Instructions
CASE STUDY - THE COMPLETE ACCOUNTING CYCLE
Name: ___________________________________
This Case Study is worth 100 points, or 10% of your final course grade.
This Case Study relates to TCOs E and F, and Chapters 3 and 4.
MAKE SURE TO COMPLETE ALL REQUIREMENTS WHICH ARE LISTED BELOW.
There are 10 sheets in the Workbook, including this one.
All of the information that you need for the project is located in this Workbook.
Requirements Sheet in Workbook
Requirement 1—Prepare the Journal Entries in the General Journal Journal Entries
Requirement 2—Post Journal Entries to the General Ledger General Ledge
Requirement 3—Prepare a Trial Balance Trial Balance
Requirement 4—Prepare the Adjusting Entries Adjusting Entries
Requirement 5—Post Adjusting Entries to the General Ledger General Ledge
Requirement 6—Prepare an Adjusted Trial Balance Adjusted Trial Balance
Requirement 7—Prepare the Financial Statements Financial Statements
Requirement 8—Prepare the Closing Entries Closing Entries
Requirement 9—Post Closing Entries to the General Ledger General Ledge
Requirement 10—Prepare the Post Closing Trial Balance Post-Closing Trial Balance
Hint for success: Review the Week 2 and 3 Activities prior to starting this project.
You can hover over the red pointer at the top right-hand corner of the cell to read the hint.
Hints are provided for the following balances:
1) The debits for the journal entries are on the Journal Entries tab.
2) The credits for the journal entries are on the Journal Entries tab.
3) The cash balance is on the General Ledger tab.
4) The debits for the trial balance are on the Trial Balance tab.
5) The credits for the trial balance are on the Trial Balance tab.
6) The debits for the adjusted trial balance are on the Adjusted Trial Balance tab.
7) The credits for the adjusted trial balance are on the Adjusted Trial Balance tab.
8) Net income for the income statement is on the Financial Statements tab.
9) Retained earnings as of July 31 are on the Financial Statements tab.
10) Total assets for the balance sheet are on the Financial Statements tab.
11) Total liabilities and shareholders' equity for the balance sheet are on the Financial Statements tab.
12) The debits for the post-closing trial balance are on the Post-Closing Trial Balance tab.
13) The credits for the post-closing trial balance are on the Post-Closing Trial Balance tab.
Journal Entries
Requirement #1:
During its first month of operation, the True Consulting Corporation, which specializes in management consulting,
completed the following transactions.
July 1 Issued 15,000 shares of the company's common stock in exchange for $15,000.
July 3 Purchased a truck for $8,000. A down payment of $3,000 was made, with the balance on account.
July 5 Paid $1,200 to cover rent from July 1 through September 30.
July 7 Purchased $2,000 of supplies on account.
July 10 Billed customers for consulting services performed, $3,700.
July 14 Paid $500 toward the amount owed for the supplies purchased on July 7.
July 15 Paid $1750 in cash for employee wages.
July 19 Collected $1600 in cash from customers that were billed on July 10.
July 21 Received $4,200 cash from customers for services performed.
July 31 Paid $350 in cash for truck repairs.
July 31 Declared and Paid $700 in cash dividends.
Prepare journal entries to record the July transactions in the General Journal below. Use the following account names for journal entries.
General Journal Chart of Accounts
Date Description(Account Name) Debit Credit Category Account Title Normal Balance
1-Jul Cash 15,000 Assets
Common Stock 15,000 Cash Debit
Accounts Receivable Debit
3-Jul Equipment 8,000 Supplies Debit
Cash 3,000 Prepaid Rent Debit
Accounts Payable 5,000 Equipment Debit
Accumulated Depreciation - Equipment Credit
5-Jul Prepaid Rent 1,200
Cash 1,200 Liabilities
Accounts Payable Credit
7-Jul Supplies 2,000 Income Tax Payable Credit
Accounts Payable 2,000
Stockholders' Equity
10-Jul Accounts Receivable 3,700 Common Stock Credit
Services Revenue 3,700 Retained Earnings Credit
Dividends Debit
14-Jul Accounts Payable 500
Cash 500 Revenue
Service Revenue Credit
15-Jul Wages Expense 1,750
Cash 1,750 Expenses
Rent Expense Debit
19-Jul Cash 1,600 Wages Expense Debit
Accounts Receivable 1,600 Repairs & Maintenance Expense Debit
Supplies Expense Debit
21-Jul Cash Depreciation Expense Debit
Service Revenue 4,200 Income Tax Expense Debit
4,200
Clearing Account
31-Jul Repair and Maintenance Expense 350 Income Summary
Cash 350
31-Jul Dividends 700
Cash 700
39,000
DeVry: Debits equal $39,000
39,000
DeVry: Credits equal $39,000
Note: Remember that debits must equal credits—All of your journal entries should balance.
General Ledge
This Sheet will be used for Requirements 2, 5, and 9.
Requirement #2:
Post the July journal entries to the following T-accounts and compute ending balances.
