Betty's Bakery Manual Practice Set of Books

Small Business Manual ACCOUNTING BOOKKEEPING PRACTICE SET OF BOOKS

Bakery

A Step-by-Step Manual Accounting and Bookkeeping Practice Set Set Up a New Set of Books for a Small Business; Record First Month's Transactions into Journals; Post to the General Ledger; Reconcile the Bank Account; Prepare the Trial Balance, Financial Statements and Ratio Analysis.

Suggested Prerequisites: 10-Key Skills and Knowledge of the Accounting Equation, Accrual Accounting, Debits and Credits, Bank Reconciliations, Financial Statements, Financial Ratios.

INSTRUCTIONS & WORKPAPERS INCLUDED

Step-by-Step Instructions, Realistic Source Documents, the Six Journals, the General Ledger, Bank Reconciliation, Trial Balance, Balance Sheet, Income Statement, Financial Ratios, and Solutions

WELCOME

We're thrilled to have you join us on this real-world, hands-on journey, where you'll get the opportunity to apply your knowledge and skills in a practical setting. This manual accounting and bookkeeping practice set is designed to provide you with valuable experience in dealing with realistic financial transactions and mastering the art of maintaining accurate and organized records.

As you embark on this adventure, you'll be challenged to set up a new set of books, analyze and record a full month of financial transactions into journals, post to the general ledger, reconcile the bank account, prepare the trial balance, and create a balance sheet, income statement, and financial ratio analysis. You will gain a deeper understanding of how these essential components come together to create a comprehensive financial picture.

This practice set will give you a taste of what it's like to be an accountant and/or bookkeeper in the real world, where attention to detail, precision, and thoroughness are crucial. You'll encounter scenarios that will test your problem-solving abilities and decision-making skills, allowing you to learn from both your successes and any challenges you may encounter along the way.

By completing this practice set, you'll gain practical knowledge and confidence in your accounting and bookkeeping skills, making you well-prepared for on-the-job tasks. The talent you develop here will be invaluable as you progress in your career and encounter similar challenges in professional settings.

Remember, this is a learning experience, so don't get frustrated if you make mistakes or get stuck Mistakes are opportunities for growth and learning and it’s natural to get stumped along the way. If you become perplexed and unable to move forward at any point, it’s perfectly acceptable to take a quick peek at the solutions (at the back of the manual). Instead of viewing this as a failure or roadblock, try to see it as an opportunity for growth.

Suggestions for Working with this Practice Set

First, read and review page 1.1 to get a general idea of the nature of the company and how the practice set is structured. Then complete the five steps in order one step at a time. Each step includes an overview section and a ‘work to be performed’ section. The overview includes helpful accounting definitions and directions to assist in completing the ‘work to be performed.’

Helpful Hint: The entire accounting and bookkeeping practice set is printed on perforated paper and the pages may be easily removed from the manual at the left margin

At a minimum, the following two steps should be removed from the manual to make completing your work easier:

• Step 1: Prior Year Balances and Closing General Journal Entry-Pages 1.3 through 1.4

• Step 3: The Six Journals – Pages 3.1 through 3.6

• Step 5: The Workpapers - Pages 5.1 through 5.8

The remaining pages do not need to be removed, however you may find that completing the General Ledger at Step 4, pages 4.1 through 4.36, may work better if removed (optional).

Good Luck and Have Fun!

No part of this publica�on may be reproduced, stored in a retrieval system, or transmited in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, except as permited under Sec�on 107 or 108 of the 1976 United States Copyright Act, without the prior writen permission of the publisher.

Limit of Liability and Disclaimer of Warranty: The publisher makes no representa�ons or warran�es with respect to the accuracy or completeness of the contents of this work and specifically disclaims all warran�es, including without limita�on warran�es of fitness for a par�cular purpose. No warranty may be created or extended by sales or promo�onal materials. The advice and strategies contained herein may not be suitable for every situa�on. This work is sold with the understanding that the publisher is not engaged in rendering legal, accoun�ng, or other professional services. If professional assistance is required, the services of a competent professional should be sought. The publisher shall not be liable for any damages from loss of profit or any other commercial damages, including but not limited to special, incidental, consequen�al, or other damages.

Published by American Business College, Inc., San Diego, California

Copyright All rights reserved

ISBN: 979-8-9882087- 2-3

Betty’s Bakery

Small Business Manual Accounting & Bookkeeping Practice Set

THE BUSINESS

Betty Buckley has owned and operated a bakery and coffee shop for several years. She has both retail and wholesale operations. The retail coffee shop focuses on selling directly to individual customers, while the wholesale portion of the business involves selling baked goods in large quantities to other businesses such as restaurants, schools, non-profits, and stores. She has a team of skilled staff members who help her run the operation. Inventory turns over rapidly so that daily purchases are expensed directly to cost of goods sold. She performs a physical count of the inventory periodically and adjusts the inventory general ledger account balance accordingly.

Her accounting fiscal period is the calendar year. She has decided to change bookkeepers effective with the start of the new year and has hired you to take over the accounting and bookkeeping. You are to record her business transactions for the month, reconcile the bank account, prepare the month's financial statements on the accrual-basis of accounting, and complete a financial ratio analysis of her financial position and operating results.

Small Business Manual Accounting & Bookkeeping Practice Set

INSTRUCTIONS

Step 1: The Chart of Accounts, Prior Year Balances and Closing General Journal Entry

The Chart of Accounts

The first accounting process step required of any new company is the design and set up of a Chart of Accounts. This has already been done for you and is included with the workpapers (see below for location).

