Option #1: The Four Steps in the Accounting Process

You own an independent CPA firm. One client had the following transactions in January 20×7.

1. Issued share capital for $5,000 cash
2. Purchased $3,000 of equipment on credit
3. Paid $600 cash for this month’s rent
4. Purchased on credit $3,000 of supplies to be used next month
5. Billed $3,500 to customers for repairs made to date
6. Paid cash for one-half of the amount owing in Transaction 4
7. Collected $400 cash of the amount billed in Transaction 5
8. Sold one-half of the equipment purchased in Transaction 2 for $1,200 in cash

Required:

Use the four steps in the accounting process to analyze business transactions, a) Identifying transactions and source documents, b) Analyzing transactions using the accounting equation, c) Recording the journal entry and d) Posting the entry to the ledger to complete the following:

1. Prepare journal entries for each of the above transactions.
2. Post the journal entries to T–accounts and total the accounts.
3. From the T–accounts, prepare an unadjusted trial balance. List expenses in alphabetical order.

Use the following chart of accounts names and template:

Cash, Capital Stock, Equipment, Accounts Payable, Rent, Supplies, Accounts Receivable, Revenue.

Each assignment must include a title page and reference page. Review the grading rubric to understand how you will be graded on this assignment. Reach out to your instructor if you have questions about the assignment.

Option #2: Preparing Financial Statements

Using the information presented below, prepare an income statement and the balance sheet from the adjusted trial balance of McTangy Spices.

Required:

Use a spreadsheet to prepare the:

1. Income Statement
2. Balance Sheet

Each assignment must include a title page and reference page. Review the grading rubric to understand how you will be graded on this assignment. Reach out to your instructor if you have questions about the assignment.