Assingments % - Computer Project Financial Accounting

As a recently hired accountant for a small business, SMC, Inc., you are provided with last year’s balance sheet, income statement , and post-closing trial balance to familiarize yourself with the business. The attached pdf contains information for your course project. Here is a written version of the course project information.
Computer Project Financial Accounting – SUMMER 2022.pdf
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You are also given the following information that summarizes the business activity for the current year,2022
Issued 10,000 additional shares of common stock for $60,000 cash on January 1st.
Borrowed $50,000 on March 1, 2022, from Downtown Bank as a long-term The interest rate on the loan is 4% and Interest for the year is payable on January 1, 2023.
Paid $12,000 cash on April1 to lease a building for one year.
Received $6,000 on May 1 from a tenant for one year’s rent.
Paid $4,200 on June 1 for a one-year insurance policy.
Purchased $3,700 of supplies for cash on June 15th.
Purchased inventory for $125,000 on account on July 1.
August 1, sold inventory for $185,000 on account; cost of the merchandise sold was $120,000.
Collected $145,000 cash from customers’ accounts receivable on August 20th.
September 1, Paid $95,000 cash for inventories purchased earlier during the year.
September 20th paid $34,000 for sales reps’ salaries, including $1,000 owed at the beginning of 2022.
Dividends for $9,500 were paid on October 20th.
The income taxes payable for the year of 2021 were paid on November 15th.
For adjusting entries, all prepaid expenses are initially recorded as assets, and all unearned revenues are initially recorded as liabilities (this is just informational).
At year-end, $1,050 worth of supplies are on hand.
At year-end, an additional $9,500 of sales salaries are owed, but have not yet been paid.
Prepare an adjusting entry to recognize the taxes owed for 2022. The corporate tax rate is 21% of the income before income taxes.
Assignment Summary
You are asked to do the following on an excel spreadsheet:
Journalize the transactions for the current year, 2022, using the chart of accounts listed on the
excel spreadsheet provided for the project.
Set up T-accounts and enter the beginning balances from the December 31, 2021, post-closing trial balance for SMC. Post all current year journal entries to the T-accounts.
Journalize and post any necessary adjusting entries at the end of (Hint: Items b, c, d, e, o, p, and q require adjustment.)
After the adjusting entries are posted, prepare an adjusted trial balance, an income statement, statement of retained earnings and a balance sheet for 2022. The format of your statements should mirror those prepared by the company in 2021 (This doesn’t mean all of the account titles will be the same).
Journalize and post-closing entries for 2022 and prepare a post-closing trial balance
Compute the Current Ratio and Debt to Total Equity Ratio for 2021 and 2022
Interpretive Question: What is your overall assessment of the financial health of SMC, ?
Use this Excel Template to complete items 1 through 6: Computer Project Template – Financial Accounting (SUMMER 2022).xlsx Download Computer Project Template – Financial Accounting (SUMMER 2022).xlsx
Use this Word Document to answer question #7 Interpretive Question: Analysis Form for Computer Project (SUMMER 2022).docx
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Struggling with where to start this assignment? Follow this guide to tackle your assignment easily!

This assignment is a comprehensive accounting project that involves multiple steps to complete, so it’s important to break it down into smaller, manageable tasks. This step-by-step guide will help you tackle each part of the project efficiently.

Step 1: Understand the Assignment

This is a hands-on financial accounting project where you need to journalize transactions, prepare financial statements, and analyze the financial health of SMC, Inc. You’ll be using Excel and Word documents provided to you to complete the required tasks.

Here’s what you need to do:

Journalize Transactions for 2022: Enter journal entries for all the transactions provided, using the chart of accounts.
Set Up T-accounts: Post the beginning balances from the post-closing trial balance and enter all journal entries for 2022.
Adjusting Entries: Record adjusting entries based on the given information, especially those related to prepaid expenses and unearned revenues.
Prepare Financial Statements: After adjusting entries, prepare the adjusted trial balance, income statement, statement of retained earnings, and balance sheet.
Post-closing Entries: Prepare post-closing journal entries and a post-closing trial balance.
Financial Ratios: Compute the Current Ratio and Debt to Total Equity Ratio for 2021 and 2022.
Interpretive Question: Analyze and assess the financial health of SMC.

Step 2: Journalize Transactions for 2022

Use the provided chart of accounts to record the journal entries for the transactions listed.
Example: For the issuance of additional shares of stock, you would debit Cash and credit Common Stock.
For each transaction, identify the relevant accounts (e.g., Cash, Supplies, Inventory, Rent Revenue, etc.), and make sure you follow the proper debit and credit rules.
Pay close attention to the amounts and dates for each transaction.
After completing the journal entries, double-check to ensure the correct accounts are used.

Step 3: Set Up T-accounts and Post the Journal Entries

Open the T-accounts and transfer the beginning balances from the December 31, 2021, post-closing trial balance into the appropriate T-accounts.
For each journal entry you made in Step 2, post the debits and credits to the corresponding T-accounts.
Make sure the amounts match between the journal entries and T-accounts, and check for accuracy as you go.

Step 4: Journalize and Post Adjusting Entries

Some entries require adjustments at year-end:
- Supplies: Record the adjustment for supplies based on the ending balance of $1,050.
- Sales Salaries: Adjust for the $9,500 sales salaries owed at year-end.
- Prepaid Expenses: Adjust for prepaid rent and insurance (paid in advance) that needs to be expensed.
- Unearned Revenue: Adjust for any revenue earned but not yet recognized (e.g., rent collected from tenants).
After journalizing the adjustments, post them to the T-accounts.

Step 5: Prepare Financial Statements

Adjusted Trial Balance: After posting adjusting entries, prepare the adjusted trial balance. This will include all accounts and their final balances after adjustments.
Income Statement: Using the adjusted trial balance, create the income statement. Include revenues, expenses, and calculate net income.
Statement of Retained Earnings: Starting with retained earnings from the previous year, add net income (from the income statement) and subtract dividends paid to calculate ending retained earnings.
Balance Sheet: Prepare the balance sheet using the adjusted balances of assets, liabilities, and equity.

Step 6: Journalize Post-closing Entries and Prepare Post-closing Trial Balance

Journalize the post-closing entries. These will typically include closing revenue and expense accounts into Retained Earnings.
Once all closing entries are posted, prepare a post-closing trial balance. This will only include the permanent accounts (assets, liabilities, and equity).

Step 7: Compute Financial Ratios

Current Ratio: Formula: Current Assets / Current Liabilities
Debt to Total Equity Ratio: Formula: Total Liabilities / Total Equity
Use the information from the balance sheet for both years (2021 and 2022) to calculate these ratios.

Step 8: Answer the Interpretive Question

In the Analysis Form for Computer Project (SUMMER 2022) Word document:

Assess the financial health of SMC, Inc.: Review the financial statements you prepared, and analyze the company’s liquidity, solvency, and profitability.
Consider ratios like the current ratio and debt-to-equity ratio and what they indicate about SMC’s ability to meet short-term obligations and manage long-term debt.
Look at trends from 2021 to 2022, such as changes in revenue, expenses, and retained earnings.

Final Tip:

Take your time with each step and double-check your work as you go along. Financial accounting can be complex, but breaking it into parts will make it easier to manage.
Be meticulous about journal entries and ensure the accuracy of your T-accounts, as these will impact all subsequent steps.
If you’re unsure about any step, refer to the provided templates and documents, and consult with your instructor if needed.