The chart of accounts serves as a framework for the entire accounting system It provides a standardized way to record and report financial transactions. It is a list of all the accounts that a company uses to record its financial transactions.

It provides a systematic way to organize and categorize financial transactions, which forms the basis for preparation of an organization’s financial statements, tax returns, and other financial reporting. The chart of accounts typically includes a numerical code for each account, along with a brief description of the account.

The Chart of Accounts is organized into five categories: assets, liabilities, equity, income, and expenses. It is structured to reflect the accounting equation, a list of company assets (the value of the business) and liabilities and equity (the two categories who ‘own’ the assets, respectively). Remember, income and expense accounts belong to the owner and are a sub-set of equity.

Each account is assigned to a category based on the type of transaction it represents. The Chart of Accounts should always utilize a simple numbering system and have as few accounts as possible in order to increase efficiency and accuracy. It is a flexible document and may be modified as the business changes.

Work to be Performed

The Chart of Accounts has already been created for you. It is located at Step 5: Workpapers (5.2).

1. Remove the Chart of Accounts from the manual and review the account numbers and descriptions to become familiar with the five account categories: assets, liabilities, equity, income, and expenses

2. You will refer to the Chart of Accounts often as you work through and complete the remaining practice set tasks.

Following your review of the Chart of Accounts, enter the prior year account balances into each appropriate General Ledger account, close out the income and expense accounts, and record the previous year net profit to the owner’s equity as explained below.

Betty’s Bakery

Small Business Manual Accounting & Bookkeeping Practice Set

Prior Year Account Balances

The chart on the right shows the ending account balances as a result of operations for the previous twelve months These account balances must be carried forward as new account balances for the new year.

Note that credit account balances are shown in parentheses and should be entered in that format.

To enter the prior year’s ending account balances to the General Ledger:

1. Locate the General Ledger at Pages 4.1 to 4.27. The pages may remain in the manual or may be removed at your option.

2. Enter each account balance shown on the right, one at a time, on the FIRST LINE of the correct General Ledger account page.

3. For example, Cash in Bank Account 100: Enter 01/01/20XX for the date, Prior Year Balance for the description, and $6,000 in the balance column.

4. Enter all remaining asset, liability, equity, income, and expense account balances with the same date and description, and appropriate debit or credit amount

The income and expense account balances applicable to the prior year must next be closed with the net difference recorded to the owner equity Retained Earnings account (see next section below).

Betty’s Bakery

Small Business Manual Accounting & Bookkeeping Practice Set

Close Prior Year Income and Expense Account Balances

After entering the prior year account balances as explained above, the next step requires transferring the prior year income and expense account balances to the Retained Earnings account

This is the process of ‘Closing the Books’ applicable to the previous year’s operational activity resulting in either a profit or loss.

One large General Journal Entry is prepared in which the income account balances are DEBITED and the expense account balances are CREDITED as shown here.

The net difference between the income credit balance accounts and expense debit balance account is the company’s profit or loss

To record the General Journal Entry:

1. Locate the General Ledger at Pages 4.1 to 4.26.

2. For each line item on the journal entry, go to the General Ledger account indicated and enter the date, journal entry number, and amount in the debit or credit column and adjust the account balances

General Journal Entry to Close the Books (Prior Year Income and Expense Accounts)

3. For example, Sales–Baked Goods Account number 410: Date 01/01/20XX, Posting Reference JE-00, enter $130,000 in the debit column, and change the account balance to zero.

Next, review the company’s source documents for the first month of operations for the new year and enter the transactions into the six journals.

Betty’s Bakery

Small Business Manual Accounting & Bookkeeping Practice Set

Step 2: Source Documents: Overview

An organization’s source documents are physical or electronic records that provide evidence of a financial transaction. They are used to support the entries made in the accounting system and they provide a detailed record of each transaction, including the dates, names, amounts, descriptions, and other essential information. Businesses group source documents into six categories: sales, purchases, cash receipts, cash payments, payroll, and miscellaneous.

Work to be Performed

The Source Documents for the company’s first month of operations are located at Step 2: Source Documents. Do not remove them from the manual. They have been grouped together into the six basic transaction categories. Review the various source documents to become familiar with each category. Each individual source document represents a business transaction that must be recorded into one of six journals discussed below as a separate line item using double-entry, debit and credit bookkeeping

Step 3: The Six Journals Overview

Manual accounting and bookkeeping utilize six Journals for each of the six categories of transactions. Each Journal is a record of every individual financial transaction that occurs in a business. It is where transactions are for the first time in the accounting process The journals provide a chronological listing of the six categories of financial transactions.

Each Journal is organized similar to a spreadsheet containing several columns. Debit amounts are always entered into the left column(s) and credit amounts are entered into the right column(s). Each transaction is entered on a single line and includes applicable information: date, invoice number, check number, name, and transaction debit and credit amounts. Each transaction is recorded in the journal as a debit to one account (left-side) and a credit to another account (rightside), in accordance with the principles of double-entry bookkeeping

Work to be Performed

The Six Journals for the company’s first month of operations are located in Step 3: The Six Journals (3.1). Remove the journals from the manual in order to work on them. Review and become familiar with the format of each one.

