Week 2 Homework Template Problem 3 2b A Show The Effects Of

Week 2 Homework Templateproblem 3 2b A Show The Effects Of Each Tr

Show the effects of each transaction on the accounting equation. Enter each amount in the proper column. Assume the note payable is to be repaid within the year. REMEMBER: each transaction affects TWO accounts! Use the + or – signs to indicate whether the amount increased or decreased the account. Total up each account in the last line of the worksheet then “check” your work by totaling up Assets, Liabilities and Equity. Put each transaction on a separate line. Remember the accounting equation: assets = liabilities + equity. Note any changes in Retained Earnings on the page below the worksheet. (a) WALZ SERVICE INC. Assets = Liabilities + Stockholders’ Equity Date Cash + Accounts Receivable + Supplies + Equipment = Notes Payable + Accounts Payable + Common Stock + Retained Earnings Revenues – Expenses – Dividends June 1 Totals $ $ Total of All Columns under Assets Total of All columns under Liabilities & Stockholder’s Equity (a) Continued Changes in Retained Earnings: (b) Prepare an Income Statement for June WALZ SERVICE INC. Income Statement For the Month Ended June, 30, 2014 Revenues Account title Amount Expenses Account title Amount Account title Amount Account title Amount Account title Amount Total expenses Amount Net income Amount (Part C is on the next page) (c) Prepare a Classified balance sheet at June 30, 2014 (Remember, assets and liabilities + equity MUST equal). If it doesn’t, there is an error somewhere). WALZ SERVICE Inc. Balance Sheet June 30, 2014 Assets Current assets Account title Amount Account title Amount Account title Amount Total current assets Amount Account title Amount Total assets Amount Liabilities and Stockholders’ Equity Current liabilities Account title Amount Account title Amount Total current liabilities Amount Stockholders’ equity Account title Amount Account title Amount Amount Total liabilities and stockholders’ equity Amount Problem 3-5B is on the next page. (a) Journalize the transactions, including explanations. (Note, enter all accounts in one box. The dates have been included to help with formatting). Remember that every transaction affects TWO accounts! Date Account Titles and Explanation Debit Credit May Part B is on the next page. PROBLEM 3-5B (Continued) Financial Accounting, 6/e, Solutions Manual   (For Instructor Use Only) (b) Post the transactions to the ledger T Accounts Be sure to post the amounts to the correct side of the T-Account! Cash Bal. Accounts Receivable Bal. Supplies Bal. Accounts Payable Bal. Unearned Service Revenue Bal. Common Stock Bal. Service Revenue Bal. Salaries and Wages Expense Bal. Rent Expense Bal. PROBLEM 3-5B (Continued) Prepare a Trial Balance on May 31, 2014. (c) ROYCE CONSULTING Trial Balance May 31, 2014 Account Name Debit Credit Total E4-13. Answer questions A through D. Remember to show your calculations! (Add more space as necessary). (E 4-14 is on the next page). E4-14. Prepare the closing entries at January 31, 2014. (Enter all accounts for each transaction in one box. Dates have been provided). Date Account Titles and Explanation Debit Credit Jan E4-15. Journalize (a) the July transactions and (b) adjusting entries that were made on July 31. Enter all accounts in one box. Dates have been provided. Part A Date Account Titles and Explanation Debit Credit July Part B Date Account Titles and Explanation Debit Credit July E4-16 Prepare the adjusting entries that were made: (a) Enter all accounts in one box. The dates have been included to help with formatting. Date Account Titles and Explanation Debit Credit Aug E4-17 Prepare the income statement and retained earnings statements for the year and the classified balance sheet at August 31. BERE COMPANY Income Statement For the Month Ended August 31, 2014 Revenues Account title Amount Account title Amount Total Revenues Expenses Account title Amount Account title Amount Account title Amount Account title Amount Account title Amount Total expenses Amount Net income Amount (Continued on next page) BERE COMPANY Retained Earnings Statement For the Month Ended August 31, 2014 Retained earnings, September 1, 2011 Amount Add: Account title Amount Total Less: Account title Amount Retained earnings, August 31, 2012 Total BERE COMPANY Balance Sheet August 31, 2014 Assets Current assets Account title Amount Account title Amount Account title Amount Account title Amount Total current assets Amount Account title Amount Total assets Amount Liabilities and Stockholders’ Equity Current liabilities Account title Amount Account title Amount Account title Amount Total current liabilities Amount Stockholders’ equity Account title Amount Account title Amount Amount Total stockholder’s equity Total liabilities and stockholders’ equity Amount Exercise 4-18 is on the next page Exercise 4-18 (a) Prepare the closing entries for the temporary accounts at August 31. (Note, enter all accounts in one box. The dates have been included to help with formatting). Date Account Titles and Explanation Debit Credit Aug

