Using The Data Provided, Perform The Steps Below To Complete ✓ Solved
Using the data provided, perform the steps below to complete
Using the data provided, perform the steps below to complete the final project. On December 1, 2019, SoccerBox Inc. started operations. The following transactions occurred during December 2019. NOTE: There are no beginning balances-this is a new company.
- Dec 1: Randol Espy invested $80,000 cash in the company for common stock.
- Dec 2: SoccerBox purchased soccer equipment for $20,000 cash.
- Dec 2: SoccerBox rented an old warehouse for $30,000 cash for the first year's (December 2019-November 2020) rent.
- Dec 3: SoccerBox purchased $500 of office supplies with cash.
- Dec 10: SoccerBox paid $12,000 cash for an annual insurance policy.
- Dec 14: SoccerBox paid $4,000 cash for the first payroll earned by its employees.
- Dec 24: SoccerBox received $85,000 cash from soccer fees paid by parents for a private youth soccer lesson.
- Dec 28: SoccerBox paid $4,000 cash for 2 weeks' salaries earned by its employees.
- Dec 29: SoccerBox paid $200 cash for minor repairs to its soccer equipment.
- Dec 30: SoccerBox paid $150 cash for this month's telephone bill.
- Dec 30: Dividends of $1,000 cash were paid by SoccerBox to its current shareholders.
Using this spreadsheet and the information above, complete the following:
- Record the journal entries that occurred during the month of December.
- Prepare an unadjusted trial balance.
- Create adjusting journal entries at the end of the year (December 31) based on the following adjustment data:
- One month's insurance coverage has expired.
- The company occupied the warehouse space for the month of December.
- At the end of the month, $100 worth of office supplies are still available.
- This month's depreciation on the soccer equipment is $250.
- Employees earned $300 of unpaid and unrecorded salaries as of month-end.
- Prepare an adjusted trial balance.
- Prepare an income statement, a statement of retained earnings, and a classified balance sheet as of December 31, 2019.
Paper For Above Instructions
To complete the tasks required by SoccerBox Inc.'s financial situation for December 2019, I will undertake the steps involving journal entries, unadjusted trial balance, adjusting journal entries, adjusted trial balance, income statement, statement of retained earnings, and a classified balance sheet. This undertaking will encapsulate both the transactions made and the necessary adjustments at the end of the month.
Journal Entries for December
The following are the journal entries for December based on the transactions listed:
- Dec 1: Cash $80,000
Common Stock $80,000
(To record investment by Randol Espy)
- Dec 2: Equipment $20,000
Cash $20,000
(To record purchase of soccer equipment)
- Dec 2: Rent Expense $30,000
Cash $30,000
(To record payment for warehouse rent)
- Dec 3: Office Supplies $500
Cash $500
(To record purchase of office supplies)
- Dec 10: Prepaid Insurance $12,000
Cash $12,000
(To record payment for an annual insurance policy)
- Dec 14: Salaries Expense $4,000
Cash $4,000
(To record first payroll payment)
- Dec 24: Cash $85,000
Service Revenue $85,000
(To record cash received for soccer lessons)
- Dec 28: Salaries Expense $4,000
Cash $4,000
(To record additional payroll payment)
- Dec 29: Repairs Expense $200
Cash $200
(To record minor repairs to equipment)
- Dec 30: Utilities Expense $150
Cash $150
(To record payment for telephone bill)
- Dec 30: Dividends $1,000
Cash $1,000
(To record payment of dividends)
Unadjusted Trial Balance
| Account | Debit | Credit |
|---|---|---|
| Cash | $34,850 | |
| Equipment | $20,000 | |
| Office Supplies | $500 | |
| Prepaid Insurance | $12,000 | |
| Rent Expense | $30,000 | |
| Salaries Expense | $8,000 | |
| Repairs Expense | $200 | |
