ACCT350 Computer Depot OPTION #1: COMPUTER DEPOT Computer Depot is a major computer store chain with locations across North America, Europe, and Africa. T

ACCT350 Computer Depot OPTION #1: COMPUTER DEPOT

Computer Depot is a major computer store chain with locations across North America, Europe, and Africa. The company is preparing to report on business transactions that occurred during January.

Download the Excel spreadsheet for Computer Depot in the module folder. The spreadsheet includes the following tabs:

Transactions – Details the transactions that occurred in the month of January
Journal – General journal for the company
Ledger – General ledger for relevant accounts
Trial Balance – Template for unadjusted and adjusted trial balances
IS – Income Statement template
SE – Statement of Stockholders’ Equity template
BS – Balance Sheet template
CF – Statement of Cash Flows template.

Required:

Part A

Prepare journal entries for all the transactions occurring in January
Post entries to the general ledger
Prepare the unadjusted trial balance as of January 31st
Prepare adjusting entries at January 31st
Post adjusting entries to the general ledger
Prepare the adjusted trial balance as January 31st
Prepare and post closing entries and prepare trial balance at February 1st
Prepare the four primary financial statements on January 31st
Include a ratio analysis of your company and include the industry averages. Calculate at least one ratio from each category listed: Liquidity, Solvency, and Profitability, and provide an explanation on what it means to the company.

Submit a well-formatted electronic file, with your last name as the file name.

