Reference no: EM131208974

Your dog, Peyton, has severe allergies and cannot have the usual store-bought dog treats. You have been making homemade treats for him that are all-natural and hypoallergenic. Over the past year, you have been making and selling these treats out of your home and have been quite successful. You now have an opportunity to open your own dog treat bakery. You have decided on a corporate form of business and have named your company "Peyton Approved."

There are two components to this part of the final project: an accounting cycle workbook (submitted in Module Six) and an accounting cycle report (submitted in Module Seven).

To complete the first component, use accepted accounting principles to follow and record your business transactions for a three-month period from step one of the accounting cycle through the reporting process. Enter your transactions in the workbook provided. Your completed workbook will consist of journal entries for each transaction and postings of transactions to account ledgers. You will develop a trial balance from ledger balances and adjust revenue and expense accounts as necessary to ensure that revenues and expenses are reported in the appropriate period under the accrual accounting method. The adjusted trial balance will be used in preparation of the income statement, statement of owner's equity, balance sheet, and statement of cash flows. After preparation of financial statements, closing entries will be entered to transfer earnings to equity and prepare temporary accounts for the new accounting period.

Then, prepare a brief report that lays out the steps of the accounting cycle, explaining what each step does, why it is important to the success of a business, and what financial information is produced at the end of the cycle.

Specifically, the following critical elements must be addressed:

Accounting Cycle Workbook

a) Record all journal entries. Be sure that all information is recorded accurately.

b) Post entries to appropriate ledger accounts. Ensure all information is posted accurately.

c) Prepare unadjusted trial balance. Ensure unadjusted trial balance is prepared accurately.

d) Interpret trial balance and make appropriate end of period adjustments.

e) Post adjusted entries and prepare the adjusted trial balance.

f) Apply adjusted trial balance and prepare financial statements.

g) Close all temporary income statement accounts and create closing entries.

h) Prepare the post-closing trial balance for the next accounting period.

i) Cancel any applicable temporary adjusting entries and prepare reversing entries.

Accounting Cycle Report

a) Identify the steps of the accounting cycle and provide a description of each step.

b) What role does each step play in the success of a business?

c) How could the omission of a step impact the success of a business? What strategies could be used to avoid this?

d) What are the major financial statements that come out of the accounting cycle? Why are they important?