BUS 251 (2024 Spring)

Accounting Cycle Homework Assignment

In Chapter 4, we learned about the 9-step accounting cycle (pictured below).

The accounting cycle is how we journalize transactions and turn them into financial statements. To illustrate this process,
you are being asked to complete the following assignment.

Instructions

Complete the assignment in Microsoft Word or Excel. You may also do it on pen and paper or on a tablet/iPad if you
wish. Once you have completed the assignment, upload a single document (multiple files are not permitted) to Canvas
for grading by your TA.

Only the following file types are to be accepted: PDF, XLS, XLSX, DOC, and DOCX. JPEGs are not permitted.

Your TAs will be grading this assignment heavily on effort. Their focus will be less on ensuring that your entries are
perfect, but that you are completing all of the steps and showing your work. So, if your trial balance does not balance
(your total debits do not equal your total credits), don't give up. Your 'balance sheet' may not balance, but you can
always check your work and learn from it when the solution is posted.

A Word of Warning

Do not plagiarize or commit academic dishonesty! I have a zero-tolerance policy. Plagiarized or dishonest assignments
will be reported to the Dean’s office, regardless of the excuse. Plagiarism and academic dishonesty include:
o Handing in the work of others.
o Copying the work of others (collaborating is okay!)
o Googling/searching for answers on the Internet. (You will not find it).
o Hiring/paying/soliciting external help (i.e. Chegg, Coursehero, etc.).
o Posting completed assignments and solutions online (on websites such as Chegg, Coursehero, Studocu,
ChatGPT)
Students who do assignments dishonestly tend to sabotage themselves for the midterm. Doing journal entries and
mastering the preparation of financial statements is a critical skill for this class.
Grading

Your performance on this assignment will be assessed by your TA, based on the following rubric:

Criteria Ratings Pts

Journal
Entries 6 pts 4 pts 2 pts 0 pts
Full Marks Approaching Below No Marks
Were journal Only a few minor expectation Expectations
entries errors. Demonstrates Missed a few entries Missed many
completed for a strong and/or amounts entries. Did not
understanding of incorrect, but shows demonstrate a 6 pts
all
transactions. double entry a reasonable strong
accounting. understanding of understanding of
Was each double entry double entry
entry 'in accounting. accounting.
balance'?

T-Accounts
Were t-
accounts 3 pts 2 pts 0 pts
completed for Full Marks Approaching No Marks
all accounts Only a few minor expectation
used (both in errors, if any, in Did not complete t- 3 pts
opening trial preparing t- accounts for all
accounts. accounts, or omitted
balance, and as
the opening balances
a result of
2023
transactions)?

Trial Balance 2 pts 1 pts 0 pts

Was a trial Full Marks Approaching No Marks
balance Account balances expectation
created based from T-accounts Did not include all 2 pts
on the results were all accounts in trial
transferred to trial balance.
of the T-
balance.
accounts?

Preparation 7 pts 5 pts 4 pts 2 pts 0 pts 7 pts

of financial Full Marks Met Approaching Below Expectations No
statements Financial expectation expectation Many errors in Marks
Was a properly statements well Financial Weak formatting preparing financial
formatted. statements provided in either statements (e.g.
formatted
Supporting looked ok, but income statement accounts appear in
income calculation of some or statement of the wrong place)
statement and ending retained formatting financial position, and/or little effort at
a classified earnings was weaknesses although both formatting and/or
balance sheet provided. and/or were provided. missed providing
calculation of one of the required
prepared? Was
ending statements.
there a retained
supporting earnings not
calculation for
 Criteria Ratings Pts

ending
retained provided.
earnings?

Closing 2 pts 1 pts 0 pts

entries Full Marks Approaching No Marks
Identification Closing entries Expectation Closing entries not
and for revenue, Some closing provided.
expense and entries provided,
preparation of 2 pts
dividends but others missed
closing entries. declared and/or incorrect.
accounts
provided, and
mainly correct.

Discussion 2 pts 1 pts 0 pts

question #1 Full Marks Approaching No Marks
Ethical Thorough and Expectation Poor, unclear response
Dilemmas well-thought out Vague or unclear or no response. 2 pts
response, written response; only
in own words. partially addresses
question.

