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Pm Ctu Portal Accounting For Non Accounting Majors Acc3

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Journalize the January transactions. Post transactions to the General Ledger. Prepare a Trial Balance. Prepare an Income Statement. Prepare a Statement of Owner’s Equity. Prepare a Balance Sheet.

Sample Paper For Above instruction

Introduction

The Super Hero Theme Park, initiated by Dr. Strange, has documented several financial transactions during its inaugural month, January. These transactions encompass various activities such as investments, purchases, expenses, revenues, and owner withdrawals, which collectively shape the financial position of the enterprise. Proper recording and analysis of these transactions are essential for preparing accurate financial statements, providing insights into the company’s chronological financial performance, and complying with accounting standards.

Journal Entries for January Transactions

To begin, each transaction is recorded as a journal entry, adhering to the principles of double-entry accounting. For January 1, Dr. Strange’s investment is debited to Cash and credited to Jack Strange, Capital, reflecting the influx of resources into the business. Subsequent transactions involve recording equipment purchases, expenses, owner withdrawals, revenue receipts, billing, collections, and payments on accounts payable. Each transaction is systematically documented to ensure clarity and accuracy in financial reporting.

For example, on January 1:

  • Debit Cash $50,000
  • Credit Jack Strange, Capital $50,000

On January 5, the purchase of equipment on account is recorded as:

  • Debit Equipment $100,000
  • Credit Accounts Payable $100,000

This approach continues for each transaction, ensuring all economic events are accurately captured in the journal.

Postings to the General Ledger

The journal entries are then posted to the General Ledger, which aggregates all transactions by account. This process helps in tracking the cumulative balances of each account, such as Cash, Equipment, Accounts Payable, Unearned Revenue, Jack Strange, Capital, and others. Carefully transferring the journal entries to respective ledger accounts facilitates the preparation of trial balances and ensures trial discrepancies are minimized.

Trial Balance Preparation

A trial balance consolidates the ending balances of all ledger accounts to verify that debits equal credits. Preparing the trial balance involves listing each account and its balance, categorizing them as debit or credit, and summing the totals. Any discrepancies indicate errors in posting that require correction before proceeding to financial statement preparation.

Income Statement Development

The income statement summarizes revenues and expenses, determining the net income for January. Revenues include admission fees and billed amounts, while expenses constitute advertising, salaries, insurance, telephone, and other operating costs. Calculating total revenues and expenses yields the net income or loss, providing insight into the company's operational performance during the period.

Statement of Owner’s Equity

The statement of owner’s equity adjusts the beginning capital for owner investments, withdrawals, and net income. Since this is the first month, the beginning balance is zero. The investment increases owner’s equity, while withdrawals decrease it. The net income, derived from the income statement, further impacts owner’s equity.

Balance Sheet

The balance sheet provides a snapshot of the company's financial position at the end of January. It lists assets such as Cash and Equipment, liabilities like Accounts Payable and Unearned Revenue, and owner’s equity components including Jack Strange, Capital. Ensuring that assets equal liabilities plus owner’s equity verifies the accounting equation's integrity.

Conclusion

Accurately recording and analyzing the January transactions for the Super Hero Theme Park exemplify fundamental accounting processes. Through journalizing, posting, and compiling financial statements, stakeholders gain vital information for decision-making and assessing the company’s financial health.

References

  • Horngren, C. T., Sundem, G. L., Stratton, W. O., Burgstahler, D., & Schatzberg, J. (2014). Introduction to Financial Accounting (11th ed.). Pearson.
  • Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2019). Financial Accounting (10th ed.). Wiley.
  • Wild, J. J., Subramanyam, K. R., & Halsey, R. F. (2019). Financial Statement Analysis (12th ed.). McGraw-Hill Education.
  • Brigham, E. F., & Ehrhardt, M. C. (2016). Financial Management: Theory & Practice. Cengage Learning.
  • Schroeder, R. G., Clark, M. W., & Cathey, J. M. (2019). Financial Accounting Theory and Analysis: Text and Cases. Wiley.
  • Accounting Standards Board. (2020). Generally Accepted Accounting Principles (GAAP). Financial Accounting Standards Board.
  • IFRS Foundation. (2022). International Financial Reporting Standards (IFRS). IFRS.org.
  • U.S. Securities and Exchange Commission. (2018). Financial Reporting Manual. SEC.gov.
  • Journal of Accountancy. (2021). Practical guidance for small business accounting. AICPA.
  • Graham, J. R., & Harvey, C. R. (2001). The theory and practice of corporate finance: Evidence from the field. Journal of Financial Economics, 60(2-3), 187-243.

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