Part B

In your current position as financial accounting manager, it is your turn to present the financial statements at the monthly leadership meeting. Prepare a PowerPoint presentation (at least four slides but no more than seven slides) analyzing the company’s financial performance for the month of January, formatted according to the APA requirements. BENSON COMPANY
Income Statement
For the year ended December 31, 2017
Sales revenue
Cost of goods sold
Gross profit
Operating expenses:
Total operating expenses
Operating Income
Other items:
Dividend revenue
Loss on write-off of damaged inventory
Lost from earthquake
Pretax income from continuing operations
Income tax expense
Income from continuing operations
Results from discontinued operations:
Income from operations of discontinued Division E
(net of $570 income taxes)
Loss on disposal of Division E (net of
$2,380 income tax credit)
Net Income
Components of Income
Income from continuing operations
Income from discontinued operations
Net income
2,800
Earnings per Common Share (
$108,124.00
$1,330.00
$109,454.00
235,650
81,720
157,560
39,830
117,730
1,200
7,620
4,700
106,610
117,730
9,606
108,124
1,330
1,470
107,984
ngs per Common Share (# of shares)
BENSON COMPANY
Statement of Cash Flows
For the year ended December 31st, 2017
Cash Flows from Operating Activities
Net Income
Adjustments for noncash effects:
Depreciation expense
Changes in current assets and current liabilities:
Increase in accounts receivable
Increase in inventory
Increase in prepaid insurance
Increase in accounts payable
Increase in income taxes payable
Net cash flows for operating activities
Cash Flows from Investing Activities
Purchase of equipment
Net cash flows for investing activities
Cash Flows from Financing Activities
Payment of dividends
Net cash flows from financing activities
Net increase in cash
Beginning cash balance, Jan. 1
Ending cash balance, December 31st
Difference in cash
117,730
500
13,000
15,000
300
6,000
5,000
Lastname, firstname
Portfolio Project
Computer Depot was incorporated on January 1st. The business maintains a retail personal computer replacement parts store, and also
a full range of services, including computer diagnostic services, virus removal, hardware replacement, software installation and upgrade
The following transactions occurred during the first twelve months of operations:
January 1st
February 8th
March 1st
March 31st
April 1st
April 10th
May 15th
May 30th
June 1st
June 30th
July 25th
July 31st
August 2nd
August 6th
September 15th
September 29th
October 13th
October 29th
November 1st
November 15th
December 15th
Common stock is issued in exchange for cash in the amount of ………….………….………………………
The company purchases and pays for 300 units of computer replacement parts at a price of $25 per unit ………
The company pays cash for a one-year insurance policy in the amount of ……………….………………………
Rent on a retail space for 12 months is paid in the amount of …..……….………………………………………
Diagnostic tools and testing equipment with a useful life of 2 years is purchased for cash in the amount of ……
PC tuning supplies purchased on account in the amount of …………..…………………………………………
The company purchases and pays for another 300 units of computer replacement parts at a price of $38 per unit
PC repair services are performed on account in the amount of …………………………………………………
The company pays for advertisements to be run for the next 12 months in the amount of ………………………
The company issues a 5-year bond with a face value of $100,000 and a stated annual rate of 8%.
Interest is due on June 30th each year. The market rate is 6% on the date of issuance ……………………………
Software installation & upgrade services are performed on account in the amount of ……………………………
120 units of computer replacement parts are sold for $75 per unit with terms 2/10, n/30. The sale is recorded u
the gross method in the amount of (see note c for cost flow assumptions) ………………………………………
Hardware replacement services are provided on account in the amount of ………………………………………
The company receives full payment from the customer for the July 31st sale ……………………………………
Virus removal services are performed on account in the amount of ……………………..………………………
Customer payments are received for services previously provided in the amount of ……………………………
136 units of computer replacement parts are sold for $75 per unit with terms 2/10, n/30. The sale is recorded u
the gross method in the amount of ………………………………………………………………………………
The company receives payment for half of the October 13th sale ………………………………………………
Equipment originally purchased on April 1st for $3,000 is sold for $1,500 cash
A bookkeeper is hired to help the company with daily accounting taxes and annual tax preparation
The bookkeeper is paid $4,500 for the previous month’s services
Additional information:
a. PC tuning supplies on hand at the end of the month are as follows: …………………………………….
b. The year-end balance reported at the end of the year for the Allowance for Doubtful Accounts
is estimated as 2.5% of outstanding receivables at the end of the year
c. The Company uses a perpetual inventory system and accounts for costs using the Last-In-First-Out cost
flow assumption. On December 31st, a count of ending inventory reveals that there are 344 units of computer