| Utilities Expense | $150 | |
| Dividends | $1,000 | |
| Common Stock | $80,000 | |
| Service Revenue | $85,000 | |
| Total | $205,700 | $205,700 |
Adjusting Journal Entries
Now, we will make several adjusting entries at the end of December:
- Insurance Expense: Insurance Expense $1,000
Prepaid Insurance $1,000
(To adjust for one month's insurance coverage expired)
- Rent Expense: Rent Expense $2,500
Rent Payable $2,500
(To adjust for one month’s rent expense)
- Office Supplies Expense: Office Supplies Expense $400
Office Supplies $400
(To adjust for supplies used)
- Depreciation Expense: Depreciation Expense $250
Accumulated Depreciation $250
(To record monthly depreciation on equipment)
- Salary Expense: Salary Expense $300
Salaries Payable $300
(To record unpaid salaries)
Adjusted Trial Balance
| Account | Debit | Credit |
|---|---|---|
| Cash | $34,850 | |
| Equipment | $20,000 | |
| Office Supplies | $100 | |
| Prepaid Insurance | $11,000 | |
| Rent Expense | $32,500 | |
| Salaries Payable | $300 | |
| Repairs Expense | $200 | |
| Utilities Expense | $150 | |
| Dividends | $1,000 | |
| Common Stock | $80,000 | |
| Service Revenue | $85,000 | |
| Accumulated Depreciation | $250 | |
| Total | $205,700 | $205,700 |
Income Statement for December 2019
The income statement summarizes the revenues and expenses for the month of December:
| Revenue | $85,000 |
|---|---|
| Expenses: | |
| Salaries Expense | $4,300 |
| Rent Expense | $2,500 |
| Insurance Expense | $1,000 |
| Depreciation Expense | $250 |
| Repairs Expense | $200 |
| Utilities Expense | $150 |
| Office Supplies Expense | $400 |
| Total Expenses | $8,950 |
| Net Income | $76,050 |
Statement of Retained Earnings for December 2019
The statement of retained earnings reflects the retained earnings after accounting for dividends:
| Beginning Retained Earnings | $0 |
|---|---|
| Add: Net Income | $76,050 |
| Less: Dividends | $1,000 |
| Ending Retained Earnings | $75,050 |
Classified Balance Sheet as of December 31, 2019
The classified balance sheet provides an overview of the company's financial position, categorizing assets and liabilities:
| Assets | |
|---|---|
| Current Assets: | |
| Cash | $34,850 |
| Office Supplies | $100 |
| Prepaid Insurance | $11,000 |
| Total Current Assets | $45,950 |
| Property, Plant, and Equipment: | |
| Equipment | $20,000 |
| Less: Accumulated Depreciation | ($250) |
| Net Equipment | $19,750 |
| Total Assets | $65,700 |
| Liabilities | |
| Current Liabilities: | |
| Salaries Payable | $300 |
| Total Liabilities | $300 |
| Equity | |
| Common Stock | $80,000 |
| Retained Earnings | $75,050 |
| Total Equity | $155,050 |
| Total Liabilities and Equity | $155,350 |
References
- Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2019). Accounting Principles (13th ed.). Wiley.
- Horngren, C. T., Sundem, G. L., & Elliott, J. A. (2014). Introduction to Financial Accounting (10th ed.). Pearson.
- Libby, R., Libby, P. A., & Short, D. G. (2019). Financial Accounting (4th ed.). McGraw-Hill.
- Wild, J. J., & Shaw, K. W. (2019). Financial Accounting (8th ed.). McGraw-Hill.
- Financial Accounting Standards Board (FASB). (2020). Accounting Standards Codification. Available at: https://asc.fasb.org/
- American Institute of CPAs (AICPA). (2021). Accounting Standards. Available at: https://www.aicpa.org/research/standards.html
- International Financial Reporting Standards (IFRS) Foundation. (2020). IFRS Standards. Available at: https://www.ifrs.org/standards/
- Bodie, Z., Kane, A., & Marcus, A. J. (2019). Investments (11th ed.). McGraw-Hill.
- Schroeder, R. G., Clark, M. W., & Cathey, J. M. (2019). Financial Accounting Theory and Analysis: Text and Cases (12th ed.). Wiley.
- Elliott, B. & Elliott, J. (2018). Financial Accounting and Reporting (17th ed.). Pearson.