The six journals correspond to the six categories of source documents. Each journal is formatted with columns for debit amounts on the left-side and credit amounts on the right-side

Betty’s Bakery

Small Business Manual Accounting & Bookkeeping Practice Set

Step 3: The Six Journals - continued

Work to be Performed - continued

1. Enter the month (January) and year (20XX) at the top of each journal

2. Starting with Customer Sales Invoice source documents, enter one invoice per line: enter applicable source document information: date, reference number (invoice number, check number, etc.), and name

3. Also enter each source document’s dollar amounts as debit(s) on the left-side of the journal and credit(s) on the right-side of the journal Be sure the debit and credit dollar amounts are equal

4. After all transactions have been entered in the journal, add up each column and enter the totals at the bottom. It is important that these total debit and credit column amounts are also equal because they will be subsequently ‘posted’ (transferred) to the individual General Ledger accounts

5. Complete the remaining six journals using these same steps.

Step 4: The General Ledger Overview

The General Ledger is a central record-keeping system that contains all of the financial transactions of a company. It is a master accounting document that provides a complete and accurate record of all the financial transactions that have occurred during the life of the business An organization can have only one General Ledger.

The General Ledger contains all the individual accounts that a company uses to record its transactions in five categories: assets, liabilities, equity, revenue, and expenses. Each account in the GL has its own ledger page where transactions are recorded in chronological order using double-entry, debit and credit amounts. Each GL account will carry either a debit or credit balance and it is the accountant’s responsibility to know the validity and accuracy of each balance.

Work to be Performed

The General Ledger is located in Step 4: The General Ledger (4.1). The GL ledger pages should stay in the manual. Note that the GL account numbers and descriptions are identical to the Chart of Accounts

Betty’s Bakery

Small Business Manual Accounting & Bookkeeping Practice Set

Step 4: The General Ledger – continued Work to be Performed – continued

1. Review and become familiar with the 36 GL account ledger pages covering the five General Ledger Types: Assets, Liabilities, Equity, Income, and Expense.

2. Starting with the Sales Journal and continuing through the other five journals one-at-a-time, copy and enter each column’s total debit or credit dollar amounts to the applicable General Ledger account debt or credit column.

3. For instance, the Sales Journal’s left-side total debit column amount for Accounts Receivable would be entered into the first line of Accounts Receivable GL account as a debit amount. To complete the posting, enter the month-end date, description (sales Journal), and posting reference SJ-01 to provide an audit trail.

4. Similarly, the Sales Journal’s right-side total credit column amounts would be entered as credits into the various GL income (revenue) accounts.

5. Be sure to update the GL account balance for each debit and credit transaction entered into the debit and credit columns Note: GL debit account balances are not shown with brackets while GL credit account balances are shown with brackets. (Remember: GL asset and expense accounts generally carry debit balances while liabilities, equity, and income accounts carry credit balances.)

Step 5: Workpapers

The practice set workpapers are located in Step 5: Workpapers. They consist of the Chart of Accounts, Trial Balance, Bank Statement, Bank Reconciliation, Balance Sheet, Income Statement, and Financial Ratios. Review the various workpapers to get familiar with their format, content, and the financial information each provides. When all the workpapers have been finished, the practice set is considered completed.

The Chart of Accounts Overview

As discussed above, the design and set up of the chart of accounts is the first accounting process step required of any new company. The chart of accounts serves as a framework for the entire accounting system, and it provides a standardized way to record and report financial transactions

Work to be Performed

As mentioned above, the Chart of Accounts has already been created and is located in Step 5: Workpapers (5.2). If not already done so, remove it from the manual and review to become familiar with the five account categories: assets, liabilities, equity, income, and expense.

Betty’s Bakery

Small Business Manual Accounting & Bookkeeping Practice Set

The Trial Balance Overview

The Trial Balance worksheet is located in Step 5: Workpapers (5.3). The Trial Balance lists all the accounts in a company's Chart of Accounts and General Ledger along with columns for their respective debit or credit balances. The purpose of a trial balance is to ensure that the total debits and total credits for all the accounts are equal after all the transactions have been entered from the Journals

Work to be Performed

1. Enter the applicable balance from each General Ledger account onto the first two debit and credit columns and add the two columns. The two columns must be equal. Review your Journals and postings to the GL until the two column totals are equal

2. After resolving any discrepancies in 1, copy the Balance Sheet account balances to the two middle columns and copy the Income and Expense account balances to the two right columns and total all four columns. The columns will not be equal. See 3 below.

3. Verify that the difference between the debit and credit columns for the Balance Sheet and Income Statements are the same. This difference is the company’s profit or loss. Remember: the income and expense accounts belong to the owner. This difference between the income credits and the expense debits must be added back to owner’s equity (Retained Earnings) in order to balance the Balance Sheet.

The Bank Statement Overview

A bank statement is a monthly bank-generated document provided to its customers. It is a detailed listing of all the transactions that have occurred on the company’s bank account for the period Bank statements provide information related to deposits, withdrawals, and other money transactions that have taken place in the account, as well as the beginning and ending balance for the period.

Bank statements also support an historical and accurate record of a company’s cash transactions. It is essential and mandatory that the accountant and bookkeeper reconcile the bank balance to the company’s GL checking account balance at the end of every month.

Work to be Performed

The Bank Statement for the company’s first month is located in Section 5 Workpapers (5 4) Remove it from the manual and review it to become familiar with the format and information provided. You will need to refer to the Bank Statement as you complete the bank reconciliation below.

Betty’s Bakery

Small Business Manual Accounting & Bookkeeping Practice Set

The Bank Reconciliation Overview

The Bank Reconciliation form is located in Step 5: Workpapers (5.5). A bank reconciliation is the process that compares the bank statement balance to the company's General Ledger bank account balance and summarizes the missing transactions for both The purpose of a bank reconciliation is to identify any discrepancies or differences between the two balances and to adjust the accounting records accordingly.

