Quiz 4: Comp Eting the Accounting Cyde
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 2) Ledger of Kelly Consulting : 3) Cash Account Accounts Receivable Account Supplies Account Prepaid Rent Account Prepaid Insurance Account Office Equipment Account Accumulated Depreciation Account Accounts Payable Account Salaries Payable Account Unearned Fees Account Kelly Pitney, Capital Account Kelly Pitney, Drawings Account Fees Earned Account Salary Expense Account Miscellaneous Expense Account Insurance Expense Account Supplies Expense Account Depreciation Expense Account Rent Expense Account Income Summary Account 3) Unadjusted trial balance : Kelly Consulting Unadjusted Trial Balance May 31, 2014 4) Adjustments are analyzed and assembled 5) Optional end-of-period spreadsheet of Kelly Consulting : 6) Journalizing and Posting of Adjustment Entries : Journal Entries for Adjustments In the books of Kelly Consulting on May 31, 2014 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 8) Income Statement, Statement of Owner's Equity and Balance Sheet : Kelly Consulting Income Statement For the Period ended May 31, 2014 Kelly Consulting Statement of Owner's Equity For the period ended May 31, 2014 Kelly Consulting Balance Sheet May 31, 2014 9) Journalizing and Posting of Closing Entries : Journal Entries to close the accounts at May 31, 2014 in the books of Kelly Consulting 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
1) Optional end-of-period spreadsheet of PS Music : 2) Income Statement, Statement of Owner's Equity and Balance Sheet : PS Music Income Statement For the Period ended July 31, 2014 PS Music Statement of Owner's Equity For the period ended July 31, 2014 PS Music Balance Sheet July 31, 2014 3) Journalizing and Posting of Closing Entries : Journal Entries to close the accounts at July 31, 2014 in the books of PS Music Posting Closing Entries in Ledger PS Music : Fees Earned Account Music Expense Account Wages Expense Account Office Rent Expense Account Advertising Expense Account Equipment Rent Expense Account Utilities Expense Account Supplies Expense Account Insurance Expense Account Depreciation Expense Account Miscellaneous Expense Account Peyton Smith, Capital Account Peyton Smith, Drawings Account Income Summary Account 4) Post-Closing Trial Balance : PS Music Post-Closing Trial Balance July 31, 2014