Menumgmt210 Course Project Requirement Description

Menumgmt210 Course Projectrequirementrequirement Descriptionworksheet

Prepare the journal entries in the General Journal, post them to the General Ledger, prepare a Trial Balance, make Adjusting Entries, post them and prepare an Adjusted Trial Balance, then prepare Financial Statements (Income Statement, Statement of Retained Earnings, Balance Sheet), followed by Closing Entries, Post-Closing Trial Balance, and Ratios with interpretation.

Scenario: You’ve secured a new client, Howard's Flight Radio Management Corporation (HFRM), a small business in flight management systems. The owner is not an accountant and needs help preparing financial statements for investors from initial transactions in March. The project involves completing eight worksheets, including journal entries, ledger postings, trial balances, adjusting entries, financial statement preparation, closing entries, post-closing trial balances, and ratio analysis.

Paper For Above instruction

Howard's Flight Radio Management Corporation (HFRM) is a fledgling business specializing in Flight Management Systems (FMS). As its accountant, the primary goal is to guide Howard in organizing his financial data from inception through the preparation of formal financial statements, providing clarity on the company's financial health for investor review.

The initial step involves systematic recording of all business transactions during March into the General Journal. These transactions include the owner’s initial capital investment, purchase of equipment, expenses incurred such as rent, insurance, and repairs, revenue generated from FMS repair services, and payments of liabilities and dividends. Each journal entry must correctly identify the accounts involved, ensuring debits equal credits, and reflect the nature of the transaction according to the provided chart of accounts.

Following the journal entries, the next phase requires transferring these transactions into the respective T-accounts of the General Ledger. This process entails posting the debits and credits from each journal entry to update account balances accurately. The trial balance is then prepared to verify the equality of total debits and credits, ensuring ledger accuracy before proceeding to adjust accounts.

Adjusting entries are crucial, representing the recognition of expenses and revenues that are incurred but not yet recorded or adjusted. For HFRM, adjustments include recognizing insurance expense as it expires monthly, adjusting repair supplies to reflect the remaining inventory, computing depreciation expense for equipment, and estimating income taxes owed. These adjustments are posted to update account balances for an accurate reflection of financial position at month-end.

With the adjusted accounts, an Adjusted Trial Balance consolidates all ledger balances, serving as the foundation for preparing financial statements. The Income Statement reports the company's revenues and expenses, calculating net income or loss for March. The Statement of Retained Earnings starts with the prior balance, adds net income, subtracts dividends paid, and computes the ending retained earnings. The Balance Sheet details assets, liabilities, and stockholders’ equity, reflecting the company's financial position at month-end.

The next step is recording closing entries to reset temporary accounts for the new period. Revenues, expenses, and dividends are closed to Retained Earnings, and the totals are posted to the ledger. Once closed, a Post-Closing Trial Balance ensures all temporary accounts are zeroed out, and only permanent accounts remain, confirming the ledger's accuracy at month-end.

Finally, ratio analysis is conducted using data from the financial statements. Ratios such as the current ratio, leverage ratio, asset turnover, net profit margin, and return on assets provide insights into liquidity, leverage, operational efficiency, and profitability. The interpretation of these ratios offers a comprehensive understanding of the company's financial health and operational performance.

References

  • Arnold, G., & Sutton, G. (2019). Financial accounting: An introduction. Pearson Education.
  • Horngren, C. T., Sundem, G. L., & Elliott, J. A. (2018). Introduction to financial accounting. Pearson.
  • Wild, J. J., Shaw, K. W., & Chiappetta, M. (2020). Financial accounting (13th ed.). McGraw-Hill Education.
  • Financial Accounting Standards Board (FASB). (2023). Accounting standards updates. FASB.org.
  • AccountingCoach. (2023). Basic accounting principles. https://www.accountingcoach.com.
  • Investopedia. (2023). Financial ratios. https://www.investopedia.com/terms/f/financialratio.asp.
  • Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2020). Intermediate accounting. Wiley.
  • Brigham, E. F., & Houston, J. F. (2019). Fundamentals of financial management. Cengage Learning.
  • Shim, J. K., & Siegel, J. (2016). Financial management: Theory & practice. McGraw-Hill Education.
  • US Securities and Exchange Commission. (2021). Financial reporting and analysis. SEC.gov.

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