Exclusions
In one page, create exclusions page for the below project:
What are the boundaries of the project What is not going to be included in the project This helps the project manager to set boundaries on the project scope. For example, on our software development project, we might exclude some specific functionality on the program. Let’s say Internet access for credit card payments will not be included in the programming for this project. You should have at least 10–15 exclusions.
Project: Children’s Library Reading RoomBA 211 Financial Accounting
Comprehensive Group Project – Phase I
Form a group of 3-4 members
Complete excel worksheet using the directions
Complete the cover sheet with all members names
Complete the original JE’s
You may need beginning balances to complete entries
Post to the ledger
Complete the unadjusted TB
Complete the adjusting entries
You may need beginning balances to complete entries
Post to the ledger
Complete the closing entries
Post to the ledger
Turn in excel worksheet via Canvas
ONLY one member of the team needs to submit the worksheet via Canvas
INTRODUCTION
On Dec 1st of this year, you have been hired as Chief Financial Officer (“CFO”) of a business called Beavers Entertainment Incorporated (“GoBeavs”). The company plans, organizes, and administers various music festivals, one of which is called Civil War Music Fest (“CWMF”) held at the Reser Stadium in Corvallis, Oregon.
Part of your job as the CFO of the GoBeavs is to record the transactions related to running the festival. You will also be responsible for fixing errors, including unrecorded transactions.
The festival will begin Friday, Dec. 12th and run through Sunday, Dec. 14th. The owner of GoBeavs has contracted with various bands to play at your festival. Among them include Maron 5, SOS, Kid Cudi, Foster the People, and Major Lazer.
You will provide a campground adjacent to the main festival as well as other amenities.
Items worth noting:
GoBeavs has a 12/31 year-end.
GoBeavs rounds all numbers to the nearest $1.
The General Journal (GJ) is where you will record the journal entry (JE) associated with each individual transaction. Note: not all transactions or events require a JE.
The General Ledger (G/L) is where you post the results of any JE. Each G/L account is in “standard account form” which is a more formal format of a typical T-account.
Note: the headers of the individual G/L accounts do not indicate whether the account is a normal debit or credit balance. Use the information on the trial balance worksheets to determine whether an account has a normal debit or credit balance.
The Adjusting Trial Balance (ATB) and Closing Trail Balance (CTB) reflect the unadjusted, adjusted, and closing balances of each G/L account. You will populate information from the individual G/L accounts into these worksheets which will ultimately help you produce the financial statements for the second phase of the project.
The Financial Statements (F/S) reflect the summary information about GoBeavs. They are prepared using the information from the Adjusted TB. This is part of the second phase of the project.
An example of how to record a JE and post it to the G/L is already in the GJ.
Post JE’s to the G/L at the end of each transaction date to keep the G/L balances updated.
All JEs and G/L postings are to be typed into the document.
You must work through the problems sequentially; do not skip around doing random JEs. Do not “divide-and-conquer”.
TRANSACTIONS AND EVENTS
Record the JEs in the GJ associated with each transaction below. – Note: be sure to also post each JE into the G/L.
Monday, Dec 1st
T&E-01… GoBeavs issues 6,500 shares of additional common stock for $65,000 from stockholders. There is $10 par value associated with GoBeavs’ common stock. The cash was deposited into GoBeavs’ checking account.
– Note: this JE and the related postings to the G/L have already been done for you. Review these to gain an understanding of what is expected.
T&E-02… You discover that GoBeavs failed to pay salaries related to last year’s work by employees. GoBeavs pays the amount accrued in the salaries and wages payable account. The cash was paid out of GoBeavs’ checking account.
T&E-03… You discover that the accounting records still show long-term assets that were sold January 1st. The building and land were sold for $550,000 cash on January 1st. The cash was deposited into GoBeavs’ checking account. Book the entry that SHOULD HAVE been recorded, but date it as of today. Make sure the memo entry indicates the original date of the transaction.
T&E-04… You discover that on May 1st, 2015, GoBeavs borrowed $575,000 from a bank but forgot to record the transaction. The cash was deposited in GoBeavs’ checking account. The 2-year note specified 4% annual interest payable on April 30th of each year. Of the total amount borrowed, $200,000 of the principal is to be paid on April 30th of 2016 and the remainder is due on April 30th, 2017 (i.e. the maturity date). All interest payable is to be paid in cash at the maturity date. Book the entry that SHOULD HAVE been recorded, but date it as of today. Make sure the memo entry indicates the original date of the transaction.
