ACCT 321 Ro Barry is a skin care specialist

ACCT 321
Project #1
Due February 1, 2016
Directions: Complete all requirements for each phase in the accounting cycle. Be sure to use
best practices when recording all transactions. Remember to follow all accounting cycle rules
and regulations. You may use the attached workpapers to help you complete the project.
Each group is to complete the following independently. The project is due at the beginning of
class. Only one submission per group is needed. Late submissions will not be accepted.
Part 1:
Ro Barry is a skin care specialist. During the month of June she started a new incorporated spa
business with the following transactions:
June 1
1

2
4
5
8
10
11
14
22
27

Ro began her business by finding investors to contribute $10,000 into a checking
account in the name of the corporation in exchange for 1,000 shares of common stock
of the corporation.
Purchased a new massage table (fixed asset) costing $24,000. Paid $4,000 cash and
signed a $20,000 note payable for the balance. The note carries an interest rate of
12% (1% per month) and requires interest to be paid monthly. The first interest
payment is due July 1.
Purchased a one year insurance policy for $1,200. The policy begins immediately.
Purchased supplies on account for $500.
Completed a wedding party prep and billed the customer $1,200.
Hired an assistant at $10 per hour.
Purchased supplies for $200 in cash.
Received a $1,200 check from the customer billed on June 5.
Paid the assistant $250 for 25 hours of work.
Received a telephone bill for $60, due next month.
Received a $1,000 deposit from a customer for a large spa package that will not be
started or completed until the following month.

REQUIRED
a) Journalize the June transactions.
b) Post the June entries to the ledger.
c) Prepare a trial balance as of June 30th.

ACCT 321
Project #1
Due February 1, 2016
Phase #2
At the end of the month R. Barry decided to prepare the financial statements for the company to
demonstrate the strong opening month that the business incurred. Before creating the statements,
Ro ensured that all of the accounting information was up-to-date. During this process she noted
that:
At the end of the month the assistant had worked 80 hours for which he had not been
paid. He will be paid on the first Friday in July.
The massage table will be depreciated, using the straight-line method, over a 5 year
period (60 months) using no salvage value.
An inspection of the supplies on hand as of June 30th indicated that $300 of supplies
remain.
A dividend of $500 was declared but not scheduled to be paid until mid-July.
REQUIRED
d) Journalize all required adjusting entries for the month of June (including those that may
not be explicitly listed)
e) Post the adjusting entries to the ledger.
f) Prepare an adjusted trial balance as of June 30th.
g) Prepare an Income Statement, Statement of Shareholders’ Equity, and Balance Sheet for
the period ending June 30.
h) For the purposes of this exercise, assume that the company’s accounting cycle ends on
June 30th. Journalize the closing entries for the spa.
i) Post the closing entries to the ledger
j) Prepare the post-closing trial balance.
Phase #3
July 1 marks the beginning of a new cycle for R. Barry. They began their first month of the
cycle with the following transactions:
July 1
1
2
10
15
25
26
27

Paid the interest due on the equipment purchased in June.
Received $500 in cash for spa services provided.
Paid the assistant $960 for the work completed over the past two weeks. (Remember
some may have already been logged due to the timing of the pay)
Completed services previously paid for on June 27th.
Paid $100 for repairs to spa equipment.
Received $800 in cash for completed spa services.
Billed a customer $1,000 for a completed spa treatment.
Refunded $100 to a client when it was determined that such client had been
overcharged for services that were completed on July 10th.

REQUIRED
k) Journalize all daily entries for the month of July.
l) Post the entries to the ledger.
m) Prepare a trial balance as of July 31st.