CASE STUDY - THE COMPLETE ACCOUNTING CYCLE

Name: ___________________________________

This Case Study is worth 100 points, or 10% of your final course grade.
This Case Study relates to TCOs E and F, and Chapters 2 and 3.
MAKE SURE TO COMPLETE ALL REQUIREMENTS WHICH ARE LISTED BELOW.
There are 10 sheets in the Workbook, including this one.
All of the information that you need for the project is located in this Workbook.
Requirements
Requirement 1Prepare the Journal Entries in the General Journal
Requirement 2Post Journal Entries to the General Ledger
Requirement 3Prepare a Trial Balance
Requirement 4Prepare the Adjusting Entries
Requirement 5Post Adjusting Entries to the General Ledger
Requirement 6Prepare an Adjusted Trial Balance
Requirement 7Prepare the Financial Statements
Requirement 8Prepare the Closing Entries
Requirement 9Post Closing Entries to the General Ledger
Requirement 10Prepare the Post Closing Trial Balance

Sheet in Workbook
Journal Entries
General Ledger
Trial Balance
Adjusting Entries
General Ledger
Adjusted Trial Balance
Financial Statements
Closing Entries
General Ledger
Post-Closing Trial Balance

Hint for success: Review the Week 2 Lesson prior to starting this project.
There are also hints contained within certain cells on some of the Worksheet tabs.
You can hover over the red pointer at the top right-hand corner of the cell to read the
Hints are provided for the following balances:
1) The debits for the journal entries are on the Journal Entries tab.
2) The credits for the journal entries are on the Journal Entries tab.
3) The cash balance is on the General Ledger tab.
4) The debits for the trial balance are on the Trial Balance tab.
5) The credits for the trial balance are on the Trial Balance tab.
6) The debits for the adjusted trial balance are on the Adjusted Trial Balance tab.
7) The credits for the adjusted trial balance are on the Adjusted Trial Balance tab.
8) Net income for the income statement is on the Financial Statements tab.
9) Retained earnings as of July 31 are on the Financial Statements tab.
10) Total assets for the balance sheet are on the Financial Statements tab.
11) Total liabilities and shareholders' equity for the balance sheet are on the Financial Statements tab.
12) The debits for the post-closing trial balance are on the Post-Closing Trial Balance tab.
13) The credits for the post-closing trial balance are on the Post-Closing Trial Balance tab.

project.
e Worksheet tabs.
f the cell to read the hint.

ments tab.

During its first month of operation, the Melvin Plumbing Corporation, which specializes in residential plumbing,
completed the following transactions.
July 1

Began business by making a deposit in a company bank account of $90,000, in exchange

for 9,000 shares of $10 par value common stock.

July 3

Paid the current month's rent, $5,500.

July 5

Paid the premium on a 1-year insurance policy, $4,800

July 7

Purchased supplies on account from Little Company, $900.

July 10

Paid employee salaries, $3,300

July 14

Purchased equipment from Lake Company, $11,500. Paid $1,500 down and the balance was
placed on account. Payments will be $500.00 per month for 20 months. The first payment is due 8/1.
Note: Use accounts payable for the balance due.

July 15

Received cash for plumbing revenue for the first half of July, $7,700

July 19

Made payment on account to Lake Company, $500.

July 31

Received cash for plumbing revenue for the last half of July, $8,505

July 31

Declared and paid cash dividends of $600

Prepare journal entries to record the July transactions in the General Journal below.
Date
july 1
july 3
july 5
july 7
july 10
july 14

General Journal
Description(Account Name)
Debit
Credit
Cash
90,000
Common Stock
90,000
(Issued stocks for cash)
rent expense
5,500
cash
5,500
(Paid the month's rent with cash)
prepaid insurance
4,800
cash
4,800
(paid insurance in advance)
Supplies
900
accounts payable
900
(purchased supplies on account)
Salary Expense
3,300
cash
3,300
(paid salaries with cash)
Equipment
11,500

This Sheet will be used for Requirements 2, 5, and 9.

Requirement #2:
Post the July journal entries to the following T-accounts and compute ending balances.

beginning
july 15
july 31
bal

Cash (111)
90,000 july 3
7,700 july 5
july 10
8,505 july 14
july 31
july 31
90,005

Revenue (411)
july 15
july 31

5,500
4,800
3,300
1500
500
600

Bal

july 5

Prepaid Insurance (117)

4800

july 3

Rent Expense (511)

5500

bal

4800

bal

5500

july 7

900

Supplies (119)

bal

900

7700
8505

july 10

Salaries Expense (512)

3300

bal

3300

16205

july 14

Equipment (144)
11,500

july 5

Insurance Expense (513)

4,800

bal

11,500

bal

4.800

Accumulated Depreciation-Equipment (145)

July 31
175

July 31
bal

bal

july 19

525

175

Accounts Payable (212)

500
july 7
900
july 14 10,000

July 31
bal

bal

Supplies Expense (514)

