Reference no: EM131415180

Comprehensive Accounting Project

Overview: Project will run through the rest of the course with graded check points. Project consists of individual work in which students are given a start-up business scenario with monthly transactions that will need to be recorded, posted and production of financial statements.

Business Profile: Four students (Victoria, Matt, Jean & Tracy) from Kendall College, decided to start a business and open an ice cream shop in the month of June. They form a partnership and name it "Chicago Summers" which is also the name of their establishment.

Organizational Roles: Matt and Victoria will make the purchases needed to produce the ice cream; Jean will supervise the employees and keep track of inventory; Tracy keeping the accounting records and preparing the financial reports.

June Transactions -

Setting up the business:

6/01 Victoria, Matt, Jean & Tracy each invest $15,000 of cash into the business. The students open a business checking account and deposit their investments.

6/01 They sign a 2 year lease to rent a space on Michigan Ave in Chicago. Monthly rent is $2000 payable on the first day of each month.

6/02 They purchased ice cream equipment on account from Central Restaurants for $12,600 payable in three equal installments in the next three months. First installment is due on July 2nd. It is estimated by the dealer that the equipment has a 7 year life with no salvage value.

6/02 They purchased furniture from RestaurantFurniture.Net on account for $10,000 payable in 45 days. It is estimated that the furniture will be used in 5 years with no salvage value.

6/02 They purchased a refurbished laptop on account from the Apple store for $1200. Payment is due to Apple in 45 days. Estimated life of the laptop is 3 years with no salvage value.

6/02 They purchased QuickBooks accounting software for $1500 on account payable in 45 days. It is estimated that the software will be used for 10 years.

6/03 They call a technician to install the ice cream equipment, estimated bill is $700. At the end of the month the company has not yet received the bill;however the technician did complete the full installation.

6/05 They hire two employees. Total salary cost for the two employees is $1500 payable at the end of the month.

Starting Operations:

6/05 Victoria and Matt purchase the key materials to make ice cream.

6/05 They incur freight costs of $50, which they pay in full

6/15 They purchase additional materials, because of market changes they realize the price of materials have increased.  

6/30 Sales at the end of June has generated up to $6,000

Inventory (FIFO method):

Jean is in charge of keeping track of the key material quantities. She knows that most of the materials during the month have been used in making ice cream. However, some quantities still are left unused. These will be used in the next month's production of ice cream. At the end of the month Jean performs a physical count of the materials left. Below is the result of the physical inventory.  

STEPS to Complete June Accounting Activities -

STEP 1: Record the June transactions in the General Journal sheet of the excel file (Don't forget end of month transactions-salary, depreciation)

STEP 2: Post the journal accounts to the ledger of accounts sheet of the excel file

STEP 3: Calculate inventory using the June inventory FIFO sheet of the excel file

STEP 4: Record end of month inventory to the General Journal sheet of the excel file

STEP 5: Post end of month inventory to the ledger of accounts sheet of the excel file

STEP 6: Prepare a June Trial Balance and record on the trial balance sheet of the excel file

STEP 7: Post end of closing entries to the General Journal and close out temporary accounts

STEP 8: Prepare an income statement and record profit through retained earnings using the appropriate excel sheets.

STEP 9: Prepare your balance sheet for the month of June

Attachment:- Project Sheet.rar