pre-knowledge assesment

Instructions

ACTG

38

1 Pre-requisite Knowledge Assessment Winter 2

0

21 Purpose of the Assessment: This take home assessment has been designed as a review of the pre-requisite accounting knowledge necessary to be successful in ACTG 381. This assessment focuses on recording basic accounting transactions/journal entries, understanding T accounts, and creating a set of financial statements. It is also int

end

ed as an opportunity to practice using basic Excel functions. The accounting issues included in this assessment are assumed to have been covered in your prerequisite financial accounting course. If you need a reference, you could refer to the textbook from your pre-requisite accounting course, WileyPlus Chapter 0, Chapter 3 in the textbook for this class, or the ACTG 381 Boot Camp on your D2L page. Possible Points: 25 points; 20 for accounting accuracy and 5 for appropriate Excel technique (i.e., internal referencing among spreadsheets, auto-sum, dr/cr control total, formatting). Due

Date

: Your Excel file should be turned in to D2L Assignments by 10pm on Saturday, January 9th. Late assignments will receive a score of zero as the solution will be posted on D2L by 11pm the same evening. If you are unfamiliar with D2L, please refer to http://www.pdx.edu/oit/d2l Background:

Nguyen Service Corporation

(Nguyen) was founded in 2012 by Judy and Julie Nguyen. The company repairs espresso machines and grinders for coffee shops and other types of clients. Judy and Julie decided to start the company when they realized it was the perfect way to combine their love of coffee and mechanical systems. Nguyen employs a few field technicians and sales people as well as an MBA, Darrell Johnson. To date Darrell has been doing all the accounting for the company. In January 2020, Nguyen hires you as an accounting intern. Required:

Darrell Johnson has just provided you with the attached

beg

inning balances for 2020. Assume this trial balance has been correctly prepared. Use the balances in the 1-1-20 Trial Balance tab as your beginning balances for all

T-Accounts

. This should be completed through the use of Excel formulas rather than retyping the numbers in the T-accounts. See the Beginning Balance in the

Cash

T-account for an example. Nguyen’s year end is December 31st.

(A) Using the Excel

General Journal

spreadsheet in this file, record the 2020 transactions listed below AND the necessary year end adjusting journal entries. Label the transactions in numeric sequence corresponding to the numbers below. Each of the transactions below requires a journal entry. Note that there is a debit and credit control total at the top of the general journal so that you can check after each entry to see if you are in balance.

1. Issued an additional

100,000

shares of common stock on January 2. The stock was sold for $

200,000

, which equals the par value of the stock. 2. Purchased equipment for $24,000 cash on January 3. 3. Received cash payment of $

12,000

for outstanding accounts receivable on January 5. 4. Provided services on account to clients for $16,000 on February 10. 5. Received bill and paid utilities of $15,000 on Feburary 28. 6. On March 23, provided services for clients, for which $20,000 was collected in cash and $44,000 was billed to the clients. 7. Paid employee salaries of $46,500 on April 2. 8. Collected $51,200 on outstanding accounts receivable on April 15. 9. Incurred legal fees of $13,000 on May 24, but did not pay for these services. 10. Declared and paid dividends to stockholders of $22,000 on June 10. 11. Paid $45,000 for a three-year insurance policy on July 6 with coverage beginning on October 1. 12. Collected $63,000 on July 20 for services to be provided over the coming year. 13. Paid $8,000 on August 15 related to legal fees incurred on May 24. 14. Sold land with cost of $100,000 for $88,000 cash on September 25. 15. Paid $2,500 in interest costs related to the

Long Term Notes Payable

on November 15. Darrell also provided you the following information that she thought may be helpful in preparing the year-end financial statements. 16. Nguyen received a information from a field technician indicating that services amounting to $5,800 had been provided that need to be billed to customers and recorded. 17. Nguyen depreciates its equipment at a rate of $6,000 per year. Depreciation expense has not been recorded as of December 31. 18. Nguyen has incurred salaries of $15,600 at the end of the year. The next payroll date is January 2 of the following year. (Ignore payroll taxes and withholdings) 19. For the service revenue collected on July 20 (

#

12 above), Nguyen estimated that 60% of the amount collected in advance had been earned by the end of the year. 20. As of December 31, Nguyen has not recorded any insurance expense for the year. The only insurance policy it owns is the one purchased in #11 above. Note: Do not prepare the closing journal entries at this point! Closing journal entries should be prepared as part of step C below. (B)   “Post” journal entries 1-20 from the General Journal to the Excel spreadsheet of T-accounts in this file. All necessary T-accounts have been provided. This should be completed through the use of Excel formulas rather than retyping the numbers in your T-accounts. Please also place the number of each transaction next to each journal entry (see transaction ‘1’ in the Excel T-Account sheet for an example) and be sure to create formulas so that each T-account automatically calculates its ending balance (see the Cash and

Common Stock

t-accounts for examples of both a debit and credit account formula). TIP: Set up your spreadsheet to have debit and credit control totals so that you can check after each entry to see if you are in balance.