525

Depreciation Expense (515)

175
175

10,400

Income Tax Payable (213)

July 31
3200

July 31

Income Tax Expense (516)

3200

bal

3200

bal

Common Stock (311)

july 1 90,000
July 31
bal

3200

Retained Earnings (312)

600
July 31
3105

90,000
bal

Dividends (313
july 31
bal

600
600

2505

2505

Requirement #3:
Prepare a trial balance for July in the space below.
Melvin Plumbing Corporation
Trial Balance
July 31
Dr.
Cash
Prepaid Insurance
Supplies
Equipment
Accounts Payable
Common Stock
Dividends
Salaries Expense
Rent Expense
Revenue

Cr.
90,005
4,800
900
11,500
10,400
90,000
600
3,300
5,500
16,205

116,605

116,605

Requirement #4:
Prepare adjusting entries using the following information in the General Journal
below. Show your calculations!
a) One month's insurance has expired.
b) The remaining inventory of supplies is $375.
c) The estimated depreciation on equipment is $175.
d) The estimated income taxes are $3,200.
Date
a
b
c
d

General Journal
Description (Account Name)
Insurance expense
Prepaid insurance

Debit

Credit
400
400

Supplies Expense
Supplies

375

Depreciation Expense
Accumulated Depreciation

175

Income Tax Expense

Income Tax Payable

375
175
3,200
3,200

Requirement #5:
Post the adjusting entries to the General Ledger T-accounts and compute adjusted balances.
Just add to the balances that are already listed.

Requirement #6:
Prepare an adjusted trial balance in the space below.
Melvin Plumbing Corporation
Adjusted Trial Balance
July 31
Account
Cash
Prepaid Insurance
Supplies
Equipment
Accumulated Depreciation
Accounts Payable
Income Tax Payable
Common Stock
Dividend
Retained Earnings
Revenue
Rent Expense (Debit)
Salaries Expense (Debit)
Insurance Expense (Debit)
Supplies Expense (Debit)
Depreciation Expense (Debit)
Income Tax Expense (Debit)

Dr

Cr
90005
4400
375
11500
175
10400
3200
90000
600
16205
5500
3300
400
525
175
3200
119980

119980

Requirement #7:
Prepare the financial statements for the Melvin Plumbing Corporation as of July 31 in the space below.
You will only be preparing the income statement, statement of retained earnings, and the balance sheet.
The statement of cash flows is a required financial statement, but is not required for this case study.
Melvin Plumbing Corporation
Income Statement
For the Month Ending July 31
Dr.
Cr.
Revenues:
Revenue
$ 16,205
Expenses:
Rent Expense
Salaries Expense
Insurance Expense
Supplies Expense
Depreciation Expense
Income Tax Expense
Total Expenses
Net Income

5,500
3,300
400
525
175
3,200
-13,100
$ 3,105

Melvin Plumbing Corporation

Statement of Retained Earnings
For the Month Ending July 31
Retained Earnings, July 1
Add: Net Income
Subtotal
Less: Dividends
Retained Earnings, July 31

3,105

-600
$ 2,505

n the space below.

d the balance sheet.
this case study.
Melvin Plumbing Corporation
Balance Sheet
July 31
Assets:
Cash
Supplies
Prepaid Insurance
Equipment
Less: Accum. Depr.
Total Assets

$ 90,005
375
4,400
11,500
-175
106,105

Liabilities:
Accounts Payable
Income Tax Payable
Total Liabilities
Stockholders' Equity:
Common Stock
Retained Earnings
Total Stockholders' Equity
Total Liabilities and
Stockholders' Equity

urrent Assets:
Cash
Accounts Receivable
Pepaid Rent
Rent Expense
Supplies Expense
Insurance Expense
Non Current Assets
Equipment less dep
Total Assets:

10,400
3,200
13,600
90,000
2,505
92,505
$106,105

250000
150000
120000
24000
10000
12000
333000
899000

Liabilities:
Accounts Payable
168000
Unearned Service Revenue 25000
Long term Debt
300000
Total Liabilities
Stockholders' Equity:

493000

Common Stock
250000
Retained Earnings
110000
Service Revenue
165000
Total Stockholders' Equity 525000
Total Liabilities and
Stockholders' Equity

1453000

Assets:
Current Assets:
Cash
Accounts Receivable
Pepaid Rent

250000
150000
120000

Non Current Assets

Equipment less dep
Total Assets:

333000
899000

Liabilities:
Accounts Payable
168000
Unearned Service Revenue 25000
Long term Debt
300000
Total Liabilities

493000

Stockholders' Equity:
Common Stock
Retained Earnings

250000
110000

Total Stockholders' Equity 360000

Total Liabilities and
Stockholders' Equity

853000

Requirement #8:
Prepare the closing entries at July 31 in the General Journal below.