Work to be Performed

To prepare the bank reconciliation you need the bank statement, the GL checking account, any journals that have cash transactions, and a bank reconciliation form The bank reconciliation form is located in Section 5 Workpapers (5.5). Remove it from the manual and become familiar with the format and information to be entered.

1. Enter the month-end General Ledger Checking Account balance and the month-end Bank Statement balance in the applicable two columns on the first line at the top.

2. Enter checkmarks next to each cash transaction in the four journals that also appear on the bank statement. Also, checkmark the bank statement amount that it matches the GL

3. Enter any unchecked cash receipt amounts in the journals as additions to the bank balance in the Deposits in Transit section. Enter any unchecked cash payment amounts in the journals as deductions from the bank balance in the Outstanding Checks section.

4. Verify any bank fees and/or interest earnings have been recorded in the General Journal.

5. The reconciliation is complete when the two column totals at the bottom are in agreement.

The Balance Sheet Overview

The Balance Sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time, usually at the end of a month, quarter, or year. The primary purpose of a business is to grow the organization and increase owner’s equity by generating operating profits.

The Balance Sheet answers two foundational and fundamental questions: (1) what is the value of the business (total assets)? and (2) who has rights or owns the assets (creditors vs owners)? It is a key financial statement in assessing financial liquidity, leverage, and strength of a company.

A balance sheet is based on the accounting equation: Assets = Liabilities + Equity whereby the total assets of a company must equal the sum of its liabilities and equity. The income and expense accounts are sub-sets of the owner’s equity as explained in more detail below.

Betty’s Bakery

The Balance Sheet - continued Overview - continued

The balance sheet is divided into three sections: assets, which lists all of the assets of the company in order of liquidity; liabilities, representing the creditor’s rights to assets; and equity, representing the owner’s rights to the assets.

Asset account balances are normally carried as debit balances, and liability and equity account balances are normally carried as credit balances

Work to be Performed

The Balance Sheet is located in Step 5 Workpapers (5.6). Remove it from the manual and become familiar with the format and information to be entered.

1. Enter the month-end date and year right below BALANCE SHEET.

2. From the Trial Balance enter the account balances for the assets, liabilities, and Owner’s Initial Investment without brackets. (The lines with brackets indicate deductions.)

3. Enter sub-total amounts where there are single lines.

4. Enter grand total amounts where there are double lines.

5. Enter the profit or (loss) amount from the Trial Balance on the Retained Earnings line.

6. The Total Assets must equal the Total Liabilities & Owner’s Equity.

The Income Statement Overview

An income statement is a financial statement that reports a company's income and expenses over a specific period of time, usually a month, quarter, or year. It is also known as a profit and loss statement, P&L statement, or Statement of Operations.

The income statement provides a summary of a company's operating results and performance, reporting whether it made a profit or a loss for the period covered. It shows the company's financial performance over an accumulated period of time

The income and expense accounts belong to the owner and are sub-sets of the owner’s equity. They are temporary accounts that only live for one year. After a year’s activity, the accumulated income and expense balances accounts are transferred back into equity. This is referred to as “closing the books” as the income and expense accounts begin the next year with zero balances.

In the past, income credit and expense transactions were recorded directly into equity, where the information could not be easily extracted and analyzed. Over time, if the business operates at a PROFIT, the owner’s equity increases. Conversely, if it generates LOSSES, the owner’s equity decreases.

Betty’s Bakery

The Income Statement - continued Work to be Performed

The Income Statement is located in Step 5 Workpapers (5 7). Remove it from the manual in order to work on it. Review and become familiar with the format and information to be entered.

1. Enter the month end date and year right below INCOME STATEMENT.

2. From the Trial Balance enter the account balances for each income and expenses line item

3. Add and enter sub-total amounts for Total Sales and Total Expenses

4. Subtract Total Expenses from Total Sales to calculate Net Income or (Loss) and enter on the double line at the bottom This amount should be the same as shown on the Trial Balance.

5. Calculate and enter each line item’s percentage (one decimal point) in the column at the right by dividing every line amount by Total Sales. i.e.; Every line item is a percentage of sales.

6. Enter the Net Income or (Loss) amount on the Retained Earning line of the Balance Sheet

This amount is needed in order to balance the Balance Sheet.

Financial Ratio Analysis

Overview

Financial statement ratio analysis is a technique used to evaluate a company's financial position and operating performance by comparing key financial ratios derived from its Balance Sheet and Income Statement.

Ratio analysis involves calculating and interpreting ratios that relate to the company's profitability, liquidity, solvency, and efficiency.

There are many financial ratios utilized in the finance industry Four basic financial ratios are: liquidity, efficiency, profitability, and leverage ratios.

• Liquidity ratios measure its ability to meet its short-term obligations.

• Profitability ratios measure a company's ability to generate income.

• Efficiency ratios measure how effectively the company uses its assets to generate revenue. Leverage ratios measure the relationship between the creditor’s rights to assets compared to the owner’s rights to rights, i.e., who owns the majority of the assets.

Betty’s Bakery

Small Business Manual Accounting & Bookkeeping Practice Set

Financial Ratio Analysis - continued

Work to be Performed

The Financial Ratio Analysis Worksheet is located in Step 5 Workpapers (5 8). Remove it from the manual in order to work on it. Review and become familiar with the format and information to be entered. The worksheet includes the following seven ratios:

• Two Liquidity ratios: Working Capital and Current Ratio

• One Efficient ratio: Days’ Sales Outstanding (DSO)

• Two Profitability ratios: Net Income as a Percentage of Sales & Return on Investment

• Two Leverage ratios: Owner’s Claims to Assets and Creditor’s Claims to Assets.

