CASE STUDY – THE COMPLETE ACCOUNTING CYCLE

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CASE STUDY – THE COMPLETE ACCOUNTING CYCLE

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 2 and 3.
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
Requirement 1—Prepare the Journal Entries in the General Journal
Requirement 2—Post Journal Entries to the General Ledger
Requirement 3—Prepare a Trial Balance
Requirement 4—Prepare the Adjusting Entries
Requirement 5—Post Adjusting Entries to the General Ledger
Requirement 6—Prepare an Adjusted Trial Balance
Requirement 7—Prepare the Financial Statements
Requirement 8—Prepare the Closing Entries
Requirement 9—Post Closing Entries to the General Ledger
Requirement 10—Prepare the Post Closing Trial Balance

Sheet in Workbook
Journal Entries
General Ledger
Trial Balance
Adjusting Entries
General Ledger
Adjusted Trial Balance
Financial Statements
Closing Entries
General Ledger
Post-Closing Trial Balance

Hint for success: Review the Week 2 Lesson prior to starting this project.
There are also hints contained within certain cells on some of the Worksheet tabs.
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.

During its first month of operation, the Melvin Plumbing Corporation, which specializes in residential plumbing,
completed the following transactions.
July 1

Began business by making a deposit in a company bank account of $90,000, in exchange
for 9,000 shares of $10 par value common stock.

July 3

Paid the current month’s rent, $5,500.

July 5

Paid the premium on a 1-year insurance policy, $4,800

July 7

Purchased supplies on account from Little Company, $900.

July 10

Paid employee salaries, $3,300

July 14

Purchased equipment from Lake Company, $11,500. Paid $1,500 down and the balance was
placed on account. Payments will be $500.00 per month for 20 months. The first payment is due 8/1.
Note: Use accounts payable for the balance due.

July 15

Received cash for plumbing revenue for the first half of July, $7,700

July 19

Made payment on account to Lake Company, $500.

July 31

Received cash for plumbing revenue for the last half of July, $8,505

July 31

Declared and paid cash dividends of $600

Prepare journal entries to record the July transactions in the General Journal below.

Date

General Journal
Description(Account Name) Debit

Credit

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 (111)

Revenue (411)

Prepaid Insurance (117)

Rent Expense (511)

Supplies (119)

Salaries Expense (512)

Equipment (144)

Insurance Expense (513)

Accumulated Depreciation-Equipment (145)

Supplies Expense (514)

Accounts Payable (212)

Depreciation Expense (515)

Income Tax Payable (213)

Income Tax Expense (516)

Common Stock (311)
Retained Earnings (312)

Dividends (313

Requirement #3:
Prepare a trial balance for July in the space below.

Melvin Plumbing Corporation
Trial Balance
July 31

0

0

Requirement #4:
Prepare adjusting entries using the following information in the General Journal
below. Show your calculations!
a) One month’s insurance has expired.
b) The remaining inventory of supplies is $375.
c) The estimated depreciation on equipment is $175.
d) The estimated income taxes are $3,200.

Date

General Journal
Description (Account Name)

Debit

Credit

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.

Requirement #6:
Prepare an adjusted trial balance in the space below.
Melvin Plumbing Corporation
Adjusted Trial Balance
July 31

0

0

Requirement #7:
Prepare the financial statements for the Melvin Plumbing 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.
Melvin Plumbing Corporation
Income Statement
For the Month Ending July 31
Revenues:
Revenue
Expenses:
Rent Expense
Salaries Expense
Insurance Expense
Supplies Expense
Depreciation Expense
Income Tax Expense
Total Expenses
Net Income

Melvin Plumbing Corporation
Statement of Retained Earnings
For the Month Ending July 31
Retained Earnings, July 1
Add: Net Income
Subtotal
Less: Dividends
Retained Earnings, July 31

Melvin Plumbing Corporation
Balance Sheet
July 31
Assets:
Cash
Supplies
Prepaid Insurance
Equipment
Less: Accum. Depr.
Total Assets
Liabilities:
Accounts Payable
Income Tax Payable
Total Liabilities
Stockholders’ Equity:
Common Stock
Retained Earnings
Total Stockholders’ Equity
Total Liabilities and
Stockholders’ Equity

Requirement #8:
Prepare the closing entries at July 31 in the General Journal below.

