It Is Time For The Staff Accountants To Begin Preparing Dail

It Is Time For The Staff Accountants To Begin Preparing Daily Accounti

It is time for the staff accountants to begin preparing daily accounting transactions. In preparation for the upcoming audit, the accountants must ensure that these transactions are correct and are free from any misstatement. Because this is a new subsidiary of the company, there are no beginning balances. As a staff accountant, your job is to do the following: Prepare the 10 transactions below by posting to the general journal. You should use an Excel spreadsheet to accomplish this task. Post the general journal entries to the general ledger in the Excel spreadsheet. Prepare a trial balance from the ending balances on the ledger. You should also use an Excel file for the trial balance.

Paper For Above instruction

Introduction

The initiation of daily bookkeeping activities is crucial for ensuring the accuracy of financial data, especially in a new subsidiary. Accurate recording of transactions facilitates effective audits, proper financial management, and compliance with accounting standards. This paper addresses the process of recording specific transactions that a staff accountant must undertake, emphasizing journal entry preparation, posting to the general ledger, and compiling a trial balance within Excel spreadsheets.

Transaction Recording and Analysis

The first step in the accounting cycle involves recording transactions in the general journal. Each of the ten transactions outlined necessitates precise journal entries, reflecting the dual aspect of financial accounting. These transactions include investments, expenses, purchases, sales, and customer payments, which collectively influence the company's financial statements. Proper documentation is essential to maintain transparency and accuracy (Weygandt, Kimmel, & Kieso, 2021).

Journal Entries Preparation

The following analysis pertains to preparing journal entries for each transaction:

  1. Investment of capital: Debit Cash $50,000; Credit Owner’s Capital $50,000. This reflects the initial investment in the business.
  2. Payment for phone service: Debit Phone Expense $100; Credit Cash $100.
  3. Purchase of equipment on credit: Debit Equipment $35,000; Credit Accounts Payable $35,000.
  4. Prepaid rent: Debit Prepaid Rent $3,000; Credit Cash $3,000.
  5. Prepaid insurance: Debit Prepaid Insurance $5,500; Credit Cash $5,500.
  6. Payment for advertising on credit: Debit Advertising Expense $1,000; Credit Accounts Payable $1,000.
  7. Customer purchase on account: Debit Accounts Receivable $2,000; Credit Sales $2,000.
  8. Customer payment on account: Debit Cash $1,000; Credit Accounts Receivable $1,000.
  9. Sale for cash: Debit Cash $5,000; Credit Sales $5,000.

Each journal entry accurately captures the nature of the transaction and ensures that the accounting equation remains balanced.

Posting to the General Ledger

Once journal entries are prepared, the next step involves posting these to the general ledger. The general ledger consolidates all transaction data by account, providing the ending balances necessary to prepare financial statements. Managing this in Excel involves creating individual ledger accounts with columns for debits, credits, and balances, updating with each posted journal entry (Anthony, Hawkins, & Merchant, 2020).

Trial Balance Preparation

The trial balance is derived from the ending balances of all ledger accounts. It serves as a preliminary check to ensure that total debits equal total credits, indicating the ledger's accuracy. In Excel, the trial balance involves listing all account names alongside their debit or credit balances, summing these to verify the equality of both sides (Kieso, Weygandt, & Warfield, 2019).

Conclusion

Effective handling of daily accounting transactions in a new subsidiary requires precise recording, diligent posting, and careful reconciliation. The use of Excel spreadsheets streamlines the process, enhances accuracy, and provides a clear trail for audit purposes. Proper documentation of each step in the accounting cycle lays the foundation for transparent financial reporting and compliance.

References

  • Anthony, R. N., Hawkins, D., & Merchant, K. A. (2020). Accounting: Texts and Cases. McGraw-Hill Education.
  • Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2019). Intermediate Accounting. Wiley.
  • Intermediate Accounting. Wiley.
  • Heisinger, K., & Warren, J. (2018). Accounting Fundamentals for Decision Makers. Cengage Learning.
  • Benjamin, B. S. (2022). Financial Accounting for Managers. Routledge.
  • Schroeder, R. G., Clark, M. W., & Cathey, J. M. (2020). Financial Accounting Theory and Analysis. Wiley.
  • Revsine, L., Collins, D., Johnson, H., & Mittelstaedt, F. (2019). Financial Reporting & Analysis. Pearson.
  • Gibson, C. H. (2021). Financial Reporting & Analysis. Cengage Learning.
  • Libby, T., Libby, R., & Short, D. G. (2020). Financial Accounting. McGraw-Hill Education.
  • Arens, A. A., Elder, R. J., & Beasley, M. S. (2019). Auditing and Assurance Services. Pearson.

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