(C)   In Excel, prepare a balance sheet as of 12/31/20 and a SINGLE-STEP income statement for the year ended 12/31/20. This should be completed through the use of Excel referencing formulas rather than retyping the ending balances from your T-accounts in the financial statements. (Note that at this point your balance sheet will be out of balance because

Retained Earnings

hasn’t yet been updated!) After you have prepared your balance sheet and income statement, prepare closing entries in the General Journal but do not post them to the T-accounts so that the pre-closing ending balances continue to flow to the

Income Statement

using the Excel referencing formulas. Then the final

Net Income

amount from your Income Statement should be referenced using Excel formulas to the

Statement of Retained Earnings

. Once reconciled, your ending Retained Earnings balance should be referenced using Excel formulas back to your 12/31/20

Balance Sheet

. You do NOT need to prepare a Statement of Shareholders’ Equity or Statement of Cash Flows. Income taxes should be ignored.

Trial Balance 1-1-20

Cash

0

12,000

100,000

0

0

Long Term Notes Payable

Common Stock

Retained Earnings

Service Revenue

224,150

Unadjusted Trial Balance
General Ledger Account Name	1/1/20
	Debit		Credit	Note: All the accounts in this trial balance
	54,150	will be used. No additional accounts are needed.
	Accounts Receivable		18,000
	Prepaid Insurance
	Equipment	52,000
	Accum Depreciation
	Land
	Accounts Payable	2,150
Unearned			Service Revenue
	Salaries Payable
25,000
	60,000
			125,000
	Dividends
	Loss on Sale of Land
	Depreciation Expense
	Insurance Expense
	Legal Fees Expense
	Interest Expense
	Salaries Expense
	Utilities Expense
Total		224,150	0.00	Control totals

General Journal

Nguyen Service Corporation
General Journal
200,000 200,000

# Date

Debit Credit

1

Cash 200,000

Common Stock 200,000

(Control totals)

Transaction

1/2/20

To record issuance of common stock.

T-Accounts

Cash Accounts Receivable Prepaid Insurance
beg 54,150 18,000
1 200,000
end

Equipment Accum Depreciation Land
Accounts Payable

Salaries Payable

Long Term Notes Payable Common Stock Retained Earnings
60,000 beg 125,000 beg
200,000 1

end 125,000

Dividends Service Revenue Loss on Sale of Land
Salaries Expense Legal Fees Expense Interest Expense
Insurance Expense Depreciation Expense Utilities Expense

Nguyen Services Corporation	NAME:
DR total
CR total
Difference
254,150
Unearned Service Revenue
260,000

Income Statement

Nguyen Service Corporation

Service Revenue

1 pt

1 pt
1 pt
1 pt
1 pt
1 pt
1 pt

Net Income

Student Name:

Section:

Income Statement or Profit and Loss Statement

For the Year Ended 12/31/20

Revenues and Gains

$

– 0

1 pt

Total Revenues

Expenses and Losses

Total Expenses

Check Figure

$ 9,250

Total 8 pts

Balance Sheet

Student Name:
Section:

Nguyen Service Corporation

Balance Sheet
Cash

1 pt

1 pt
1 pt

1 pt
1 pt

1 pt
1 pt
1 pt

1 pt

1 pt

Retained Earnings 125,000 1 pt

1 pt

Check Figure

December 31, 2020
Assets
$ 254,150
Total Current Assets
Total Assets
Liabilities
Total Current Liabilities
Total Liabilities
Stockholders’ Equity
This should be referenced from the Stmt of Retained Earnings
Total Stockholders’ Equity
Total Liabilities and Stockholders’ Equity
Total 12 pts
Note: Prepaid Insurance can be shown as all CA or split between CA and LT
Total Assets	445,200

Statement of Retained Earnings

Student Name:
Section:
Nguyen Service Corporation

Statement of Retained Earnings
Net Income – 0

– 0

$ 125,000

For the Year Ended December 31, 2020
Beginning Retained Earnings		$ 125,000
Less: Dividends
Ending Retained Earnings
Note: Per instruction C, to calculate Ending Retained Earnings you should
use Excel formulas to pull values in from the appropriate T accounts.
Ending Retained Earnings calculated here should flow into the 12/31
Balance Sheet.