Assignment
As the accounting period comes to an end, you will prepare the adjusting and closing entries, as well as prepare the financial statements for Marabelle's Craft 'n Shop. Please use this template to complete your work.
Your order of completion should be:
1. Complete the adjusting journal entries.
2. Enter the adjusting journal entry amounts in the worksheet "Adjusting Entries" columns. Solve for the balance changes and enter new account balances in the "Adjusted Trial Balance" columns.
3. Transfer income statement account balances to the "Income Statement" debit and credit columns, and transfer balance sheet account balances to the "Balance Sheet" debit and credit columns.
4. Enter formulas to show total debits and credits of all worksheet columns. In the Debit side of the Income Statement columns and the Credit side of the balance sheet columns, enter the net income figure and find balance in debits and credits for these two worksheet items.
5. Journalize the closing entries. Recall, we close Revenue, Expense, and Drawing accounts. Use the Income Summary account to close revenue and expenses to, as Marabelle is a proprietor and not a corporation so there is no retained earnings account to be used.
6. Complete the Income Statement in multiple-step format.
7. Complete the Balance Sheet using classified format. Remember, Mirabelle's capital account balance will have changed from the worksheet balance to include the net income and subtract the drawing balance.
8. Complete the Statement of Cash Flows using the indirect method of preparation. Use the "2015 PCTB" tab for end of last year's account balances to compare to end of the current year's balances for your operating section information.
9. On Ratio Analysis tab in the template, show a basic analysis of the information found in the statements. This should include, but is not limited to the following:
o Current Ratio
o Inventory Turnover
o Debt Ratio
o Gross Profit Percentage
o Profit Margin
As you complete these tasks, consider the transferrable skills you are using: critical thinking, information literacy, communication, and digital fluency skills are all being used at some level in the preparation and delivery of financial statement information.