principles of accounting group assignment

Determine unadjusted trial balance, adjustment, adjusted trial balance : Closing balances of all the accounts in the GL at the end of an accounting period are reflected in a trial balanc

Principles of Accounting Group Assignment

5 Nguyễn Hoàng Minh Thư - SS181051

Ho Chi Minh City

Principles of Accounting Group member’s Contribution form

A. Business Introduction

34

G Closing Process……… 37

A Business Introduction:

This report intends to provide an overview of Huong Company and conduct an analysis of several aspects of the financial statements of the company This shall include various items from the cash flow statements, balance sheets and the profit andloss account The report intends to address the significant areas of performance by the company by conducting ratio analysis and itemized study of important items and thereby focusing on the areas to be improved by the company

B Summary of the accounting cycle:

Identify and analyze transactions :The first step in the accounting cycle is to identify and analyze all transactions made during the accounting period, including expenses, debt payments, sales revenue and cash received from customers During this initial stage, companies go through every transaction that affects their financial, though this should be an ongoing step for companies that are continuously creating customer invoices, buying inventory, paying bills, making payroll and collecting cash Record transactions in a journal:The next step is to record the details of all financial transactions, in chronological order, as journal entries, whether in an actual book or in

an accounting program

Post transactions to general ledger: Once journal entries are recorded and approved, they are posted to the general ledger The GL is the master record and summary of all financial transactions, broken down by account

Determine unadjusted trial balance, adjustment, adjusted trial balance : Closing balances of all the accounts in the GL at the end of an accounting period are reflected

in a trial balance

Financial Statements: Upon the posting of adjusting entries, a company prepares an adjusted trial balance followed by the actual, formal financial statements

Closing : An entity finalizes temporary accounts, revenues, and expenses, at the end

of the period using closing entries These closing entries include transferring net income to retained earnings

C Description of business transaction of the first year operation:

In 2022, Hương Company completed the following transactions

January

1 Hương invests $70,000 cash in the company

3 The company purchased merchandise for $10,500

8 The company purchased $2,100 for office supplies

10 The company sold merchandise for cash $6,000 to Larn Co The cost of merchandise sold was $4,100

13 The company purchased merchandise on account from Rin Co for $9,000, terms 2/10, n/30

20 The company paid salaries and wages of $1,800

23 The company paid full cash for Rin Co for the transaction on January 13

28 The company paid $230 cash for this month's utilities

20 Hương withdrew $1,000 for personal use

23 Paid $70 cash for shipping charges related to the February 12 sale to Aroma Co

27 Receive from Aroma for the sale on February 12

28 Sold merchandise on account to Lana Corp for $4,000, terms 2/10, n/30, FOB destination The merchandise cost $1,800

March

3 The company paid $2,000 for office rent expenses

5 The company paid $3,600 for a one-year insurance policy

8 The company paid $70 cash for shipping charges related to the February 10 sale to Lana Corp

10 Lana paid for the sale on February 28

23 The company sold merchandise to Monica Co and received $1,500 in cash The merchandise cost $800

25 The company paid $285 for telephone expenses

29 The company paid $565 for cleaning services

April

2 Purchase merchandise on credit from Ace Company, terms 2/10, n/30, FOB shipping point ($3,400)

3 Paid Ace Co for shipping charges on merchandise purchased on April 2, $100

6 Sold merchandise to Liva Company on account for $4,500, terms 3/10, n/60, FOB shipping point The merchandise cost $2,300

10 The company paid $400 cash for advertising on social media for this month

12 Paid for the purchase from Ace Co on April 2

14 The company paid $100 on credit for utilities this month

16 Receive payment from Liva Co for the sale on April 6

27 The company sold merchandise for Tepy Company on account for $3,700, terms 2/10, n/30 The merchandise cost $2,000

May

4 The company purchased $1,500 for office equipment

6 The company paid $100 cash for the transaction on April 14

7 Receive $2,000 cash from Tepy Co as partial payment for the sale on April 27 ( no discount allowed)

14 Paid $1,250 for repairs to the company’s forklift

18 Purchased merchandise from JJ Company for $6,000 cash

23 Sold merchandise to Wupi Company and immediately received $5,000 in cash The merchandise cost $2000

31 Paid $200 for this month’s utilities

June

1 Sold merchandise to Acy company ( $4,500) on account, terms n/30

3 Paid $2,000 on account for office rent fees

6 Sold merchandise to Liva company on account for $6,000, terms 2/30, n/90, and FOB shipping point The merchandise cost $4,570