Discussion 2 pts 1 pts 0 pts

question #2 Full Marks Approaching No Marks
Closing Thorough and Expectation Poor, unclear response
Entries well-thought out Vague or unclear or no response. 2 pts
response, written response; only
in own words. partially addresses
question.

Discussion 2 pts 1 pts 0 pts

question #3 Full Marks Approaching No Marks
Role of Thorough and Expectation Poor, unclear response
technology well-thought out Vague or unclear or no response. 2 pts
response, written response; only
in own words. partially addresses
question.

Total Points: 26

The Assignment

Pep Peroni is the CEO of On a Knead to Know Basis, a local pizza shop in Vancouver, BC. After hearing that you took Richard’s
accounting class, the CEO had a renewed “pep” in his step. He never paid attention in his accounting class so he is hoping that you
can help him piece together the financials, using the accounting cycle.

Pep had originally hired an accounting student to help him with his books but the guy turned out to be a weir-dough. As a result, the
books have not been finished for the year ended December 31, 2024. Pep provides you with the following account balances for the
business on December 31, 2023 (Their last fiscal year-end):

Cash 32,340 Vehicles 78,400

 Accounts Receivable 14,700 Accumulated Depreciation, Vehicles 35,280

Inventory 9,800 Accounts Payable 6,860

Prepaid Rent 2,940 Wages Payable 1,960

Equipment 58,800 Common Shares 107,800

Accumulated Depreciation, Equipment 29,400 Retained Earnings 15,680

During 2024, the following transactions occurred, all of which have not been recorded for the business:

1. The business purchased $225,400 of ingredients, on account.

2. The business sold pizzas to customers for cash of $499,800. An additional $39,200 was sold on credit.

The company paid $102,900 in salaries this year from January 1 – December 30, 2024. This included
3.
clearing out the opening balance of wages payable.

4. The company also paid $24,500 for electricity bills that they incurred during the year.

5. The company made payments for ingredients purchased on account. Payments totalled $215,600.

6. The company collected $37,240 from its customers for sales on account.

7. Ingredients valued at $220,500 became spoiled during the year and had to be thrown away.

8. A dividend of $14,700 was declared and paid in December 2024.

9. In December 2024, the Company paid $1,470 towards its January 2025 rent.

On December 31, 2024, employees incurred $2,450 of wages. This will not be paid until the end of
10.
the first week of 2025.

11. The equipment had an estimated useful life of eight years, with no residual value.

12. The delivery vehicles had an estimated useful life of six years with a residual value of $7,840.

Required

1. Prepare journal entries for the above 12 transactions or explain why a journal entry is not required.
Clearly label each account affected, what you are debiting and crediting, and show any calculations necessary. State any
assumptions that you feel are necessary.

2. Using your journal entries above, prepare T-accounts for 2024. Please ensure you have a T-account for all accounts you
have used in your journal entries or on your financial statements. Do not forget to include opening balances for all of your
permanent accounts!

3. Using the results of your T-accounts, prepare a trial balance at December 31, 2024. If your trial balance does not balance
(DR ≠ CR) there is probably an error. Don’t fret if it doesn’t balance or you made a math error; as long as you have shown
your work.

4. Prepare an income statement for the year ended December 31, 2024 (Single-step is fine). Ensure you have headings and
titles.

5. Prepare a statement of financial position (balance sheet) as at December 31, 2024. Your balance sheet should have
headings and titles. Don’t worry if your balance sheet is ‘out of balance’. Your assignment is being marked mainly for work
 and effort, not for accuracy. If your trial balance does not balance this will mean that your statement of financial position
will likely not balance.

6. Prepare closing journal entries.

Discussion Questions

7. Discussion Question #1 – Can you identify 1 potential ethical dilemma that may arise during the accounting cycle, and how
we can address it? Be brief (bullet points are fine). Keep it to under 3 sentences.

8. Discussion Question #2 – Why do we do closing entries? Be brief (bullet points are fine). Keep it to under 3 sentences.

9. Discussion Question #3 – How does technology influence the efficiency and accuracy of the accounting cycle? Give an
example of a specific technology (“Excel” or a “calculator” does not count). Be specific and keep it brief. Keep it to under 4
sentences.