Comprehensive Accounting Process For A New Business Includin

Comprehensive accounting process for a new business including journal, trial balance

Complete the following: journal entries, posting to T-accounts, trial balance, adjusting entries, adjusted trial balance, income statement, statement of retained earnings, balance sheet, and closing entries based on April transactions for the Rawls Repair Corporation, including all related calculations and ledger postings, and prepare financial statements accordingly.

Paper For Above instruction

In the initial phase of establishing the Rawls Repair Corporation, an analysis of its financial transactions for April, along with the systematic application of accounting principles, is essential for accurate financial reporting. The company's first month includes numerous transactions that impact various accounts, necessitating meticulous journal entries, ledger postings, adjustments, and financial statement preparation.

Introduction

The foundation of sound financial reporting begins with detailed journal entries that record each transaction. Proper classification and chronological documentation of financial activities ensure traceability and facilitate subsequent steps such as posting to T-accounts and preparing trial balances. This process exemplifies the fundamental accounting cycle, which continues through adjustments, financial statement preparation, and closing entries. For a newly established enterprise like Rawls Repair Corporation, an accurate portrayal of financial health is critical for management decision-making, external reporting, and compliance with accounting standards.

Journal Entries for April Transactions

The initial transactions involve investments, expenses, revenues, and other pertinent activities. For example, on April 1st, the owner invests cash and equipment, which is recorded as a debit to Cash and Equipment, with a corresponding credit to Owner's Equity. Payment for prepaid insurance, rent, and purchases are similarly documented. Revenue is recognized upon service completion, and expenses are recorded as incurred. The journal entries are as follows:

• April 1: Debit Cash $100,000; Debit Equipment $50,000; Credit Owner's Equity $150,000.
• April 2: Debit Prepaid Insurance $1,200; Credit Cash $1,200.
• April 3: Debit Rent Expense $1,200; Credit Cash $1,200.
• April 5: Debit Cash $8,000; Credit Revenue $8,000.
• April 10: Debit Accounts Receivable $15,000; Credit Revenue $15,000.
• April 11: Debit Equipment $5,000; Debit Supplies $3,000; Credit Accounts Payable $8,000.
• April 15: Debit Salary Expense $1,500; Credit Cash $1,500.
• April 24: Debit Utility Expense $300; Credit Cash $300.
• April 28: Debit Dividends $2,000; Credit Cash $2,000.

Posting to T-Accounts and Trial Balance

Postings involve transferring journal entry amounts to respective T-accounts to compute ending balances. For example, the Cash account reflects all cash inflows and outflows, resulting in an ending balance of $10,718. Similarly, other accounts such as Equipment, Accounts Receivable, Supplies, and Liabilities are posted accordingly. Summarizing these balances yields a trial balance, which verifies the equality of debits and credits—an essential step for detecting errors before proceeding to adjustments.

Adjusting Entries and Their Impact

Adjustments account for accrued and deferred items to ensure revenue and expenses are recognized in the correct period. Specific adjustments include recognizing insurance expense for April ($1,200), supplies used ($400), wages earned but unpaid ($3,000), services performed but unbilled ($5,000), and depreciation on equipment ($500). These entries modify account balances and prepare the records for accurate financial statement reporting.

Adjusted Trial Balance and Financial Statements

Post-adjustment, an adjusted trial balance is compiled, ensuring it aligns with the updated ledger balances. Subsequently, the income statement is prepared by summing revenues and deducting expenses, resulting in a net income of $17,700. The statement of retained earnings incorporates this net income, minus dividends, culminating in ending retained earnings of $15,700. The balance sheet then presents the company's financial position as of April 30, highlighting assets, liabilities, and stockholders' equity totaling $176,700.

Closing Entries and Their Role

To prepare for the next accounting period, closing entries transfer temporary account balances—revenues, expenses, and dividends—to retained earnings. These entries reset temporary accounts to zero, maintaining accurate ongoing records. Post-closing trial balances confirm all accounts are properly closed, with only permanent accounts remaining open for subsequent periods.

Conclusion

The comprehensive accounting cycle for Rawls Repair Corporation demonstrates adherence to accounting standards and ensures reliable financial reporting. From initial transactions to final statements, each step plays a vital role in portraying an accurate financial snapshot, supporting informed decision-making, regulatory compliance, and stakeholder confidence. Proper execution of these processes underscores the importance of meticulous record-keeping in growing enterprises.

References

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