Posted: August 6th, 2022

Business Accounting

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Graded Project
GRADED PROJECT
Project Goal
The goal of this graded project is to create the following financial statements for J & L
Accounting, Inc.:
n Balance sheet
n Income statement
n Statement of retained earnings
n Post-closing trial balance
The financial statements must be created in one Microsoft Word document (.doc or .docx
file). Alternatively, an Excel workbook may be used (.xls or .xlsx file). The Word or Excel
file will be uploaded for grading.
Instructions
Read the following instructions thoroughly before beginning your work to get familiar with
the project. Students who start on the project right away, thinking they’ll save time, tend to
get stuck and spend more time working through the project than is necessary. The material you need to know in order to complete the project has been covered in the textbook
and the assigned exercises. If you understand the chapters and completed the assigned
homework problems, you should have no problem with the project.
The project is to be done by hand with a pencil and paper, using the blank forms provided.
At the end of the project are instructions for creating and uploading the financial statements in
a Word or Excel file for grading.
Note: The formatting of financial statements is important. They follow Generally Accepted
Accounting Principles (GAAP), which creates a uniformity of financial statements for
analyzing. This allows for an easier comparison, as all businesses follow GAAP. The
financial statements should be created exactly as shown or described in the textbook.
Incorrect formatting will result in a loss of points.
Debits equal credits is a fundamental principle of accounting that must not be violated.
Debits not equaling credits allows for “cooking the books,” which means presenting false
information. It also allows for embezzlement, which is theft by management or employees. If debits don’t equal credits, the cause may be a lack of understanding of accounting
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Graded Project
principles or a lack of focus and concentration when making journal entries, posting to
ledger accounts, or completing math. Remember—instructors are available to help you
with material you may be struggling with.
Mistakes are best corrected by going back over the work until the error is found. The
accounting equation must balance on the balance sheet. This is another fundamental
principle of accounting that can’t be violated. When the equation doesn’t balance and the
numbers are “fudged,” this is easily detectable by someone who knows accounting. If
your debits equal your credits and you understand which general ledger accounts belong
on which financial statements, then the accounting equation should balance.
The following financial statements are provided from the prior accounting period for J & L
Accounting, Inc.:
a. Post-closing trial balance
b. Balance sheet
c. Income statement
d. Statement of retained earnings
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Graded Project
J & L Accounting, Inc.
Post-Closing Trial Balance
December 31, 2017
BALANCE
ACCOUNT TITLE DEBIT CREDIT
Cash, Business Checking $20,500.00
Accounts Receivable
Prepaid Rent
Vehicles 48,000.00
Accumulated Depreciation, Vehicles $12,000.00
Equipment 3,600.00
Accumulated Depreciation, Equipment 600.00
Accounts Payable
Common Stock 38,000.00
Retained Earnings 21,500.00
Dividends
Service Revenue
Advertising Expense
Rent Expense
Office Supplies Expense
Telephone Expense
Utilities Expense
Depreciation Expense
TOTALS $72,100.00 $72,100.00
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J & L Accounting, Inc.
Balance Sheet
As of December 31, 2017
ASSETS
Cash, Business Checking $20,500.00
Accounts Receivable 0.00
Prepaid Rent 0.00
Vehicles $48,000.00
Less: Accumulated Depreciation, Vehicles 12,000.00 36,000.00
Equipment 3,600.00
Less: Accumulated Depreciation, Equipment 600.00 3,000.00
TOTAL ASSETS $59,500.00
LIABILITIES
Accounts Payable 0.00
TOTAL LIABILITIES $0.00
STOCKHOLDERS’ EQUITY
Common Stock $38,000.00
Retained Earnings 21,500.00
TOTAL STOCKHOLDERS’ EQUITY $59,500.00
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY $59,500.00
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Graded Project
J & L Accounting, Inc.
Income Statement
For the Month Ending December 31, 2017
REVENUES
Service Revenue $10,275.00
EXPENSES
Advertising Expense $2,300.00
Rent Expense 1,000.00
Office Supplies Expense 300.00
Telephone Expense 750.00
Utilities Expense 3,200.00
Depreciation Expense 1,100.00
TOTAL EXPENSES 8,650.00
NET INCOME $1,625.00
J & L Accounting, Inc.