1. Enter the month end date and year right below FINANCIAL RATIO ANALYSIS

2. Using both the Balance Sheet and Income Statement, calculate the seven financial ratios. Note: explanations for calculating the ratios are described in each section.

3. Evaluate each ratio by entering a checkmark at the right to indicate Positive, Neutral, or Negative. Remember, ratio analysis is subject to personal opinion; and since this is the company’s first month in business, the ratios are not as meaningful as they will be as the organization develops additional operational history.

Step 6: Solutions

Solutions for the Six Journals, Trial Balance, Bank Reconciliation, Balance Sheet, Income Statement, Financial Ratios, and General Ledger are included in Sections 6, 7, and 8

Betty's Bakery

SALES INVOICE

Betty's Bakery

Betty's Bakery

SALES INVOICE

Betty's Bakery

SALES INVOICE

Betty's Bakery

125 Maple Glen Ave Pleasantville, CA 93121 Tel: (619) 555-0000 Fax: (619) 555-1111

SALES INVOICE

SALES INVOICE

Betty's Bakery

SALES INVOICE

SALES INVOICE

North County Flour Distributors

Bill To: Betty's Bakery

Reminder: Please include the invoice number on your check.

Reminder: Please include the invoice number on your check. ©American

Approved by Operations Manager: Charge $605 to Cost of Goods Sold

Bill To: Betty's Bakery Invoice No: 10115

Due

Vendor ID No: 105

Approved by Operations Manager: Charge to Individual Expense Accounts $2,235.00

Reminder: Please include the invoice number on your check.

Description Advertising Office Supplies Repairs & Maintenance Delivery Expense Postage Miscellaneous 2.17 Total

Bill To: Betty's Bakery Invoice No: 66881 125 Maple Glen Avenue

Description Building & Office Maintenance Expense for January Vendor ID No: 111

Approved by Operations Manager: Charge to Maintenance Expense

Bill To: Betty's Bakery

Invoice No: 44885 125 Maple Glen Avenue Date: 01-25-XX San Diego, CA 93121

Description

Gasoline for Delivery Van for the month of January

Lube and Oil Delivery Van

Vendor ID No: 112

Approved by Operations Manager:

Charge to Maintenance Expense

Total Due and Payable...................................................................................................

©American Business College, Inc.

Bill To: Betty's Bakery

Federal Express

1225 Mc Manus Street

Pleasantville, CA 93000

Phone: (916) 561-1797

Fax: (916) 561-1798

Invoice No: 551-01

Date: 01-27-XX San Diego, CA 93121

125 Maple Glen Avenue

Description

Overnight Pickup and Delivery for January

Vendor ID No: 113

Approved by Operations Manager: Charge to Delivery Expense

$175.00

Total Due and Payable............................................................................................... 2.25

©American Business College, Inc.

$175.00

EDSON REPAIR SERVICE

802 Carson Street Pleasantville, CA 93000 Tel: (916) 623-2189 Fax: (916) 623-2190

Bill To: Betty's Bakery

Invoice No: 44123

125 Maple Glen Avenue

Repair Mixing Machine

Description

Date: 01-29-XX San Diego, CA 93121 Date Amount 01-29-XX

$225.00

Vendor ID No: 114

Approved by Operations Manager: Charge to Repairs & Maint.

Total Due and Payable...................................................................................................

$225.00

©American Business College, Inc.

MORRISON MARKETING SERVICES

50 Slauson Blvd Pleasantville,, CA 93000 Tel: (916) 615-2581 Fax: (916) 615-2582

Bill To: Betty's Bakery

Invoice No: 13107

125 Maple Glen Avenue

Description

Date: 01-31-XX San Diego, CA 93121 Date Amount 01-31-XX

Professional Advertising Consulting & Marketing Services

for January

Vendor ID No: 115

Approved by Operations Manager: Charge to Advertising

$950.00

Total Due and Payable...................................................................................................

$950.00

©American Business College, Inc.

Betty's Bakery Cash Receipts

CASH RECEIPTS

Betty's Bakery

125 Maple Glen Ave. Pleasantville, CA 93121 Tel: (619) 555-0000 Fax: (619) 555-1111

Betty's Bakery issues a receipt every time it receives cash from any source. Duplicate receipts are are given to the bookkeeper to be recorded in the Cash Receipts Journal. These receipts serve as objective, verifiable documentation of cash business transactions. Date: Received From: BETTY BUCKLEY

RECEIPT

THREE THOUSAND AND 00/100-------------------------------------------------- Dollars

SEVEN HUNDRED FIFTY AND 00/100------------------------------------------- Dollars

ONE THOUSAND THREE HUNDRED FIFTY AND 00/100-------------------Dollars

CASH RECEIPTS

Betty's Bakery

125 Maple Glen Ave. Pleasantville, CA 93121 Tel: (619) 555-0000 Fax: (619) 555-1111

Betty's Bakery issues a receipt every time it receives cash from any source. Duplicate receipts are are given to the bookkeeper to be recorded in the Cash Receipts Journal. These receipts serve as objective, verifiable documentation of cash business transactions.

RECEIPT

From: COUNTER SALES

ONE THOUSAND THREE HUNDRED SEVENTY SEVEN AND 05/100------------ Dollars

HUNDRED EIGHTY FIVE AND 00/100--------------------------------- Dollars

EIGHTY NINE AND 00/100----------------------------------- Dollars

CASH RECEIPTS

Betty's Bakery

125 Maple Glen Ave. Pleasantville, CA 93121 Tel: (619) 555-0000 Fax: (619) 555-1111

Betty's Bakery issues a receipt every time it receives cash from any source. Duplicate receipts are are given to the bookkeeper to be recorded in the Cash Receipts Journal. These receipts serve as objective, verifiable documentation of cash business transactions.

