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AC1220 Accounting I Project Part 1: The Accounting Cycle

This assignment solution covers key concepts in the accounting cycle for Accounting I.

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    AC1220 ACCOUNTING I Project Part 1 Page 1 AC1220 Accounting I Project Part 1 : The Accounting Cycle "Karen Harris has started a new scooter retail business, City Rides, and has made several financial transactions throughout the month of December 20x2. After journalizing the transactions, adjusting the trial balance, and preparing the financial statements, how would you evaluate the accuracy of the income statement, the statement of owner’s equity, and the balance sheet of the business for the month? Additionally, explain the process of closing the temporary accounts and the impact of those closures on the owner’s equity. Please also ensure that your analysis includes a detailed discussion on how each step in the accounting cycle contributes to accurate financial reporting for a small business." Word Count Requirement: 800 - 1000 words

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    AC1220 ACCOUNTING I Project Part 1 Page 2 Karen Harris starts her own scooter retail business, City Rides, on December 1, 20x2. The business operates as a proprietorship from a rented space near a busy downtown area. Harris hires Jim Waters as the sales associate and assistant manager of the business. The following transactions take place during December 20x2. Transactions Dec. 1 Harris deposits $45,000 into the business bank account. In exchange, she receives capital in the proprietorship. 1 Harris writes and mails check #001 for $2,400 for rent. The rent payment covers rent for the three months ended February 28, 20x2. 2 Harris purchases office equipment for $1,800 by check #002. 2 Harris purchases office supplies for $420 by check #003. 2 Harris purchases 20 Model X mopeds at $500 each and 15 Model L mopeds at $ 800 each, costing a total of $22,000, on account from a supplier, Fun Brands:  Harris elects to use the first - in - first - out (FIFO) method to account for inventory.  Fun Brands provides an invoice with the following terms: 2/10 net 30. 9 In the first week of operation, City Rides sells 16 Model X mopeds at $750 each: 10 are sold on account, and the rest are sold for cash. 12 City Rides makes payment to Fun Brands in full settlement of accounts payable by check #004. Payment is net of the purchase discount. Hint: The terms are 2/10 net 30, and any purchase discount received reduces the cost of inventory. 13 City Rides purchases 10 Model X mopeds from Fun Brands on account at a cost of $520 each. 16 The sales for the week are as follows: 6 Model X mopeds sold on account for $750 each — inventory cost accounted using the FIFO method. 18 Cash receipts from customers on accounts receivable are $7,100. 30 Sales for the rest of December are as follows: 2 Model L mopeds sold for cash for $1,100 each. 30 Harris receives the utilities bill for December 20X2 for $650, still payable at month end. 30 Harris pays wages amounting to $1,800 by check #005. 30 Harris withdraws $2,500 in cash.

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