AC1220 Accounting I Project Part 1: The Accounting Cycle

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AC1220 ACCOUNTING IProjectPart 1Page1AC1220 Accounting IProject Part1: The Accounting Cycle"Karen Harris has started a new scooter retail business, City Rides, and has made severalfinancial transactions throughout the month of December 20x2. After journalizing thetransactions, adjusting the trial balance, and preparing the financial statements, how would youevaluate the accuracy of the income statement, the statement of owner’s equity, and the balancesheet of the business for the month? Additionally, explain theprocess of closing the temporaryaccounts and the impact of those closures on the owner’s equity. Please also ensure that youranalysis includes a detailed discussion on how each step in the accounting cycle contributes toaccurate financial reporting fora small business."Word Count Requirement: 800-1000 words

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AC1220 ACCOUNTING IProjectPart 1Page2Karen Harris starts her ownscooterretail business, City Rides, on December 1, 20x2. The businessoperates as a proprietorship from a rented space near a busy downtown area.Harrishires Jim Waters asthe sales associate and assistant manager of the business. The following transactions take place duringDecember 20x2.TransactionsDec. 1Harris deposits $45,000 into the business bank account. In exchange, she receivescapital in the proprietorship.1Harris writes and mails check #001 for $2,400 for rent. The rent payment covers rentfor the three months ended February 28, 20x2.2Harris purchases office equipment for $1,800 by check #002.2Harris purchases office supplies for $420 by check #003.2Harris purchases 20 Model X mopeds at $500 each and 15 Model L mopeds at$800each, 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 forinventory.Fun Brands provides an invoice with the following terms: 2/10 net 30.9In the first weekof operation, City Rides sells 16 Model X mopeds at $750 each: 10are sold on account, and the rest are sold for cash.12City Rides makes payment to Fun Brands in full settlement of accounts payable bycheck #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.13City Rides purchases 10 Model X mopeds from Fun Brands on account at a cost of$520 each.16The sales for the week are as follows: 6 Model X mopeds sold on account for$750each—inventory cost accounted using the FIFO method.18Cash receipts from customers on accounts receivable are $7,100.30Sales for the rest of December are as follows: 2 Model L mopeds sold for cash for$1,100 each.30Harris receives the utilities bill for December20X2for $650, still payable at monthend.30Harris pays wages amounting to $1,800 by check #005.30Harris withdraws $2,500 in cash.

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