RECEIPT

ONE THOUSAND FIVE HUNDRED FIFTY EIGHT AND 07/100------------ Dollars

ONE HUNDRED TEN AND 00/100------------------------------------------------- Dollars

From: FIRST NATIONAL BANK

THOUSAND FIVE HUNDRED AND 00/100------------------------------Dollars

ADDITIONAL FUNDS FOR WORKING CAPITAL

CASH RECEIPTS

Betty's Bakery

125 Maple Glen Ave. Pleasantville, CA 93121 Tel: (619) 555-0000 Fax: (619) 555-1111

Betty's Bakery issues a receipt every time it receives cash from any source. Duplicate receipts are are given to the bookkeeper to be recorded in the Cash Receipts Journal. These receipts serve as objective, verifiable documentation of cash business transactions.

RECEIPT

From: ST. PAUL'S CHURCH

NINE HUNDRED EIGHTY FIVE AND 00/100------------------------------------ Dollars

FIVE HUNDRED FIFTY SEVEN AND 00/100------------------------------------ Dollars

ONE THOUSAND EIGHT HUNDRED SIXTY SEVEN AND 31/100-------- Dollars

CASH RECEIPTS

Betty's Bakery

125 Maple Glen Ave. Pleasantville, CA 93121 Tel: (619) 555-0000 Fax: (619) 555-1111

Betty's Bakery issues a receipt every time it receives cash from any source. Duplicate receipts are are given to the bookkeeper to be recorded in the Cash Receipts Journal. These receipts serve as objective, verifiable documentation of cash business transactions.

RECEIPT

From: BEACHSIDE MARKET

THREE HUNDRED TWENTY FIVE AND 00/100------------------------------- Dollars

SIX HUNDRED FIFTY SEVEN AND 00/100-------------------------------------- Dollars

THOUSAND THREE HUNDRED NINE AND 16/100------------------- Dollars

CASH RECEIPTS

Betty's Bakery

125 Maple Glen Ave. Pleasantville, CA 93121 Tel: (619) 555-0000 Fax: (619) 555-1111

Betty's Bakery issues a receipt every time it receives cash from any source. Duplicate receipts are are given to the bookkeeper to be recorded in the Cash Receipts Journal. These receipts serve as objective, verifiable documentation of cash business transactions.

RECEIPT

From: GIRLS SCOUTS

SIX HUNDRED SIXTY SEVEN AND 00/100--------------------------------------Dollars

EIGHT HUNDRED THIRTY FIVE AND 00/100---------------------------------- Dollars

SEVEN HUNDRED EIGHTY NINE AND 81/100-------------------------------- Dollars

CASH RECEIPTS

Betty's Bakery

125 Maple Glen Ave. Pleasantville, CA 93121 Tel: (619) 555-0000 Fax: (619) 555-1111

Betty's Bakery issues a receipt every time it receives cash from any source. Duplicate receipts are are given to the bookkeeper to be recorded in the Cash Receipts Journal. These receipts serve as objective, verifiable documentation of cash business transactions.

RECEIPT

Received From: ROTARY CLUB

ONE THOUSAND ONE HUNDRED FIFTY TWO AND 93/100-------------- Dollars

HUNDRED TEN AND 00/100------------------------------------------------ Dollars

TWO HUNDRED NINETY ONE AND 00/100------------------------------------ Dollars

CASH RECEIPTS

Betty's Bakery

125 Maple Glen Ave. Pleasantville, CA 93121 Tel: (619) 555-0000 Fax: (619) 555-1111

Betty's Bakery issues a receipt every time it receives cash from any source. Duplicate receipts are are given to the bookkeeper to be recorded in the Cash Receipts Journal. These receipts serve as objective, verifiable documentation of cash business transactions.

RECEIPT

From: Y.M.C.A

ONE THOUSAND THIRTEEN AND 93/100----------------------------- Dollars

HUNDRED NINETY NINE AND 09/100------------------------------------ Dollars

THOUSAND ONE HUNDRED FIFTY FIVE AND 00/100--------------- Dollars

Betty's Bakery Employee Payroll

Betty's Bakery

Betty's Bakery

Betty's Bakery

Betty's Bakery

Betty's Bakery

Betty's Bakery

Betty's Bakery WELLS FARGO BANK, NA

123 Maple Glen Avenue

Pleasantville, CA 93121

PAY TO THE ORDER OF: NORTH COUNTY FLOUR DISTRIBUTORS

DATE: January 15, 20XX

THREE HUNDRED TWENTY FIVE AND 00/100----------------------------------------------------------------------------

Memo Pay 12-31

|| 00-1534 || :12340002372:3354112287

Betty's Bakery 123 Maple Glen Avenue

FARGO BANK, NA Pleasantville, CA 93121

DATE: January 15, 20XX

PAY TO THE ORDER OF: HOWARD'S EGG FARM

THREE HUNDRED FIFTY AND 00/100----------------------------------------------------------------------------------------

Memo Pay 12-31

|| 00-1534 || :12340002372:3354112287

Betty's Bakery 123 Maple Glen Avenue WELLS FARGO BANK, NA Pleasantville, CA 93121

DATE: January 15, 20XX

PAY TO THE ORDER OF: CONSOLIDATED BAKERY SUPPLIES, INC.

