J & L Accounting, Inc. Statement of Retained Earnings
For the Month Ending December 31, 2012
Retained Earnings, December 1, 2012
19,875.00
Add: Net Income
1,625.00
Subtotal
21,500.00
Less: Dividends
         0.00
Retained Earnings, December 31, 2012
21,500.00
1)  Using the following blank forms (make as many copies as necessary), set up the general ledger accounts for the general ledger and insert the beginning balances for the accounts from the post-closing trial balance. The balances from the post-closing trial balance become the beginning balances of the accounts for the next account period.
Powered by