Reference no: EM133612346

Case Scenario:

You decide to open up your very own moving company. After three months of business, you realize your current accounting system (throwing all your invoices and moving schedules into a drawer) is no longer working. Additionally, you would like to take out a loan from the bank to purchase more moving trucks and grow your fleet. In order to do that, you need accurate financial statements of your company to present to your loan officer.

What is required?

You need to record transactions (listed below) and create professional financial statements for your new company for the months of January through March.

How do I create the financial statements?

You may choose to use any software to complete the project. Just remember that appearance, professionalism, and accuracy of the financial statements are crucial!

*BONUS POINTS* will be given for using Quickbooks!! You can register for a 30 day free trial of the software online. Essentials is what I would recommend using, but any year or edition of the software you are able to obtain is fine. If you choose to use QB, learning how to enter transactions is YOUR RESPONSIBILITY! Use the help function or search the internet if you have questions. I recognize that it takes extra effort on your part to learn how to use QB, so that's why you receive those extra points!!

What exactly do I need to do for this project?

1. Open the files "Example - Income Statement" and "Example - Balance Sheet" on Blackboard. These files give you a clear example of what you should be turning in.

2. Open the file "Check copies, invoices, and moving schedules to be recorded" on Blackboard. This contains all the transactions you will be recording for your new company.

3. Give your new business a unique name.

4. Record all the transactions from "Check copies, invoices, and moving schedules to be recorded." Do not add any other transactions to your financial statements. Record only what you see in this file.

Here is a list of the transactions:

1. Record your initial investment of $100,000.

2. Record the three energy bills.

3. Record all moving jobs that are listed on your moving calendar. You will record the sale (the amount listed that you charged them), the contractor expense (you pay your movers $20 per hour), and supplies expense (listed for each job on the calendar) for each job.

4. Record the two truck purchases. You will also have monthly loan payments and depreciation related to these purchases.

5. Record deposit and monthly rent payments using the leasing agreement.5. Before you me with questions, please click on "Financial Statement Project FAQs" on Blackboard. I

have collected many of the questions I have received in the past from students and organized them by topic.

More likely than not, whatever questions you have will be answered here!

6. Save the financial statements as a PDF file.

7. Review the financial statements you created. Make sure they are easy to read, organized, accurate, and

professional.

8. Upload the financial statements by clicking on "Turn Financial Statement Project In Here" on Blackboard.

A note on trucks:

Trucks purchased will be depreciated straight line monthly over 12 years with no residual value. Depreciation is

calculated at the end of each month. DO NOT PRORATE AMOUNTS. Each month over the 12 years will have

the same amount of depreciation including the month you purchase the vehicles.

You have a 5 year loan on all the vehicles you purchase and the payment is due the 1st of every month. The

first payment will take place the month after purchase. There is no interest owed on the loan. DO NOT

PRORATE AMOUNTS. Each month over the 5 years will have the same amount of loan payment.

There should be only ONE fixed asset account for trucks, ONE accumulated depreciation account for trucks,

ONE loan payable balance, and ONE depreciation expense account. In other words, you do not need to create

a separate account for each purchase. These four accounts will include all of the trucks your company

purchases. View "Example - Balance Sheet" on Blackboard.

Do not break out your truck loans into short term and long term payable.

A note on man hours:

You pay your movers at $20 per man hour for each moving job. They are paid after each moving job. You do

not owe payroll taxes on their wages.

A note on making and receiving payments:

All bills should be entered. You pay your bills on the due date, not when received.

You take full payment from the customers on the day of the move.

Grading:

The project will be graded out of 100 points with the potential to earn up to 115 if you use QuickBooks.

5 points will be taken off for each major mistake:

• Account balances completely missing

• Account balances with large variances from the correct amount

• File not in pdf format

• Financial statements without single account balance as of March 31 (do not break out by month)

• Difficult to read / unprofessional / unorganized financial statements (please view examples on Blackboard of

what it should look like)

• Didn't submit the short essay question

• Assets do not equal Liabilities + Owners Equity (your balance sheet needs to balance)

• Net income on your Balance Sheet does not tie to net income on your Income Statement• Cash is negative

2 points will be taken off for each minor mistake:

• Account balances with minor variances from the correct amount

• Incorrect date listed (must be as of March 31)

• Account balances that are on the statements but were not required to have (for example you have interest expense on your income statement when there shouldn't be a balance in that account)

• Have more than one fixed asset account, one accumulated depreciation account, one loan payable account, or one depreciation expense account for your trucks (do not break out individual purchases!)

If you take the time to learn and use Quickbooks, you will receive bonus points on the project! The posted grade will already reflect these additional points earned.