Note: Don’t forget to accrue interest during the adjusting entries
T&E-05… You discover that GoBeavs issued bonds at 104.1 on July 1st of this year and forgot to record the entry. The cash was deposited in GoBeavs checking account. The bonds have a face value of 100,000, a stated interest rate of 9%, and a maturity period of 5 years (when the full principal amount will be paid). Interest is to be paid semi-annually (i.e. every Dec, 31st and June 30th). The market rate of the bonds issued was 8%. Book the entry that SHOULD HAVE been recorded, at the date of issuance, but date it as of today. Make sure the memo entry indicates the original date of the transaction.
T&E-06… You discover that GoBeavs failed to record the issuance of 25,000 shares of preferred
stock on February 1st. The cash was deposited in GoBeavs checking account. The preferred stock had a par value of $10.00 and a stated rate of 8%. The preferred stock was issued for $850,000 cash. Dividends are cumulative. Book the entry that SHOULD HAVE been recorded at issuance, but date it as of today. Make sure the memo entry indicates the original date of the transaction.
Tuesday, Dec. 2nd
T&E-07… You discover that GoBeavs paid $280,000 cash (from its checking account) for various long-lived assets on February 1st. These assets are appraised at the following fair values:
Land: $180,000
Building: $75,000
Equipment: $45,000
The building was assessed to have a useful life of fifteen (15) years, and the equipment was assessed to have a useful life of six (6) years. GoBeavs believes the building and the equipment to have a residual value of zero. GoBeavs uses the straight-line depreciation method to record depreciation. Book the entry that SHOULD HAVE been recorded, at the date of purchase, but date it as of today. Make sure the memo entry indicates the original date of the transaction.
Note: Don’t forget to complete the adjusting entries
Wednesday, Dec. 3rd, 2015
T&E-08… GoBeavs pays $9,000 cash (from its checking account) for office supplies.
Thursday, Dec 4th, 2015
T&E-09… GoBeavs pays cash (from its checking account) for the following investments:
3,000 shares (ABC Corp.) $150,000
5,000 shares (XYZ Corp.) $125,000
GoBeavs treats these investments as Trading Securities.
T&E-10… GoBeavs collects $70,000 cash from advance ticket sales, and deposits the proceeds into its checking account. A portion of the advance ticket sale will be earned in December and a portion in March of next year.
Thursday, December 11th, 2015
T&E-11… The remainder of one-month prepaid rent contract that GoBeavs entered into last month for use of Reser Stadium and campground has been used up.
T&E-12… GoBeavs paid $20,000 cash (from its checking account) to an outside repairman to fix equipment that it sold under warranty to a buyer.
Friday, December 12th, 2015
T&E-13… GoBeavs enters into another contract to rent Reser Stadium and campground paying cash in advance of $48,000 from its checking account for PrePaid Rent..
Friday, December 12th, 2015
T&E-14… You discover that GoBeavs purchased equipment on August 1st of this year by issuing a $365,000 long-term note payable to the vendor for the full purchase price of the equipment. The vendor is charging you zero interest on the note. The equipment was assessed to have a useful life of five (5) years, and a residual value of $10,000. GoBeavs uses the straight-line depreciation method to record depreciation expense. Book the entry that SHOULD HAVE been recorded, at the purchase date, but date it as of today. Make sure the memo entry indicates the original date of the transaction.
Note: Don’t forget to complete the adjusting entries
Monday, December 15th – 17th, 2015
T&E-15… GoBeavs Purchases the following inventory (t-shirts) on-account:
December 15th: 14,000 units at $14.00 per unit
December 16th: 38,000 units at $12.00 per unit
December 17th : 20,000 units at $10.50 per unit
GoBeavs adds the inventory (above) to its existing inventory of 55,000 units purchased last month at a price of $12.50 per unit. GoBeavs utilizes the FIFO method.
Monday, December 22nd, 2015
T&E-16… Total cash received “at the gate” from concert ticket sales totaled $625,000. GoBeavs deposited the proceeds into its checking account. Ticket sales are considered Service Revenue.
T&E-17… GoBeavs sold 100,000 t-shirts on-account at a price of $35 per unit. GoBeavs uses the perpetual inventory system of accounting and the FIFO cost accounting method. T-shirt sales are considered Sales Revenue.
Note – Don’t forget there are two journal entries related to this sale. The sale and the cost.
T&E-18… Upon closer examination of the sales on account (above), GoBeavs estimates that 3% of these sales will be deemed uncollectible and records the transaction using the allowance method of accounting for bad debts.