Date

General Journal
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.

Requirement #10:
Prepare a post-closing trial balance as of July 31 in the space below.

Melvin Plumbing Corporation
Post-Closing Trial Balance
July 31

0

0

Case Study 1 Rubric
Please note that this rubric 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

Step 1
Prepared
Journal
Entries (20
points)

Outstanding
Journal
entries use
accurate
accounts and
amounts; and
debits and
credits are
used
correctly.

Good

Poor

Very Poor

Points
Awarded

Minor errors
Errors in
Evidence of an attempt to complete
such as
computations that the journal entries.
incorrect
resulted in
account names incorrect amounts
or credits listed to be debited and
prior to debits. credited.

20 points
Posting is
correct,
Posted to the leading to
accurate
General
Ledger (10 account
balances.
points)

16 points
Posting is
mostly correct,
but minor
errors are
evident.

10 points
Correct
account
Prepared a names and
Trial Balance balances so
(10 points) to arrive at a
correct trial
balance.

8 points
6 points
4 points
Some minor
Errors in
Evidence of an attempt to complete
errors such as computations that the trial balance.
incorrect
resulted in
account names incorrect amounts
or incorrect
to be debited and
totals due to
credited.
errors in prior
steps.

Step 2

Step 3

Step 4
Prepared
Adjusting
Journal
Entries (10
points)

10 points
Journal
entries use
accurate
accounts and
amounts; and
debits and
credits are
used
correctly.

8 points
Journal entries
mostly use
accurate
accounts and
amounts; and
debits and
credits are
used correctly.

12 points
8 points
Posting has
Posting is done poorly, but does show
several errors that evidence of an attempt to complete.
resulted in
incorrect account
balances.

6 points
Journal entries
have some errors
in use of accounts
and amounts; and
debits and credits
are only used
somewhat
correctly.

10 points

8 points
6 points
Posting is
Posting has
mostly correct, several errors,
leading to a trial
Posted leading to an leading to a
accurate trial mostly correct balance with
and
trial balance. several errors.
Prepared an balance.
Unadjusted
Trial Balance
(10 points)
10 points
8 points
6 points
Step 7
All three
Two of the
One of the three
Financial
three financial Financial
Statements
Statements are Statements is
Prepared
are prepared prepared
prepared
Financial
accurately, and accurately and
Statements accurately
mostly in an
mostly in an
(20 points) and in an
appropriate
appropriate
appropriate format.
format.
format. One
Two statements
statement has have some errors.
some errors.

Steps 5 and Posting is
6
correct,

Step 8
Prepared
Closing
Journal
Entries (10
points)

20 points
Journal
entries use
accurate
accounts and
amounts; and
debits and
credits are
used
correctly.

16 points
Journal entries
mostly use
accurate
accounts and
amounts; and
debits and
credits are
used correctly.

10 points

8 points
Posting is
mostly correct,
Posted leading to an leading to a
accurate trial mostly correct
and
balance.
trial balance.
Prepared
Post-Closing
Trial Balance
(10 points)

Steps 9 and Posting is
10
correct,

10 points

8 points

4 points
Journal entries have some errors in
use of accounts and amounts; and
debits and credits are not used
correctly.

4 points
Posting is done poorly or not at all,
leading to inaccurate or no trial
balance.

4 points
One or fewer of four Financial
Statements are prepared accurately
and mostly in an appropriate format.
Three or all statements have some
errors.

12 points
Journal entries
have some errors
in use of accounts
and amounts; and
debits and credits
are only somewhat
used correctly.

8 points
Journal entries have some errors in
use of accounts and amounts; and
debits and credits are not used
correctly.

6 points
Posting has
several errors,
leading to a trial
balance with
several errors.

4 points
Posting is done poorly or not at all,
leading to inaccurate or no trial
balance.

6 points

4 points

Total Points Earned Out of 100
Points

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