Cash
DeVry: The balance of the Cash account after posting all journal entries should be $13300.
Service Revenue
15,000 3,000 3,700
1,600 1,200 4,200
4,200 500
1,750
350
700 Bal 7,900
Bal. 13,300
Accounts Receivable Rent Expense
3,700 1,600 1,200
Bal. 2,100
bal. 1,200
Supplies
2,000 Wages Expense
1,750
Bal. 2,000
Bal 1,750
Prepaid Rent
400 Repairs & Maintenance Expense
350
Bal 400
Bal 350
Equipment
8,000 3000 Supplies Expense
2000
Bal 5000
Accumulated Depreciation-Equipment Bal 2000
100
Depreciation Expense
1200
bal. 100
bal. 1200
Accounts Payable
500 5,000 Income Tax Expense
2,000 1,200
Bal 6,500
bal 1,200
Income Tax Payable
1,200
Retained Earnings
700 4700
Common Stock bal 5400
15,000
Income Summary
bal. 15,000 400
1,750
Dividends 350
700 5,400
7,900
bal. 7,900
Bal 700
Trial Balance
Requirement #3:
Prepare a trial balance for July in the space below.
True Consulting Corporation
Trial Balance
July 31
Accounts Debit Credit
Cash 13,300
Account Receivable 2,100
Prepaid Rent 1,200
Supplies 2,000
Equipment (truck) 8,000
Account Payable 6,500
Common Stuck 15,000
Dividends 700
Service revenue 7,900
wages expense 1,750
Repair & maintence expense 350
Totals 29,400
DeVry: Debits equal $29,400
29,400
DeVry: Credits equal $29,400
Adjusting Entries
Requirement #4:
Prepare adjusting entries using the following information in the General Journal
below. Show your calculations!
a) One month's rent has expired
b) The remaining inventory of supplies is $600.
c) The estimated depreciation on equipment is $100.
d) The estimated income taxes are $1,200.
General Journal
Date Description (Account Name) Debit Credit
31-Jul Rent Expense 400
Prepaid Rent 400
31-Jul Supplies Expenses 1,400
Supplies 1,400
31-Jul Depreciatio Expense 100
Accumulated Depreciation 100
31-Jul Income Tax Expense 1,200
Income tax payble 1,200
Requirement #5:
Post the adjusting entries to the General Ledger T-accounts and compute adjusted balances.
Just add to the balances that are already listed.
Rent Expense Prepaid Rent
1,200 400 400
bal. 1,200 Bal 400
Adjusted Trial Balance
Requirement #6:
Prepare an adjusted trial balance in the space below.
True Consulting Corporation
Adjusted Trial Balance
July 31
0
DeVry: Debits equal $30,700
0
DeVry: Credits equal $30.700
Financial Statements
Requirement #7:
Prepare the financial statements for True Consulting Corporation as of July 31 in the space below.
You will only be preparing the income statement, statement of retained earnings, and the balance sheet.
The statement of cash flows is a required financial statement, but is not required for this case study.
True Consulting Corporation True Consulting Corporation True Consulting Corporation
Income Statement Statement of Retained Earnings Balance Sheet
For the Month Ending July 31 For the Month Ending July 31 July 31
Revenues: Retained Earnings, July 1 Assets:
Service Revenue Add: Net Income Cash
Subtotal Accounts Receivable
Expenses: Less: Dividends Supplies
Rent Expense Retained Earnings, July 31
DeVry: Retained Earnings equals $2,000
Prepaid Rent
Wages Expense Equipment
Repairs & Maintenance Expense Less: Accum. Depr.
Supplies Expense Total Assets
Depreciation Expense
Income Tax Expense Liabilities:
Total Expenses Accounts Payable
Net Income Income Tax Payable
Total Liabilities
Stockholders' Equity:
Common Stock
Retained Earnings
Total Stockholders' Equity
Total Liabilities and
Stockholders' Equity
DeVry: Total Liabilities & Stockholders' Equity equals $24,700
DeVry: Net Income equals $2,700
DeVry: Total assets equals $24.700
Closing Entries
Requirement #8:
Prepare the closing entries at July 31 in the General Journal below.
General Journal
Date Description (Account Name) Debit Credit
Requirement #9:
Post the closing entries to the General Ledger T-accounts and compute ending balances.
Just add to the adjusted balances already listed.
Post-Closing Trial Balance
Requirement #10:
Prepare a post-closing trial balance as of July 31 in the space below.
True Consulting Corporation
Post-Closing Trial Balance
July 31
0
DeVry: Debits equal $24,800
0
DeVry: Credits equal $24,800
Grading Ru
ic
Case Study 1 Ru
ic
Please note that this ru
ic provides a general guideline, but you can score anywhere between 0
and the maximum number of points for that step, depending on the accuracy and completeness
of your work.
