Manual General Ledger Project
Rebman
Project #1
"He who would climb a ladder must begin at the bottom."
This project builds on basic accounting processes. The objective is to work through a small quantity of accounting transactions, post them to a manual general ledger, and prepare basic financial statements. By using a manual ledger, you will see the physical relation between ledger, journal, and accounting information.
This project is worth 8 percent of the final grade.
It is due as follows: 1) steps 1 - 7 are due by Thursday, October 24 (you should bring it to your class meeting before that date). 2) steps 8 - 11 are due by Thursday, November 21 (again, you should bring it to your class meeting before that date). No late assignments accepted. Since this assignment involves manual accounting work, it will have to be physically turned in. If it is not possible to attend class, the assignment can be dropped off or mailed to the Department office.
Business Description.
R&R Medical Consultants, Inc. is a business where the company sends technicians to perform employee health screenings for employees of different companies. Companies offer these screenings for their employees as an employee benefit.
When a screening is done for a company, R&R meets with the client's management to set the screening date(s) and decide on the extent of procedures to be performed - e.g. basic height/weight, body mass index, general health and lifestyle counseling, blood pressure, lab work, etc. Once the program is agreed to, the client will set appointments for their employees. R&R's staff and any additional outside technicians that may be needed bring the necessary equipment on-site on the screening dates, perform the procedures, and send samples to the lab for processing. Once all of the results are received from the lab, R&R mails a written report to each employee.
Requirements.
1. (5 points) Take 28 sheets of lined notebook paper and staple them together along the left side to form a book.
2. (2 points) On the top sheet write:
R&R Medical Consultants, Inc.
General Ledger
3. (3 points) On each of the inside pages, draw a horizontal line in ink about 1.5" from the top. Then draw a vertical line midway across the page. Extend the line from the horizontal line to the bottom of the page. We now have a "T account" format for each general ledger page.
4. (5 points) Write the following titles on the ledger pages. Each account will have its own ledger page.
Community Bank Checking, Accounts Receivable (prepare a separate account for each of the 4 clients), Allowance for Doubtful Accounts, Equipment, Accumulated Depreciation - Equipment, Prepaid Expenses, Accounts Payable, Accrued Expenses Payable, Unearned Revenue, Notes Payable, Capital Stock, Retained Earnings, Sales Revenue, Rent Expense, Outside Lab Fees Expense, Office Supplies Expense, Depreciation Expense, Telephone Expense, Outside Technician Services Expense, Interest Expense, and Bad Debts Expense.
5. (20 points) On a separate sheet of paper, write out in Journal Entry form, entries for the following transactions. Be sure that your entries balance! This will be the Company's General Journal.
Date Description
2014
1-Jan Began business. Owners deposit $10,000 in exchange for 1,000 shares of $10.00 par value common stock.
10-Jan Borrowed $25,000 from the bank. Signed a 2 year note with interest at 4.5%. Interest is payable June 30 and December 31 of each year.
12-Jan Signed a lease agreement to rent office space for $975 per month, beginning Feb 1st. Nothing was paid today. (Question: do we owe rent for January?)
15-Jan Purchased computer and diagnostic equipment. Cost is $22,000. The equipment will be depreciated straight line over 5 years using ½ month for the month of purchase. Wrote check for payment. Depreciation for Jan to March will be $1,062.50.
22-Jan Hired an outside technician to set up the equipment. Received a bill for $3,500, which is due on Feb 22. (accounts payable) (Capitalize if it is part of the asset cost. Research this.)
15-Feb Received the following bills due March 15: telephone $275, and rent for $975.
20-Feb Paid the technician's bill from Jan 22.
12-Mar Completed employee health screening for George's Woolens, Inc. Sent client an invoice for $13,800.
15-Mar Paid bills received Feb 15.
15-Mar Received the following bills due April 15: telephone $345 and office supplies $760.
17-Mar Completed employee health screening for Able Therapies, Inc. Sent client an invoice for $9,400.
20-Mar Received a check for $5,000 from JAR Manufacturing as a deposit for a screening to be done in April.
22-Mar Received payment for 50% of the invoice from George's Woolens.
22-Mar Paid three months of rent. Check amount is $2,925.
31-Mar Completed employee health screening for Martha's Knitting Works. Sent client an invoice for $16,500.
17-Mar Received lab bills related to the George's Woolens screening for $1,800. (outside lab fees exp)
17-Mar Paid outside technician $875 for work at George's Woolens.
31-Mar Have not yet received bills, but we know that the lab fees for Martha's will be $2,400 and the outside technician costs will be $480.
28-Apr Received a letter from George's Woolens. They are having financial problems and are planning to file for protection under the bankruptcy laws. They are not likely to make any further payments.
6. (10 points) Post the entries in your Journal to the General Ledger accounts. Be sure to post the debits and the credits. Check off each entry as you post it.
7. (10 points) Prepare a Trial Balance of the General Ledger as of March 31. Be sure that your ledger is in balance (i.e. debits = credits). Note that you will need to calculate the balance as of March 31 for each ledger account. These can be "penciled in" on the ledger pages.
8. (10 points) Prepare adjusting journal entries (in good form) for any adjustments as of March 31 that are needed to bring the books to their proper accrual basis amounts. (Remember depreciation expense, accrued expenses, prepaid expenses, unearned income, accounts receivable.)
9. (10 points) Prepare another Trial Balance as of March 31. Label this one Adjusted Trial Balance.
10. (15 points) Prepare a Balance Sheet as of March 31 and an Income Statement and Statement of Retained Earnings for the three months ended March 31. Be sure to show current vs. long term assets and liabilities as appropriate. Also, prepare a schedule of outstanding Accounts Receivable.
11. (10 points) Prepare a written summary of the financial condition and operating results of this business. Also, tell them how much is owed by each of their customers. Address your report to the owners of the company.