Date
july 31

july 31

july 31

General Journal
Description (Account Name)
Debit
Credit
Revenues
16,205
Income Summary
16,205
(to close revenues to income Summary)
Income Summary
Salaries Expense
Rent expense
Insurance Expense
Supplies Expense
Depreciation Expense
Income Tax Expense
(to close expenses to income summary)
Income Summary
Retained earnings

13,100
3300
5500
400
525
175
3200
2505
2505

To close Retained Earnings to Income Summary

July 31

Retained Earnings
Dividends

600
600

To close dividends

Requirement #9:
Post the closing entries to the General Ledger T-accounts and compute ending balances.
Just add to the adjusted balances already listed.

Requirement #10:
Prepare a post-closing trial balance as of July 31 in the space below.
Melvin Plumbing Corporation
Post-Closing Trial Balance
July 31
Dr.
Cash
90,005
Supplies
375
Prepaid Insurance
4,400
Equipment
11,500
Accumulated depreciation
Accounts Payable
Income Tax Payable
Common Stock
Retained Earnings
106,280

Cr.

175
10,400
3,200
90,000
2,505
106,280

Case Study 1 Rubric

Please note that this rubric provides a general guideline, but you can s
and the maximum number of points for that step, depending on the acc
of your work.
Criteria

Step 1
Prepared
Journal
Entries (20
points)

Outstanding
Journal
entries use
accurate
accounts and
amounts; and
debits and
credits are
used
correctly.

20 points
Posting is
correct,
leading to
Posted to
the General accurate
Ledger (10 account
balances.
points)
10 points
Correct
Step 3
account
Prepared a names and
Trial Balance balances so
(10 points) to arrive at a
correct trial
balance.

Step 2

Step 4
Prepared
Adjusting
Journal
Entries (10
points)

10 points
Journal
entries use
accurate
accounts and
amounts; and
debits and
credits are
used
correctly.

10 points
Posting
is
Steps 5
correct,
and 6
leading to an
Posted and accurate trial
Prepared an balance.
Unadjusted
10 points
Trial Balance

Good

Poor

Very Poor

Minor errors
Errors in
Evidence of an attempt to complete
such as
computations that the journal entries.
incorrect
resulted in
account names incorrect amounts
or credits listed to be debited and
prior to debits. credited.

16 points
Posting is
mostly correct,
but minor
errors are
evident.

12 points
8 points
Posting has
Posting is done poorly, but does show
several errors that evidence of an attempt to complete.
resulted in
incorrect account
balances.

8 points
6 points
4 points
Some minor
Errors in
Evidence of an attempt to complete
errors such as computations that the trial balance.
incorrect
resulted in
account names incorrect amounts
or incorrect
to be debited and
totals due to
credited.
errors in prior
steps.
8 points
Journal entries
mostly use
accurate
accounts and
amounts; and
debits and
credits are
used correctly.

6 points
Journal entries
have some errors
in use of accounts
and amounts; and
debits and credits
are only used
somewhat
correctly.

4 points
Journal entries have some errors in
use of accounts and amounts; and
debits and credits are not used
correctly.

8 points
Posting is
mostly correct,
leading to a
mostly correct
trial balance.

6 points
Posting has
several errors,
leading to a trial
balance with
several errors.

4 points
Posting is done poorly or not at all,
leading to inaccurate or no trial
balance.

8 points

6 points

4 points

Step 7
Prepared
Financial
Statements
(20 points)

Step 8
Prepared
Closing
Journal
Entries (10
points)

Steps 9
and 10
Posted and
Prepared
Post-Closing
Trial Balance
(10 points)

All three
Financial
Statements
are prepared
accurately
and in an
appropriate
format.

Two of the
One of the three
three financial Financial
Statements are Statements is
prepared
prepared
accurately, and accurately and
mostly in an
mostly in an
appropriate
appropriate format.
format. One
Two statements
statement has have some errors.
some errors.

One or fewer of four Financial

Statements are prepared accurately
and mostly in an appropriate format.
Three or all statements have some
errors.

20 points
Journal
entries use
accurate
accounts and
amounts; and
debits and
credits are
used
correctly.

16 points
Journal entries
mostly use
accurate
accounts and
amounts; and
debits and
credits are
used correctly.

12 points
Journal entries
have some errors
in use of accounts
and amounts; and
debits and credits
are only somewhat
used correctly.

8 points
Journal entries have some errors in
use of accounts and amounts; and
debits and credits are not used
correctly.

10 points
Posting is
correct,
leading to an
accurate trial
balance.

8 points
Posting is
mostly correct,
leading to a
mostly correct
trial balance.

6 points
Posting has
several errors,
leading to a trial
balance with
several errors.

4 points
Posting is done poorly or not at all,
leading to inaccurate or no trial
balance.

10 points

8 points

6 points

4 points
Total Points
Earned Out of
100 Points

but you can score anywhere between 0

ding on the accuracy and completeness
Points
Awarde
d