T&E-19… GoBeavs receives a $35,000 invoice from Honey Bucket for its toilet and sanitation services. GoBeavs will pay the invoice next month.
T&E-20… GoBeavs accrues employee salaries expense in the amount of $400,000, of which $225,000 is paid in cash (from its checking account), and the remainder is to be paid next month.
Friday, December 26th, 2015
T&E-21… GoBeavs collects $1,200,000 of accounts receivable, and deposits the proceeds into its checking account.
T&E-22… GoBeavs receives notification that $20,000 worth of accounts receivable is uncollectible.
T&E-23… GoBeavs pays off the balance in accounts payable using cash from its checking account.
T&E-24… The Board of Directors of GoBeavs declare a cash dividend of $400,000 payable on January 6th of the following year..
Note: part of this dividend is associated with the mandatory preferred stock dividend; the remainder is for common shareholders.
T&E-25… The Board of Directors of GoBeavs declared a 3 for 1 common stock split (effective immediately).
Hint: make sure you at least write a “memo” entry in the GJ documenting this event.
T&E-26… GoBeavs sells 1,700 shares of ABC Corp. stock for $95,000 cash.
T&E-27… GoBeavs earned 5% interest on its Dec. 31st balance in its savings account. The cash was automatically deposited into the savings account that same day.
ADJUSTING JOURNAL ENTRIES
Input the current balance from each G/L account in the “Unadjusted Balances” column of the Adjusting Trial Balance.
Note: make sure your total debits equal your total credits.
Complete the following adjusting journal entries (AJEs) below.
Note: the purpose of AJEs is to ensure the balances in the individual G/L accounts is reasonably correct.
Wednesday, December 31st, 2015
Don’t forget there might be additional adjusting entries due to the previous transactions. Assure you have included all the adjusting entries in addition to the items listed below.
AJE-01… GoBeavs had $1,000 worth of supplies on hand on December 31st. GoBeavs typically records any use of supplies as Miscellaneous Expense.
AJE-02… Based on the aging of its accounts receivable, GoBeavs determined that the balance in the Allowance for Bad Debts should be $150,000.
AJE-03… GoBeavs historically experiences warranty claims on its t-shirt sales equal to 2.5% of sales revenue.
AJE-04… GoBeavs received notification that a lawsuit was filed against GoBeavs on December 26th for a product liability issue. The lawsuit requested damages of $500,000. The lawyers for GoBeavs determined that it is reasonably possible that GoBeavs will be found at fault in this matter and can not estimate the loss.
AJE-05… GoBeavs discovered that the petty cash lockbox was empty with no receipts documenting usage of petty cash. Upon further investigation, you find that the employee responsible for safeguarding the lockbox stole the cash and “skipped town”. You record the theft as Miscellaneous Expense.
AJE-06… After conducting a physical inventory count, GoBeavs discovers that the replacement value of inventory is $40.00 per unit.
– Hint: make sure you at least write a “memo” entry in the GJ documenting this event
AJE-07… As of December 31st, ABC Corp.’s stock is trading at $40 per share; XYZ Corp.’s stock is trading at $35 per share.
AJE-08… GoBeavs determines its tax liability to be $65,000 as of December 31st. It will pay these taxes in February of each year.
AJE-09… GoBeavs recognizes depreciation expense on the long-lived assets.
AJE-10… GoBeavs recognizes rent expense for 70% of the prepaid rent during the month of December.
AJE-11… Now that the December concert has occurred, GoBeavs recognizes the $27,000 portion in unearned revenue as earned service revenue and the remainder is for a concert that GoBeavs intends to host in March of next year.
AJE-12… GoBeavs determines the interest on the note payable. The interest will be paid next month.
AJE-13… GoBeavs determines the interest on the bonds payable. The payment comes out of GoBeavs checking account.
Note: do not forget to amortize any premium or discount on bonds payable.
For each G/L account on the Adjusting Trial Balance, input the total amount of adjusting
entries under the column “Adjusting Journal Entries”.
— Note: Check to make sure the total debits equal to the total credits in the “Adjusting Journal Entries” column of the Adjusting Trial Balance.
CLOSING JOURNAL ENTRIES
Complete the appropriate closing entries in the G/J and post to the G/L. Record the closing journal entries for all temporary accounts (including dividends). Be sure to post the closing entries to the G/L.
Hint: there should be three separate CJEs; one for revenue/gains, expenses/losses, and dividends.
Finish the closing trial balance
Final Project Results Phase One:
Please post one group completed excel worksheet via Canvas.
~~~~~~~~~~ END PART 1 ~~~~~~~~~~
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