Applying the Full Accounting Cycle

This case study helps reinforce the understanding of the steps in the accounting cycle and the full accounting process. 

You will need to submit this assignment by scanning or converting the pages of the case study into a pdf file 

DO NOT create your own handwritten copies of the pages (You must complete the case study on the pages provided 

PART 1- Case Study 3 Instructions: 

BEFORE YOU BEGIN: Make sure your FIRST and LAST name are written on the top of every page or you will receive a zero!!

• Step 1: Enter the following opening balances in the Ledger Accounts (begin on page 45) listed below:
  • Cash – $37,000 (Debit)
  • Accounts Payable – $5,000 (Credit)
  • Common Stock – $20,000 (Credit)
  • Retained Earnings – $5,000 (Credit)
  • Revenue – $15,000 (Credit)
  • Expenses – $8,000 (Debit)

PLEASE NOTE: DO NOT Skip STEP 1 or  your case study will be wrong!!!

• Step 2:  Journalize the transactions on page 35 (May 1 – May 30) in the General Journal (pages 37 and 39)
  • Remember to SKIP a row between each journal entry.
  • DO NOT create an entry for the May 25th transaction (It does not provide enough information to complete an entry).
• Step 3:  Post each journal entry to the General Ledger Accounts (pages 45, 47, and 49)
• Step 4:  Prepare the Unadjusted Trial Balance (page 55)
  • Make sure you use the balances in the General Ledger Accounts to get the account totals for the Unadjusted Trial Balance
  • Don’t forget to calculate the column totals (add up the debit and credit columns (they should equal/have the same total).

 PLEASE NOTE: THE UNADJUSTED TRIAL BALANCE MUST BE COMPLETED BEFORE THE ADJUSTING ENTRIES ARE RECORDED OR THE BALANCES WILL BE WRONG!!!

• Step 5:  Journalize each Adjusting Entry (May 31st transactions) in the General Journal titled “Adjusting Entries”(page 41)
  • The adjustments are for May only (for example, the prepaid insurance adjustment is for one month/May)
  • For the depreciation adjusting entry, the monthly depreciation amount is $100.
  • To complete the tax adjusting entry you need to know your “Income from Operations” which is $14,850.  The tax amount is calculated as follows: Income from Operations X the Tax Rate ($14,850 X 40% = $5,940) Therefore, the tax amount you need to accrue is $5,940
• Step 6:  Post the Adjusting Entries to the General Ledger Accounts (pages 45, 47, and 49)
• Step 7:  Prepare the Adjusted Trial Balance (page 57)
  • Make sure you use the balances in the General Ledger Accounts AFTER the adjusting entries have been posted to get the balances for the ATB
  • Don’t forget to calculate the column totals (add up the debit and credit columns (they should equal/have the same total).

For Part 1 of Case Study 3 you should upload/submit the following items:

1. Make sure your FIRST and LAST name are written on the top of EVERY page or you will receive a zero!!
2. Journal Entries – recorded in the General Journal on page 37 
3. General Ledger Accounts – pages 45, 47, and 49
4. Unadjusted Trial Balance – page 55 (make sure you calculate the ending totals of both columns)
5. Adjusting Journal Entries – recorded in the General Journal on page 41
6. Adjusted Trial Balance – page 57 (make sure you calculate the ending totals of both columns)