Paper For Above instruction

The assignment involves analyzing multiple financial transactions and preparing essential accounting statements for a fictional company, Walz Service Inc., over a specified period. The tasks include recording the effects of transactions on the accounting equation, preparing an income statement, creating a classified balance sheet, journalizing and posting transactions to ledger T-accounts, preparing trial balances, adjusting entries, and closing entries. Additionally, the assignment covers preparing financial statements such as the income statement, retained earnings statement, and balance sheet at specified periods, ensuring all records comply with generally accepted accounting principles. The entire process emphasizes understanding and applying fundamental accounting concepts related to assets, liabilities, equity, revenues, expenses, and dividends, alongside practical skills in journal entries and financial statement preparation.

Paper For Above instruction

Introduction

This analysis provides a comprehensive overview of key accounting processes and financial statement preparation for Walz Service Inc., illustrating how transactions impact the core accounting equation and how to accurately prepare financial reports. It also highlights the importance of meticulous record-keeping and the application of generally accepted accounting principles (GAAP) in completing each stage of accounting, from initial transaction recording to the final financial statements.

Effects of Transactions on the Accounting Equation

Transactions influence the accounting equation, which states that assets equal liabilities plus stockholders’ equity. Each transaction causes a corresponding change in at least two accounts. For example, if Walz Service Inc. receives cash from customers, assets increase; if the company pays a liability, assets decrease, and so on. Proper recording requires a clear understanding of debits and credits, ensuring that the equation remains balanced after each activity.

Preparation of Financial Statements

Income Statement

The income statement summarizes revenues and expenses to determine net income for the period. It is crucial for assessing company performance and profitability. In this context, revenues earned and expenses incurred during June are listed, and net income is calculated by subtracting total expenses from total revenues. Recognizing revenues and matching expenses appropriately aligns with accrual accounting principles.

Balance Sheet

The classified balance sheet categorizes assets and liabilities into current and long-term sections, presenting a clear financial position at a specific date (June 30, 2014). It confirms that total assets equal the combined total of liabilities and stockholders’ equity, validating the accounting equation's integrity. Proper classification ensures accurate financial analysis and compliance with GAAP.

Journal Entries and Ledger Posting

Recording journal entries involves documenting each transaction with appropriate debit and credit entries alongside explanations. These entries are then posted to ledger T-accounts, which serve as individual records for each account. This step helps track account balances and provides a foundation for preparing trial balances.

Trial Balance, Adjusting, and Closing Entries

The trial balance consolidates the balances of all ledger accounts, ensuring debits equal credits, which indicates accuracy in recording. Adjusting entries are then made at period-end to account for accrued or deferred items, ensuring financial statements reflect the true financial position. Closing entries transfer temporary account balances to retained earnings, preparing accounts for the next period.

Financial Statement Preparation

Final financial statements, including the income statement, retained earnings statement, and balance sheet, are prepared post-adjustments and closing entries. These statements provide stakeholders with insights into profitability, retained earnings, and overall financial health. Ensuring accuracy in these reports is vital for effective decision-making and compliance.

Conclusion

This analysis underscores the importance of systematic recording and reporting processes in accounting. Each step, from initial transaction recording to the final financial statements, contributes to transparent and reliable financial reporting, essential for stakeholder trust and effective management decision-making.

References

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  • Atlas, R. (2018). Financial Statements and Analysis. UpToDate.
  • Investopedia. (2023). Basic Accounting Principles. https://www.investopedia.com/terms/a/accountingprinciples.asp
  • AccountingTools. (2023). What Is the Accounting Equation? https://www.accountingtools.com/articles/what-is-the-accounting-equation.html
  • Kaplan, R. S., & Anderson, S. R. (2018). Time-Driven Activity-Based Costing. Journal of Cost Management.
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