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    4 Completing The Accounting Cycle Part

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    1. A CPA audited a company's balance sheet and found that it had been prepared from a trial balance rather than an adjusted trial balance, missing several key adjustments to accounts. 2. The adjustments that were missed included unbilled services, supplies on hand, prepaid insurance, unpaid expenses, and unrecorded depreciation expenses. 3. Students were instructed to prepare a correct balance sheet for the company including the missed adjustments, and to determine if the terms of the company's bank loan were met.

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    4 Completing The Accounting Cycle Part

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    Talion
    56 views1 page
    1. A CPA audited a company's balance sheet and found that it had been prepared from a trial balance rather than an adjusted trial balance, missing several key adjustments to accounts. 2. The adjustments that were missed included unbilled services, supplies on hand, prepaid insurance, unpaid expenses, and unrecorded depreciation expenses. 3. Students were instructed to prepare a correct balance sheet for the company including the missed adjustments, and to determine if the terms of the company's bank loan were met.

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    4 Completing the Accounting Cycle Part (58)

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    1. A CPA audited a company's balance sheet and found that it had been prepared from a trial balance rather than an adjusted trial balance, missing several key adjustments to accounts. 2. The adjustments that were missed included unbilled services, supplies on hand, prepaid insurance, unpaid expenses, and unrecorded depreciation expenses. 3. Students were instructed to prepare a correct balance sheet for the company including the missed adjustments, and to determine if the terms of the company's bank loan were met.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    56 views1 page

    4 Completing The Accounting Cycle Part

    Uploaded by

    Talion
    1. A CPA audited a company's balance sheet and found that it had been prepared from a trial balance rather than an adjusted trial balance, missing several key adjustments to accounts. 2. The adjustments that were missed included unbilled services, supplies on hand, prepaid insurance, unpaid expenses, and unrecorded depreciation expenses. 3. Students were instructed to prepare a correct balance sheet for the company including the missed adjustments, and to determine if the terms of the company's bank loan were met.

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    4-58 CH A PT E R 4 Completing the Accounting Cycle

    Jenna presented the balance sheet to the bank’s loan officer on January 2, 2021, confident that the
    company had met the terms of the loan. The loan officer was not impressed. She said, “We need financial
    statements audited by a CPA.” A CPA was hired and immediately realized that the balance sheet had
    been prepared from a trial balance and not from an adjusted trial balance. The adjustment data at the
    balance sheet date consisted of the following.
    1. Unbilled janitorial services performed were $3,700.
    2. Janitorial supplies on hand were $2,500.
    3. Prepaid insurance was a 3-year policy dated January 1, 2020.
    4. December expenses incurred but unpaid at December 31, $500.
    5. Interest on the bank loan was not recorded.
    6. The amounts for property, plant, and equipment presented in the balance sheet were reported net
    of accumulated depreciation (cost less accumulated depreciation). These amounts were $4,000 for
    cleaning equipment and $5,000 for delivery trucks as of January 1, 2020. Depreciation for 2020,
    still unrecorded, was $2,000 for cleaning equipment and $5,000 for delivery trucks.

    Instructions
    With the class divided into groups, answer the following.
    a. Prepare a correct balance sheet.
    b. Were the terms of the bank loan met? Explain.

    Communication Activity
    CT4.6 The accounting cycle is important in understanding the accounting process.

    Instructions
    Write a memo to your instructor that lists the steps of the accounting cycle in the order they should be
    completed. End with a paragraph that explains the optional steps in the cycle.

    All About You


    CT4.7 Companies prepare balance sheets in order to know their financial position at a specific point in
    time. This enables them to make a comparison to their position at previous points in time, and gives them
    a basis for planning for the future. In order to evaluate your financial position, you need to prepare a per-
    sonal balance sheet. Assume that you have compiled the following information regarding your finances.
    (Note: Some of the items might not be used in your personal balance sheet.)

    Amount owed on student loan balance (long-term) $ 5,000


    Balance in checking account 1,200
    Certificate of deposit (6-month) 3,000
    Annual earnings from part-time job 11,300
    Automobile 7,000
    Balance on automobile loan (current portion) 1,500
    Balance on automobile loan (long-term portion) 4,000
    Home computer 800
    Amount owed to you by younger brother 300
    Balance in money market account 1,800
    Annual tuition 6,400
    Video and stereo equipment 1,250
    Balance owed on credit card (current portion) 150
    Balance owed on credit card (long-term portion) 1,650

    Instructions
    Prepare a personal balance sheet using the format you have learned for a classified balance sheet for a
    company. For the capital account, use Owner’s Capital.

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