Note: This Is A Two-Part Assignment; Both Parts Need To Be S

Note This Is A Two Part Assignment Both Parts Need To Be Submitted F

Note: This is a two part assignment; both parts need to be submitted for grading.

Part 1:

Review the unadjusted trial balance for Smith Construction and the information needed for the month-end adjustments in the Excel Template. Prepare the adjusting entries for the period ending May 31. Prepare the adjusted trial balance for the period ending May 31.

Part 2:

Review the adjusted trial balance for Smith Construction for the period ending May in the Excel Template. Prepare the Income Statement, the Statement of Retained Earnings, and the Balance Sheet. Prepare the three closing entries and the Post Closing Trial Balance.

Submit your completed assignment as an Excel document to the drop box by the due date specified in the course calendar. Save the file with your first initial and last name, followed by an underscore, the assignment name, another underscore, and the date (e.g., JSmith_AdjustingTrialBalance_0524.xlsx).

Paper For Above instruction

The task of preparing financial statements and adjusting entries is fundamental to accurate accounting and financial reporting. This paper outlines the processes involved in adjusting entries, trial balances, and the preparation of comprehensive financial statements as exemplified by the case of Smith Construction. Addressing both the adjustment phase and the closing process, this discussion highlights essential accounting procedures that ensure financial accuracy and regulatory compliance.

Introduction

Accounting is a systematic process that involves recording, classifying, and summarizing financial transactions. Central to this process are steps such as adjusting entries, trial balances, and the preparation of financial statements, which collectively ensure that a company's financial reports are precise and compliant with accounting standards. The scenario involving Smith Construction exemplifies these practices, demonstrating how accountants must methodically perform each step to reflect the true financial position of a business at a given period.

Adjusting Entries and Trial Balance Review

Adjusting entries are essential at period-end to account for accrued and deferred items that have not been captured during the regular recording of transactions. These adjustments may include accrued revenues, accrued expenses, depreciation, and prepaid expenses. For Smith Construction, reviewing the unadjusted trial balance provides the preliminary snapshot of account balances before adjustments are finally made. The preparation of tentative adjusting entries, based on supporting data such as invoices, depreciation schedules, and prepaid expense records, ensures that revenue recognition and matching principles are adhered to.

Following the adjustments, the adjusted trial balance consolidates all account updates and serves as a basis for financial statement preparation. It confirms the equality of debits and credits after adjustments, maintaining the fundamental accounting equation's integrity. Specifically, for Smith Construction, this step ensures that asset, liability, equity, revenue, and expense accounts accurately reflect the current period's financial activities.

Financial Statements Preparation

Income Statement

The income statement summarizes revenues and expenses to determine net income or loss for the period ending May 31. It begins with gross revenues, subtracts expenses such as cost of goods sold, administrative expenses, depreciation, and interest, leading to the calculation of net income. Accurate preparation hinges on the prior steps—particularly, the correct recording of adjusting entries to ensure all earned revenues and incurred expenses are recognized.

Statement of Retained Earnings

This statement depicts changes in retained earnings over the period, beginning with the opening balance, adding net income from the income statement, and subtracting dividends paid. It provides insight into how profit retention and distributions impact equity. For Smith Construction, this statement is vital for understanding how operational performance translates into retained earnings, impacting future financing and investment decisions.

Balance Sheet

The balance sheet presents the company’s financial position at a specific point in time. It lists assets, liabilities, and equity based on the adjusted trial balance. Proper classification and valuation are essential to convey a true and fair view of Smith Construction’s financial health as of May 31.

Closing Entries and Post-Closing Trial Balance

Closing entries are journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts. These include closing revenue and expense accounts to retained earnings and closing dividends or withdrawals. For Smith Construction, these entries reset temporary accounts to zero, preparing the accounts for the next period.

The post-closing trial balance confirms that all temporary accounts have been closed properly, and only permanent accounts—assets, liabilities, and equity—remain with balances carried forward. This final step ensures that the books are balanced and ready for the subsequent accounting period.

Conclusion

The comprehensive process involving adjusting entries, financial statement preparation, closing entries, and the post-closing trial balance forms the backbone of accurate accounting. These procedures enable businesses like Smith Construction to generate reliable financial reports that inform management decisions, satisfy regulatory requirements, and communicate financial health to stakeholders. Mastery of these processes ensures that financial data remains precise, relevant, and useful for strategic planning and operational improvements.

References

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