THREE HUNDRED FORTY FIVE AND 00/100-------------------------------------------------------------------------------

|| 00-1534 || :12340002372:3354112287

Betty's

Pleasantville, CA 93121

PAY TO THE ORDER OF: BETTY BUCKLEY

DATE: January 15, 20XX

TWO THOUSAND AND 00/100-----------------------------------------------------------------------------------------

Memo OWNER DRAW Vendor ID: 119 || 00-1534 || :12340002372:3354112287

Betty's

PAY TO THE ORDER OF: SPECIALITY FOOD PRODUCTS

DATE: January 15, 20XX

TWO HUNDRED TEN AND 00/00-----------------------------------------------------------------------------------------------

|| :12340002372:3354112287

Betty's

PAY TO THE ORDER OF: REMAC SHOPPING CENTERS, INC.

DATE: January 15, 20XX

TWO THOUSAND FIVE HUNDRED AND 00/100---------------------------------------------------------------------------

Memo RENT FOR THE MONTHS: JANUARY & FEBRUARY || 00-1534 || :12340002372:3354112287

Betty's Bakery WELLS FARGO BANK, NA

123 Maple Glen Avenue WWW.WELLSFARGO.COM

Pleasantville, CA 93121

PAY TO THE ORDER OF: FIRST NATIONAL BANK

DATE: January 15, 20XX

657 AMOUNT $750.00

SEVEN HUNDRED FIFTY AND 00/100----------------------------------------------------------------------------------------

Memo NOTE PAYABLE - PRINCIPAL PAYMENT

|| 00-1534 || :12340002372:3354112287

Betty's Bakery

Betty Buckley

123 Maple Glen Avenue WELLS FARGO BANK, NA Pleasantville, CA 93121 WWW.WELLSFARGO.COM

DATE: January 15, 20XX

PAY TO THE ORDER OF: AMERICAN EXPRESS

ONE HUNDRED FIFTY AND 00/100--------------------------------------------------------------------------------------------

Memo Pay 12-31Balance on Account

|| 00-1534 || :12340002372:3354112287

Betty Buckley

Betty's Bakery 123 Maple Glen Avenue WELLS FARGO BANK, NA Pleasantville, CA 93121 WWW.WELLSFARGO.COM 16-24/1220

PAY TO THE ORDER OF: TIMES TRIBUNE

DATE: January 15, 20XX

Authorized Signature $250.00

TWO HUNDRED FIFTY AND 00/100-------------------------------------------------------------------------------------------

Memo Pay 12-31 Balance on Account

|| 00-1534 || :12340002372:3354112287

Betty Buckley

Authorized Signature

658

Betty's Bakery WELLS FARGO BANK, NA 123 Maple Glen Avenue

Pleasantville, CA 93121

PAY TO THE ORDER OF: STAPLES OFFICE SUPPLIES

DATE: January 15, 20XX

THREE HUNDRED TWENTY FIVE AND 00/100----------------------------------------------------------------------------

Memo Pay 12-31

|| 00-1534 || :12340002372:3354112287

Betty's Bakery 123 Maple Glen Avenue

FARGO BANK, NA Pleasantville, CA 93121

DATE: January 15, 20XX

PAY TO THE ORDER OF: PETERSON INSURANCE SERVICES

ONE HUNDRED FIFTY AND 00/100-----------------------------------------------------------------------------------------

661

Memo Pay 12-31

|| 00-1534 || :12340002372:3354112287

Betty's Bakery 123 Maple Glen Avenue WELLS FARGO BANK, NA Pleasantville, CA 93121 WWW.WELLSFARGO.COM

DATE: January 15, 20XX

PAY TO THE ORDER OF: SDG&E

ONE HUNDRED TEN AND 00/100----------------------------------------------------------------------------------------------

Authorized Signature

|| 00-1534 || :12340002372:3354112287

Betty's Bakery WELLS FARGO BANK, NA

123 Maple Glen Avenue WWW.WELLSFARGO.COM 16-24/1220

Pleasantville, CA 93121

PAY TO THE ORDER OF: MISSION MOTORS

DATE: January 15, 20XX

663 AMOUNT $3,500.00

THREE THOUSAND FIVE HUNDRED AND 00/100------------------------------------------------------------------------DOLLARS

Memo PURCHASED USED DELIVERY TRUCK Vendor ID: 122

|| 00-1534 || :12340002372:3354112287

Betty's Bakery

Betty Buckley

123 Maple Glen Avenue WELLS FARGO BANK, NA Pleasantville, CA 93121 WWW.WELLSFARGO.COM 16-24/1220

DATE: January 15, 20XX

PAY TO THE ORDER OF: AT&T

Memo Pay 12-31Balance on Account

|| 00-1534 || :12340002372:3354112287

Betty's Bakery

664

AMOUNT $115.00

ONE HUNDRED FIFTEEN AND 00/100----------------------------------------------------------------------------------------DOLLARS

Betty Buckley

Authorized Signature

123 Maple Glen Avenue WELLS FARGO BANK, NA Pleasantville, CA 93121 WWW.WELLSFARGO.COM 16-24/1220

PAY TO THE ORDER OF: U.S. POSTMASTER

DATE: January 15, 20XX

Authorized Signature $250.00

665 AMOUNT

TWO HUNDRED FIFTY AND 00/100------------------------------------------------------------------------------------------- DOLLARS

Memo REFILLED POSTAGE METER MACHINE Vendor ID: 123

|| 00-1534 || :12340002372:3354112287

Betty Buckley

Authorized Signature

Betty's Bakery WELLS FARGO BANK, NA

123 Maple Glen Avenue

Pleasantville, CA 93121

PAY TO THE ORDER OF: PRESTIGE MAINTENANCE COMPANY

DATE: January 15, 20XX

THREE HUNDRED FIFTY AND 00/100---------------------------------------------------------------------------------------- DOLLARS