Statement of Retained Earnings
For the Month Ending December 31, 2017
Retained Earnings, December 1, 2017 $19,875.00
Add: Net Income 1,625.00
Subtotal 21,500.00
Less: Dividends 0.00
Retained Earnings, December 31, 2017 $21,500.00
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Graded Project
1. Using the following blank forms (make as many copies as necessary), set up the
accounts for the general ledger and insert the beginning balances for the accounts
from the post-closing trial balance. The balances from the post-closing trial balance
become the beginning balances of the accounts for the next account period.
DATE ITEM
POST
REF. DEBIT CREDIT BALANCE
DEBIT CREDIT
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DATE ITEM
POST
REF. DEBIT CREDIT BALANCE
DEBIT CREDIT
2. Journalize the following transactions in the general journal using the following
blank form (make as many copies as needed). Each journal entry’s debits should
equal its credits. This is a fundamental GAAP that can’t be violated. (A journal entry
error, such as posting $1,010 instead of $1,100, can be corrected at the adjusting/
correcting journal entries step.)
a. On January 1, 2018, a payment in cash for $12,000 is made for prepaying
rent for the entire year 2018.
b. On January 4, 2018, accounting services are performed and payment is
received in cash for the amount of $1,900.
c. On January 9, 2018, a payment in cash for advertising is made in the
amount of $850.
d. On January 10, 2018, office supplies are purchased in the amount of $75
with cash.
e. On January 14, 2018, accounting services are performed and payment is
received in cash for the amount of $2,725.
f. On January 20, 2018, the telephone bill for the amount of $660 is received
and paid with cash.
g. On January 20, 2018, the utilities bill for $2,925 is received. The bill won’t
be paid until it’s due on February 15, 2018.
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h. On January 27, 2018, accounting services are performed on account in the
amount of $3,750.
i. On January 28, 2018, a payment in cash for $1,500 is made for a bill from
an advertising agency.
DATE ACCOUNTS POST REF. DR. CR.
3. Post the general journal entries from the journal to the corresponding general ledger accounts, paying particular attention to whether they’re debits or credits. Use
the Post Ref. column to ensure that each line item of the journal entries is posted
correctly to each general ledger account. Posting from the journal to the general
ledger is simply rearranging the information. If the debits equal the credits for a
particular journal entry and the information is posted correctly, the total of the debits should equal the total of the credits in the general ledger.
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Graded Project
4. Calculate the balances in the general ledger accounts, running the numbers
several times for accuracy. Often, debits won’t equal credits on the trial balance
because a hand-held calculator is used and the math is done only once. Using
a hand-held calculator can introduce errors. This is why an Excel spreadsheet is
recommended. However, if a hand-held calculator is all that’s available to you, be
sure to do the math enough times that you know the calculations are accurate. To
calculate the balances in the ledger accounts, do the following:
n Add the debits.
n Add the credits.
n Subtract the larger amount from the other, or, alternatively, keep the running
balance of the amount in the account and whether it’s a debit or credit on
the ledger.
5. Create an unadjusted trial balance from the balances in the general ledger
accounts. If the debit and credit columns are unequal, an error has been made and
must be found and corrected. See Section 1.3 for an example of an unadjusted trial
balance. Use the following blank form.
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ACCOUNT DEBIT CREDIT
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6. Journalize the following adjusting journal entries in the general journal, being sure
that the debits equal the credits:
a. Calculate and make the adjustment for the amount of prepaid rent that has
been used.
b. Make an adjusting journal entry in the amount of $1,000 for depreciation of
the vehicles.
c. Make an adjusting journal entry in the amount of $100 for depreciation of the
equipment.
7. Post the adjusting journal entries to the respective general ledger accounts, again
being sure that the postings are to the correct debit or credit side and using the
Post Ref. column.
8. Calculate the new balances in the general ledger accounts. Create an adjusted
trial balance from the balances in the general ledger accounts using another copy
of the form used to create the unadjusted trial balance. See Exhibit 3-3 in your
textbook for an example of an adjusted trial balance. Make sure the math is correct
and that the debit column is equal to the credit column. If not, don’t continue until
the error has been found.
9. Create the income statement for J & L Accounting, Inc. using the information
from the adjusted trial balance. Use the following blank form to create the income
statement. Its format should be the same as that of the statement provided at the
beginning of the project for the prior accounting period.
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Graded Project
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Graded Project
10. Create the closing journal entries in the general journal to close the revenue,
expense, and dividend accounts to the retained earnings account, paying attention
to debits equaling credits.