9 Receive $1,700 cash from Tepy Company for the transaction on April 27

20 Paid $2,100 for repairing the company’s computers

28 Paid $6,000 for salary and wages

July

1 Receive $4,500 cash from Acy Company for the transaction made on June 1st

5 Sold merchandise to Wupi Company on account for $5,000, terms 2/10, n/30 The merchandise cost $3,480

6 Received full from Liva Co for the sale on June 6

8 Purchased $2,000 on credit for office supplies

15 Received full from Wupi Co for the sale made on July 5

16 Purchased merchandise on account for $3,000 from Spoty Company, terms 2/10, n/30, FOB destination

20 Purchased $400 on credit for extra office supplies

26 Paid full in cash to Spoty Company for the transaction on July 16

29 Paid $2,400 in cash for office supplies on July 8 and July 20

9 Paid $400 in cash for repairs to the Company’s computers

15 Purchased merchandise for $3,000 cash

23 Paid $500 for telephone bills

30 Sold merchandise to Wupi Co and immediately received $2,000 in cash The merchandise cost $890

September

5 Paid $1,000 in cash for office equipment

9 Sold merchandise on account for $3,000 to Acy Company, term 2/10 n/30 The merchandise cost $1,250

14 Purchased merchandise on account for $2,040 from Spoty Company, terms 2/10, n/30, FOB destination

19 Receive payment from Acy Company for the sale on September 9

20 Paid $150 for cleaning service

24 Paid $2,000 cash for the transaction on September 14

October

2 Sold merchandise on account for $3,500 to Liva Company, terms 2/30, n/90, FOB shipping point The merchandise cost $1,060

3 Paid $1000 for the office rent fees

15 Purchased merchandise on account for $4,000 from JJ Company, terms 2/30, n/90,FOB shipping point

16 Paid JJ Co shipping fees charges on merchandise purchased on October 15 ($90)

26 Paid $50 in cash for advertising on social media for this month

November

1 Receive payment from Liva Co for the sale on October 2

4 Sold merchandise to Coco Company and immediately received $2,000 cash The merchandise cost $900

12 Paid $300 on account for office equipment

16 Paid JJ Company for the transaction on October 15

23 Sold merchandise on account for $6,700 to Monica Company, terms 2/10, n/30, FOB shipping point The merchandise cost $5,600

25 Paid $300 cash for the transaction on November 12

28 Paid $200 for this month’s utilities

December

1 Purchased merchandise on account for $3,600 from Ace Company, terms 2/10, n/30, FOB shipping point

2 Paid Ace Co shipping fee charges on merchandise purchased on December 2 ( $100)

3 Receive payment cash from Monica Co for the sale on November 23

15 Paid $4,000 cash for the office rent fees

23 Paid $500 for the repairs to the company’s equipment

25 Sold merchandise to Wupi Co and immediately received $5,500 cash The merchandise cost $3,020

27 Paid $2,800 for electric bills this year

28 Paid $6,460 for salaries and wages

31 Paid $500 for the company’s party year-end

Prepaid Insurance 1000

3 At the end of the year, $3000 of Office supplies is still available

Dr Office supplies expense $1500

a Journalize the December transactions using a perpetual inventory system

b Enter the December 1 balances in the ledger T-accounts and post the December transactions Use Cost of Goods Sold, Depreciation Expense, Salaries, and Wages Expense, Sales Revenue, Sales Discounts, and Supplies Expense

c Journalize and post adjusting entries

d Prepare an adjusted trial balance

e Prepare a multiple-step income statement, statement of retained earnings, andthe classified balance sheet on Dec 31

f Close temporary accounts Transfer the balances to the retained earningsaccount Prepare a post-closing trial balance

D General Journal and Ledger:

Merchandise Inventory - Rin Co 9,000

( Purchase of merchandise on account )

(Purchase of merchandise on account)

(Received cash from Liva Co.)

April 27 Account Receivable - Tepy Company 3,700

(Sale of merchandise on account)

Account receivable - Liva Co 6000

(Payment to Spoty Co for the purchase on July 16)

(Purchased for merchandise)

September

19

(Received cash from Acy Co.)

(Purchase of merchandise from Ace Co.)

4,0004,000

500500

5,5005,500

3,0203,020

2,8002,800

6,4606,460

500500

COST OF GOODS SOLD

COST OF GOODS SOLD

CLEANING SERVICES EXPENSE

20/6 2100 3350

SALARIES AND WAGE EXPENSE

Gross profit from sales $35,561.00

Others revenues and

STATEMENT OF OWNER'S EQUITY

HUONGStatement of owners equityFor Year Ended December 31, 2022

Plus : Investment from owner $70,000.00

$68,431.00

HUONGClassified Balance SheetDecember 31, 2022

Assets

Current Assets :

Accounts Receivable 5000

Non - Current Assets :

G Closing Process:

Journal entries to close temporary accounts

1 Closing revenue account to Income Summary

Current Ratio = 66,231/4,600 = 14.41

Gross Profit Margin = 35,561/72,631 = 48.96%

ROE ( Return on Equity) = -1,569/67,431 = -2.33% (Note: A negative ROE indicates

a loss for the year)

The company experienced a net loss of $1,569.00 in 2022, primarily due to a decrease

in net sales and an increase in operating costs

The company's liquidity appears to be strong, with a current ratio of 14.41 and a quickratio of 12.8

The company's inventory turnover ratio was 5.56, which may indicate excess inventory

The company's debt-to-equity ratio was 0.07, suggesting a relatively low amount of debt compared to equity

Overall, we recommend that the company closely monitor expenses and inventory levels and consider implementing strategies to increase sales and profits