Quiz 4: Comp Eting the Accounting Cyde

Business

The Facts of the given case are as follows: Picasso Graphics is a graphics arts design consulting firm. Pablo Taylor, its treasurer and vice president of finance, prepared the balance sheet as of July 31, 2014 to submit the same to Paris Trust Savings Bank along with loan application. In the Current Assets section of the balance sheet, Pablo reported a $ 56,000 receivable from Becky Holt, President of the Picasso Graphics, as a trade account receivable. The money was borrowed by her in January 2012 for down payment on a new home. Pablo reported the $ 56,000 in the same manner on the preceding year's balance sheet. Trade account receivables means the receivables from the clients for the Services rendered in the course of business. The assets that can be easily convertible into cash or cash equivalents are known as current assets. The amounts given to interested parties and related parties of a firm should be disclosed under Loans and advance to related parties section in a classified balance sheet. In the given case, the loan given to Becky Holt is not a trade receivable and as it is due for a period more than two years, it should not be considered as current asset of the firm. Therefore, the balance sheet of July 31, 2014 prepared by Pablo is not acceptable.

1) Journal Entries : Journal Entries in the books of Kelly Consulting img 2) Ledger of Kelly Consulting : 3) Cash Account img Accounts Receivable Account img Supplies Account img Prepaid Rent Account img Prepaid Insurance Account img Office Equipment Account img Accumulated Depreciation Account img Accounts Payable Account img Salaries Payable Account img Unearned Fees Account img Kelly Pitney, Capital Account img Kelly Pitney, Drawings Account img Fees Earned Account img Salary Expense Account img Miscellaneous Expense Account img Insurance Expense Account img Supplies Expense Account img Depreciation Expense Account img Rent Expense Account img Income Summary Account img 3) Unadjusted trial balance : Kelly Consulting Unadjusted Trial Balance May 31, 2014 img 4) Adjustments are analyzed and assembled 5) Optional end-of-period spreadsheet of Kelly Consulting : img 6) Journalizing and Posting of Adjustment Entries : Journal Entries for Adjustments In the books of Kelly Consulting on May 31, 2014 img Note: Posting of these adjustment entries were made in part 1) this problem solved above. 7) Adjusted Trail Balance : Kelly Consulting Adjusted Trial Balance May 31, 2014 img 8) Income Statement, Statement of Owner's Equity and Balance Sheet : Kelly Consulting Income Statement For the Period ended May 31, 2014 img Kelly Consulting Statement of Owner's Equity For the period ended May 31, 2014 img Kelly Consulting Balance Sheet May 31, 2014 img 9) Journalizing and Posting of Closing Entries : Journal Entries to close the accounts at May 31, 2014 in the books of Kelly Consulting img Note: Posting of these Closing entries were made in part 1) this problem solved above. 10) Post-Closing Trial Balance : Kelly Consulting Post-Closing Trial Balance May 31, 2014 img

1) Optional end-of-period spreadsheet of PS Music : img 2) Income Statement, Statement of Owner's Equity and Balance Sheet : PS Music Income Statement For the Period ended July 31, 2014 img PS Music Statement of Owner's Equity For the period ended July 31, 2014 img PS Music Balance Sheet July 31, 2014 img 3) Journalizing and Posting of Closing Entries : Journal Entries to close the accounts at July 31, 2014 in the books of PS Music img Posting Closing Entries in Ledger PS Music : Fees Earned Account img Music Expense Account img Wages Expense Account img Office Rent Expense Account img Advertising Expense Account img Equipment Rent Expense Account img Utilities Expense Account img Supplies Expense Account img Insurance Expense Account img Depreciation Expense Account img Miscellaneous Expense Account img Peyton Smith, Capital Account img Peyton Smith, Drawings Account img Income Summary Account img 4) Post-Closing Trial Balance : PS Music Post-Closing Trial Balance July 31, 2014 img