replacement parts on hand.
d. All revenue is recorded in the “Sales Revenue” account and reported net of cash discounts on the income statem
e. The effective interest method is used to amortize bond premiums and discounts
f. Adjustments are made at the end of the year for prepaid insurance, rent, advertising, depreciation, and interest e
g. The bookkeeper is paid a salary of $4,500 on the 15th of every month.
h. The company declared dividends of $700 for the year
i. Assume selling expenses include advertising and supplies expense. All other expenses, other than depreciation
and interest expense, are considered general & administrative.
REQUIRED:
1.
2.
3.
4.
5.
6.
7.
8.
Prepare journal entries for each transaction listed above (with descriptions).
Post journal entries to the general ledger accounts.
Prepare an unadjusted trial balance.
Prepare all necessary adjusting journal entries (with descriptions)
and post to the general ledger.
Prepare an adjusted trial balance on December 31st.
Prepare closing entries, post to the general ledger, and carryforward balances to January 1st of the next year.
Prepare the following financial statements on December 31st (ignore income taxes):
a. Income Statement (multi-step, see Example 5.2 in textbook)
b. Statement of Stockholders’ Equity
c. Balance Sheet (classified)
d. Statement of Cash Flows (indirect method)
Rename the excel file Lastname_PortfolioProject_Option1.xls and submit your completed project online.
r replacement parts store, and also provides
, software installation and upgrades, and optimization services.
350,000
7,500
10,752
10,512
23,460
4,250
11,400
10,538
1,540
100,000
10,759
9,000
9,820
7,350
6,295
1,520
10,200
5,100
4,500
2,550
Journal
Date
Accounts
Debit
Credit
Journal
Date
Accounts
Debit
Credit
–
–
ASSETS
Cash
Accounts Receivable
Allowance for Doubtful Accounts
Prepaid Insurance
Supplies
Prepaid Rent
Inventory
Prepaid Advertising
Equipment
Accumulated Depreciation
LIABILITIES
Accounts Payable
Dividends Payable
Interest Payable
Salaries Payable
Bonds Payable
Bond Premium
STOCKHOLDERS’ EQUITY
Common Stock
Retained Earnings
TEMPORARY ACCOUNTS
Service Revenue
Advertising Expense
Insurance Expense
Rent Expense
Cash Discounts
Supplies Expense
Cost of Goods Sold
Depreciation Expense
Bad Debt Expense
Salaries Expense
Interest Expense
Loss on Sale of Equipment
Dividends
YOUR COMPANY
Trial Balance
As of December 31, 2019
Accounts
Cash
Accounts Receivable
Allowance for Doubtful Accounts
Supplies
Prepaid Insurance
Prepaid Rent
Prepaid Advertising
Inventory
Equipment
Accumulated Depreciation
Accounts Payable
Interest Payable
Bonds Payable
Bond Premium
Salaries Payable
Dividends Payable
Common Stock
Retained Earnings
Sales Revenue
Cash Discounts
Cost of Goods Sold
Bad Debt Expense
Interest Expense
Salaries Expense
Advertising Expense
Insurance Expense
Rent Expense
Supplies Expense
Depreciation Expense
Loss on Sale of Equipment
Dividends
TOTAL
Unadjusted
Debit
Credit
Adjusting
Debit
Credit
Adjusted
Debit
Credit
January 1st, 2020
Debit
Credit
YOUR COMPANY
Income Statement
For the year ended December 31, 2019
Sales revenue (net)
Cost of goods sold
Gross profit
Operating expenses:
Selling expenses
General & administrative expenses
Depreciation expense
Total operating expenses
Operating Income
Other items:
Interest expense
Loss on sale of equipment
Net Income
YOUR COMPANY
Statement of Stockholders’ Equity
For the year ended December 31st, 2019
Common Stock
Beginning Balance
Issuance of Stock
Add: Net Income
Less: Dividends
Ending Balance
Retained Earnings
Total
YOUR COMPANY
Balance Sheet
As of December 31st, 2019
ASSETS
Current assets:
Cash
Accounts receivable
Less: Allowance for doubtful accounts
Inventory
Supplies
Prepaid insurance
Prepaid rent
Prepaid advertising
Total current assets
Long-term assets:
Equipment
Less: Accumulated depreciation
Total long-term assets
TOTAL ASSETS
LIABILITIES
Current Liabilities:
Accounts payable
Interest payable
Salaries payable
Dividends payable
Total Current Liabilities
Long-Term Liabilities
Bonds payable
Plus: Unamortized bond premium
Total Liabilities
STOCKHOLDERS’ EQUITY
Common Stock
Retained Earnings
Total Stockholders’ Equity
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY
YOUR COMPANY
Statement of Cash Flows
For the year ended December 31st, 2019
Cash Flows from Operating Activities
Net Income
Adjustments for noncash effects:
Depreciation expense
Bad debt expense
Amortization of bond premium
Loss on sale of equipment
Changes in current assets and current liabilities:
Increase in accounts receivable
Increase in inventory
Increase in supplies
Increase in prepaid insurance
Increase in prepaid rent
Increase in prepaid advertising
Increase in accounts payable
Increase in interest payable
Increase in salaries payable
Net cash flows for operating activities
Cash Flows from Investing Activities
Purchase of equipment
Proceeds from sale of equipment
Net cash flows for investing activities
Cash Flows from Financing Activities
Issuance of common stock
Proceeds from bond issuance
Payment of dividends
Net cash flows from financing activities
Net increase in cash
Beginning cash balance, Jan. 1
Ending cash balance, December 31st

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