11. Post the closing journal entries to the respective general ledger accounts.
12. Calculate the balances in the general ledger accounts.
13. Create a post-closing trial balance from the balances in the general ledger
accounts using the same blank form as used for the unadjusted trial balance. Your
post-closing trial balance should be in the same format as the post-closing trial balance provided at the beginning of the project for the prior accounting period. Make
sure the math is correct and that the debit column is equal to the credit column. If
not, don’t continue until the error has been found.
14. Create the balance sheet for J & L Accounting, Inc. using the information from the
post-closing trial balance. If the debits equal the credits from the previous work and
the closing entries were made properly, then the accounting equation should balance on the balance sheet. If the assets don’t equal the liabilities plus stockholders’
equity, an error has been made that needs to be corrected. The balance of the
accounting equation is another fundamental GAAP principle that can’t be violated.
Use the following form to create the balance sheet. Its format should be the same
as that of the statement provided at the beginning of the project.
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Graded Project
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15. Create the statement of retained earnings for J & L Accounting, Inc. using the
ending balance from the statement of retained earnings from the prior period and
the net income from the income statement for the January accounting period. (No
dividends were paid out during the month of January.) Follow the same format from
the statement of retained earnings at the beginning of the graded project for the
prior accounting period using the blank form that follows.
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Graded Project
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Preparing Statements for Submission
Having created the balance sheet, the income statement, the statement of retained
earnings, and the post-closing trial balance on the blank forms that were provided, the
financial statements must now be typed up in a Microsoft Word document and saved as a
.doc or .docx file. Microsoft Excel can also be used (saving the file with the extension .xls or
.xlsx).
Each financial statement should be on its own page (or worksheet). The name of the file
should include your student ID number and the graded project exam number, such as
“21512345_061468.docx” as an example.
Insert tables in the Word document if you feel you need them to format the financial
statements. Alternatively, space and tab in Word to get the formatting of the statements
set up correctly.
Formatting is important. Points will be deducted for incorrect capitalization, spelling,
underlining and double underlining, as well as for improper headings, dates, indentations,
and columns.
Create all of the financial statements in one file. This is important for tracking and grading
purposes. Submission of more than one file will result in the project being returned as
ungraded.
Images or scanned images of the financial statements pasted into a Word document will
also be returned ungraded. These files can’t be “marked up,” and handwritten financial
statements are generally considered unprofessional.
Only the financial statements are required. Submitted journals, ledgers, or unadjusted/
adjusted trial balances won’t be evaluated.
PLAGIARISM
Plagiarism is taking any part of a published piece of work and using it as your own and is
unacceptable at Penn Foster College. As explained in your Student Handbook, students
are expected to conduct themselves with the highest academic and ethical standards.
Failure to do so results in disciplinary action.
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Graded Project
GRADING CRITERIA
The grading criteria for the project are as follows:
Formatting: The formatting of the four financial statements is worth 10 points each for a
total of 40 points (4 3 10 = 40).
n An out-of-balance accounting equation on the balance sheet will result in a loss
of 10 points for the formatting of the balance sheet even though other formatting
issues may be correct.
n Debits not equaling credits on the post-closing trial balance will result in a loss of 10
points for formatting of the post-closing trial balance even though other formatting
issues may be correct.
n Not having made closing journal entries as reflected on the post-closing trial balance will result in a loss of 10 points for formatting of the post-closing trial balance
even though other formatting issues may be correct.
Figures: Calculations on the financial statements are based on 18 balances from the
general ledger accounts. The beginning retained earnings balance on the statement of
retained earnings, and the correct ending retained earnings balance on the statement of
retained earnings, are also included. This amounts to a total of 20 figures. Each is worth
3 points for a total of 60 points (20 3 3 = 60).
Thus, the formatting of the financial statements (worth 40 points total) plus the figures
used for the financial statements (worth 60 points total) provide 100 points for the project.
If a project receives a failing grade (less than 70 points), the project will have to be
reworked and resubmitted for final grading. The highest grade that can be obtained on a
retake is 70, which is passing.
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Graded Project
SUBMITTING YOUR PROJECT
Your project must be submitted as a Word document (.docx, .doc) or an Excel file
(.xls or .xlsx). Your project will be individually graded by your instructor and therefore will
take up to a few weeks to grade.
Be sure that your file contains the following information:
n Your name
n Your student ID number
n The lesson number (06146800)
n Your email address
To submit your graded project, follow these steps:
n Go to http://www.pennfoster.edu.
n Log in to your student portal.
n Click on Take Exam next to the lesson you’re working on.
n Follow the instructions provided to complete your exam.
Be sure to keep a backup copy of any files you submit to the school.

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