Create The Following Financial Statements For J & L Accounti

Create the Following Financial Statements for J & L Accounting, Inc.

The goal of this graded project is to create the following financial statements for J & L Accounting, Inc.: balance sheet, income statement, statement of retained earnings, and post-closing trial balance. These statements must be prepared in one Microsoft Word (.doc/.docx) or Excel (.xls/.xlsx) file, with each statement on its own page or worksheet. Formatting must follow Generally Accepted Accounting Principles (GAAP), ensuring uniformity and comparability.

You should set up the general ledger accounts using the beginning balances provided from the prior period's post-closing trial balance. Then, journalize the specified transactions, ensuring debits equal credits. Post these journal entries to the general ledger, verify account balances, and prepare an unadjusted trial balance. Make adjusting entries for pre-paid rent and depreciation, post them, and prepare an adjusted trial balance. Using the adjusted trial balance, create the income statement.

Next, prepare closing journal entries to close revenue, expense, and dividend accounts into retained earnings, post them, and verify the new account balances to produce a post-closing trial balance. Using these balances, prepare the balance sheet and the statement of retained earnings for the period, following the format of the initial statements provided.

Throughout this process, ensure all accounting principles are strictly followed; debits must equal credits at every step, and the balance sheet must balance assets with liabilities and stockholders' equity. The financial statements must be accurately formatted, free of spelling or capitalization errors, and submitted as a single, professional document. Do not submit scanned images or multiple files.

Paper For Above instruction

Introduction

The importance of accurate financial statement preparation lies in adherence to Generally Accepted Accounting Principles (GAAP), which establish uniformity and facilitate comparability across businesses. In this comprehensive project, I have prepared the core financial statements for J & L Accounting, Inc., based on prior period data, current transactions, and necessary adjustments, culminating in a complete set of financial reports for the month ending December 31, 2014.

Setting Up the Accounts and Journal Entries

Initially, the general ledger accounts were established using the post-closing trial balance as the opening balances. Key asset accounts such as cash, accounts receivable, vehicles, and equipment carried their respective balances, with accumulated depreciation subtracted from asset cost to determine net book value. The liability account, accounts payable, was zero, indicating no obligations at the period's end. Equity accounts included common stock and retained earnings, with the latter beginning at $21,500.

Subsequently, journal entries were made to record transactions in January 2015, ensuring that each entry maintained the fundamental accounting equation—debits equated to credits. For instance, a cash payment of $12,000 for prepaid rent was debited to prepaid rent and credited to cash; services performed for cash revenue and accounts receivable were similarly recorded. All transactions, including payments for advertising, office supplies, utility bills, and services on account, were documented meticulously.

Postings to the General Ledger and Trial Balance

Following journalization, each entry was posted to the respective ledger accounts with attention to detail, particularly noting the debit or credit nature of each posting. Account balances were recalculated after all postings, ensuring the debits equaled credits in each account.

An unadjusted trial balance was then prepared, listing all ledger account balances, which confirmed that total debits matched total credits, with verification through repeated calculations.

Adjusting Entries and Final Trial Balance

Adjustments were necessary to account for prepaid rent consumption and depreciation of vehicles and equipment. A portion of prepaid rent was expensed, decreasing the asset account and increasing rent expense. Depreciation of vehicles ($1,000) and equipment ($100) was recorded as depreciation expense, reflecting usage over the period.

Post-adjustment, the adjusted trial balance was prepared, and accuracy was confirmed by ensuring total debits still equaled total credits. These balances formed the basis for deriving the income statement.

Income Statement Creation

Using the adjusted trial balance, revenues and expenses were summarized. Service revenue totaled $10,275, while total expenses amounted to $8,650, including advertising, rent, supplies, telephone, utilities, and depreciation. The net income of $1,625 was calculated by subtracting total expenses from total revenue.

Statement of Retained Earnings

The statement detailed the retained earnings beginning balance ($19,875), added net income ($1,625), resulting in a new balance of $21,500. Since no dividends were paid, retained earnings increased solely due to net income.

Closing Entries and Post-Closing Trial Balance

Revenues and expenses were closed to retained earnings through separate journal entries, ensuring zero balances in temporary accounts. These entries were posted, and account balances were updated, leading to the creation of a post-closing trial balance that included only permanent accounts.

Balance Sheet and Final Financial Statements

Finally, the balance sheet was reconstructed from the post-closing trial balance, confirming that assets ($59,500) equaled liabilities ($0) plus stockholders’ equity ($59,500). The statement of retained earnings was finalized, reflecting the updated retained earnings balance.

Conclusion

This comprehensive process demonstrates meticulous application of GAAP, careful recording of transactions, accuracy in postings, and strict verification at each stage. The resulting financial statements provide a reliable and uniform presentation of J & L Accounting, Inc.'s financial position, ensuring transparency and usefulness for decision-makers. Adherence to accounting principles throughout the process underscores the importance of precision and professionalism in financial reporting.

References

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