Criteria Outstanding Good Poor Very Poor Points Awarded
Step 1 XXXXXXXXXXPrepared Journal Entries (20 points) Journal entries use accurate accounts and amounts; and debits and credits are used co
ectly. Minor e
ors such as inco
ect account names or credits listed prior to debits. E
ors in computations that resulted in inco
ect amounts to be debited and credited. Evidence of an attempt to complete the journal entries.
20 points 16 points 12 points 8 points
Step 2 XXXXXXXXXXPosted to the General Ledger (10 points) Posting is co
ect, leading to accurate account balances. Posting is mostly co
ect, but minor e
ors are evident. Posting has several e
ors that resulted in inco
ect account balances. Posting is done poorly, but does show evidence of an attempt to complete.
10 points 8 points 6 points 4 points
Step 3 XXXXXXXXXXPrepared a Trial Balance (10 points) Co
ect account names and balances so to a
ive at a co
ect trial balance. Some minor e
ors such as inco
ect account names or inco
ect totals due to e
ors in prior steps. E
ors in computations that resulted in inco
ect amounts to be debited and credited. Evidence of an attempt to complete the trial balance.
10 points 8 points 6 points 4 points
Step 4 XXXXXXXXXXPrepared Adjusting Journal Entries (10 points) Journal entries use accurate accounts and amounts; and debits and credits are used co
ectly. Journal entries mostly use accurate accounts and amounts; and debits and credits are used co
ectly. Journal entries have some e
ors in use of accounts and amounts; and debits and credits are only used somewhat co
ectly. Journal entries have some e
ors in use of accounts and amounts; and debits and credits are not used co
ectly.
10 points 8 points 6 points 4 points
Steps 5 and 6 XXXXXXXXXXPosted and Prepared an Unadjusted Trial Balance (10 points) Posting is co
ect, leading to an accurate trial balance. Posting is mostly co
ect, leading to a mostly co
ect trial balance. Posting has several e
ors, leading to a trial balance with several e
ors. Posting is done poorly or not at all, leading to inaccurate or no trial balance.
10 points 8 points 6 points 4 points
Step 7 XXXXXXXXXXPrepared Financial Statements (20 points) All three Financial Statements are prepared accurately and in an appropriate format. Two of the three financial Statements are prepared accurately, and mostly in an appropriate format. One statement has some e
ors. One of the three Financial Statements is prepared accurately and mostly in an appropriate format. Two statements have some e
ors. One or fewer of four Financial Statements are prepared accurately and mostly in an appropriate format. Three or all statements have some e
ors.
20 points 16 points 12 points 8 points
Step 8 XXXXXXXXXXPrepared Closing Journal Entries (10 points) Journal entries use accurate accounts and amounts; and debits and credits are used co
ectly. Journal entries mostly use accurate accounts and amounts; and debits and credits are used co
ectly. Journal entries have some e
ors in use of accounts and amounts; and debits and credits are only somewhat used co
ectly. Journal entries have some e
ors in use of accounts and amounts; and debits and credits are not used co
ectly.
10 points 8 points 6 points 4 points
Steps 9 and 10 XXXXXXXXXXPosted and Prepared Post-Closing Trial Balance (10 points) Posting is co
ect, leading to an accurate trial balance. Posting is mostly co
ect, leading to a mostly co
ect trial balance. Posting has several e
ors, leading to a trial balance with several e
ors. Posting is done poorly or not at all, leading to inaccurate or no trial balance.
10 points 8 points 6 points 4 points
Total Points Earned Out of 100 Points 0
Some of the postings to the general ledger accounts are inco
ect. Temporary accounts should have a zero ending balance after closing journal entries have been posted to the general leger. Â
Please double check your spelling for account names.
Only accounts in the chart of accounts should be used to prepare journal entries and the trial balances. For example, Consulting Service Revenue is not in the chart of accounts.
A
eviations for account names should be avoided when preparing journal entries.
Order of accounts in the trial balances should be similar to that of the chart of accounts.
Amount for Wages Expense is inco
ect in the income statement.
There should be a zero for beginning retained earnings in the statement of retained earnings.
Temporary accounts should not appear in the post-closing trial balance. Amounts for Accumulated Depreciation-Equipment and Retained Earnings are missing in the post-closing trial balance.
Instructions
CASE STUDY - THE COMPLETE ACCOUNTING CYCLE
Name: ___________________________________
This Case Study is worth 100 points, or 10% of your final course grade.
This Case Study relates to TCOs E and F, and Chapters 3 and 4.
MAKE SURE TO COMPLETE ALL REQUIREMENTS WHICH ARE LISTED BELOW.
There are 10 sheets in the Workbook, including this one.
All of the information that you need for the project is located in this Workbook.
Requirements Sheet in Workbook
Requirement 1—Prepare the Journal Entries in the General Journal Journal Entries
Requirement 2—Post Journal Entries to the General Ledger General Ledge
Requirement 3—Prepare a Trial Balance Trial Balance
Requirement 4—Prepare the Adjusting Entries Adjusting Entries
Requirement 5—Post Adjusting Entries to the General