Project Goal: Create This Graded Project

Project Goal The goal of this graded project is to create the following

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, Post-closing trial balance. The financial statements must be created in one Microsoft Word document (.doc or .docx) file. Alternatively, an Excel workbook (.xls or .xlsx) may be used. The file will be uploaded for grading.

Read the following instructions thoroughly before beginning your work. This will help you become familiar with what is involved in the project.

Use the blank forms provided to set up the accounts, journalize transactions, post to the ledger, prepare trial balances, and create the financial statements following GAAP. It is essential to maintain proper formatting, accuracy, and accounting principles, especially that debits equal credits and the accounting equation balances.

The project involves: preparing the general ledger accounts from given beginning balances, journalizing transactions, posting journal entries to the ledger, calculating account balances, preparing unadjusted and adjusted trial balances, creating the income statement, closing entries, post-closing trial balance, balance sheet, and statement of retained earnings. All work is to be organized into one final Word or Excel file, with each financial statement on a separate page or worksheet, formatted properly.

Correct formatting and accuracy are critical for grading. Do not submit multiple files or handwritten images. All financial statements should follow the format shown in the textbook or provided examples. The project emphasizes understanding accounting concepts and applying them correctly, not just copying numbers.

Paper For Above instruction

Introduction

The purpose of this project is to demonstrate competence in preparing basic financial statements for a small accounting entity, J & L Accounting, Inc., by applying fundamental accounting principles outlined in the Generally Accepted Accounting Principles (GAAP). The project emphasizes accuracy, proper formatting, and adherence to accounting rules, especially the balancing of debits and credits and the equality of assets and liabilities plus shareholders’ equity.

Development of Financial Statements

The project begins with setting up the general ledger accounts using the beginning balances from the prior period’s post-closing trial balance. This step involves entering the initial balances into ledger accounts, ensuring accuracy and proper account classification. These balances serve as the starting point for the new accounting period, reflecting the company's financial status at the end of the prior period.

Journal Entries and Posting

Next, transactions specific to the month of January are journalized in detail, following GAAP. Each journal entry must have debits equal to credits; errors in amounts are permissible if the total debits and credits balance, as these can be corrected later. After journalizing, the entries are posted to the respective ledger accounts, maintaining the proper debits and credits, to update account balances.

Trial Balance Preparation

Using the updated ledger accounts, an unadjusted trial balance is prepared, summing all debits and credits to verify that they are equal. Any discrepancy indicates errors that need correction. Following this, adjusting journal entries are recorded for prepaid rent and depreciation, and posted to the ledger to account for accrued expenses and adjustments for asset depreciation.

Adjusted Trial Balance and Financial Statements

Once adjustments are made, a new trial balance is prepared, confirming that debits equal credits. From this adjusted trial balance, the income statement is created, listing revenues and expenses to calculate net income for January. The net income is then transferred to the statement of retained earnings, adjusting the prior period’s ending balance, which is prepared accordingly.

Closing Entries and Final Balances

After preparing the financial statements, closing entries are journalized and posted to reset temporary accounts (revenues and expenses) and close dividends to retained earnings. The post-closing trial balance is then prepared to confirm that all temporary accounts have been closed, and the books are ready for the next period, with the balances reflecting only permanent accounts.

Final Financial Statements

The last step involves creating a complete set of financial statements: balance sheet, income statement, statement of retained earnings, and post-closing trial balance, formatted according to GAAP and the example provided. Each statement should be on a separate page or worksheet, correctly formatted, with appropriate headings, dates, and subtotals, ensuring clarity and professionalism.

Conclusion

Interpretation of the financial data derived from the statements provides insights into the company's financial health and operational performance during January. Accurate preparation of these statements demonstrates an understanding of core accounting procedures, principles, and the importance of precision in financial reporting. Adherence to proper formatting and accounting standards is essential for credible and useful financial statements.

References

  • Higgins, R. C. (2019). Financial Accounting (11th ed.). McGraw-Hill Education.
  • Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2019). Intermediate Accounting (16th ed.). Wiley.
  • Wild, J. J., Subramanyam, K. R., & Halsey, R. F. (2019). Financial Statement Analysis (12th ed.). McGraw-Hill Education.
  • Wild, J. J., & Shaw, K. W. (2021). Fundamental Accounting Principles (24th ed.). McGraw-Hill Education.
  • Gibson, C. H. (2018). Financial Reporting & Analysis (13th ed.). Cengage Learning.
  • Schroeder, R. G., Clark, M. W., & Cathey, J. M. (2020). Financial Accounting Theory and Analysis (12th ed.). Wiley.
  • Needs, C. (2019). Accounting Principles (24th ed.). Pearson.
  • Miller, R., & Leach, W. (2020). Principles of Accounting (6th ed.). Cengage Learning.
  • Bradshaw, M., & Davidson, R. (2019). Intermediate Accounting and Reporting (10th ed.). Wiley.
  • Wiley. (2020). Financial Statements Formatting and GAAP Standards. Wiley Publishing.

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