Memo Pay 12-31Balance on Account

|| 00-1534 || :12340002372:3354112287

Authorized

Betty's Bakery 123 Maple Glen Avenue WELLS FARGO BANK, NA Pleasantville, CA 93121

DATE: January 15, 20XX

PAY TO THE ORDER OF: SHELLY'S SHELL STATION

ONE HUNDRED SIXTY FIVE AND 00/100------------------------------------------------------------------------------------ DOLLARS

|| 00-1534 || :12340002372:3354112287

Betty's Bakery 123 Maple Glen Avenue WELLS FARGO BANK, NA Pleasantville, CA 93121 WWW.WELLSFARGO.COM

DATE: January 15, 20XX

PAY TO THE ORDER OF: FEDERAL EXPRESS

ONE HUNDRED TWENTY FIVE AND 00/100-------------------------------------------------------------------------------- DOLLARS

Memo Pay 12-31

|| :12340002372:3354112287

Authorized Signature

Betty's Bakery WELLS FARGO BANK, NA

123 Maple Glen Avenue WWW.WELLSFARGO.COM 16-24/1220

Pleasantville, CA 93121

PAY TO THE ORDER OF: UNITED STATES TREASURY

DATE: January 15, 20XX

669 AMOUNT $1,617.62

ONE THOUSAND SIX HUNDRED SEVENTEEN AND 62/100--------------------------------------------------------- DOLLARS

Memo FEDERAL PAYROLL TAXES PAYABLE Vendor ID: 116

|| 00-1534 || :12340002372:3354112287

Betty's Bakery

Betty Buckley

Authorized Signature

123 Maple Glen Avenue WELLS FARGO BANK, NA Pleasantville, CA 93121 WWW.WELLSFARGO.COM 16-24/1220

DATE: January 15, 20XX

PAY TO THE ORDER OF: EMPLOYMENT DEVELOPMENT DEPARTMENT

AMOUNT $362.89

THREE HUNDRED SIXTY TWO AND 89/100-------------------------------------------------------------------------------- DOLLARS

670

Memo STATE PAYROLL TAXES PAYABLE Vendor ID: 117

|| 00-1534 || :12340002372:3354112287

Betty's Bakery

Betty Buckley

Authorized Signature

123 Maple Glen Avenue WELLS FARGO BANK, NA Pleasantville, CA 93121 WWW.WELLSFARGO.COM 16-24/1220

DATE: January 15, 20XX

PAY TO THE ORDER OF: STATE BOARD OF EQUALIZATION

671 AMOUNT

$811.60

EIGHT HUNDRED ELEVEN AND 60/100------------------------------------------------------------------------------------- DOLLARS

Memo REMIT SALES TAXES COLLECTED FROM CUSTOMERS Vendor ID: 118

|| 00-1534 || :12340002372:3354112287

Betty Buckley

Authorized Signature

Betty's Bakery

January Miscellaneous Transactions to be Recorded via General Journal Entry

INSTRUCTIONS: (1) Prepare General Journal entries for the following January miscellaneous business transactions; (2) be sure the Debit and Credit amounts equal; (3) post each debit and credit from each General Journal entry to the appropriate General Ledger Accounts.

Transaction Description

Record liability for unpaid/accrued Salary Expense of $1,500 at month-end.

Record liability for unpaid/accrued payroll taxes of $500 at month-end.

Record $750 increase to Reserve for Doubtful Accts and Bad Debt Expense.

Record $750 Depreciation Expense at month-end.

Record January amortization of Prepaid Insurance in the amount of $450.

Record Cost of Goods Sold of $2,000 for the month of January.

Record $125 of bank service charges and charge to Miscellaneous Expense.

Record $75 credit card fee deducted from Cash In Bank (Interest Expense).

Record liability for unpaid/accrued Interest Payable of $500 at month-end.

Record $40 of Interest (Misc. Income) added to checking account by bank.

$1,000 of Advertising Expense debited to Office Supplies Expense in error.

$300 Miscellaneous Expense charged to Equip & Fixtures (A/C 150) in error.

January Cost of Goods Sold was overstated by $500 due to error.

JE-01 above recorded in error…should have been $150, not $1,500.

Record January amortization of Prepaid Rent in the amount of $1,250.00

2.53

Betty's Bakery Purchases Journal

Betty's Bakery

Journal

Debits: Credits:

©American Business College, Inc. 3.4

Totals..................................................................

Debits: Credits:

Betty's Bakery

Betty's Bakery

Betty's Bakery Purchases Journal

Betty's Bakery

Journal

Debits: Credits:

©American Business College, Inc. 3.4

Totals..................................................................

Debits: Credits:

Betty's Bakery

Betty's Bakery

Betty's Bakery

Company Name: Betty's Bakery Phone: 619-555-0000

Legal Name: Betty's Bakery

Fax: 619-555-1111

Street Address: 125 Maple Glen Ave. Federal Tax ID No. 33-1234501

City: Pleasantville State Tax ID No. 33-1234501

State: California Form of Business; Sole Proprietorship

Zip: 93121 Email: bettysbakery@cox.net

Country: USA Website: bettysbakery.com

CHART OF ACCOUNTS

Betty's Bakery

123

If you have any questions about this statement or your accounts, call: 800-222-6500

COMPANY: Betty's Bakery

BANK RECONCILATION

PREPARED BY:

MONTH ENDED: January 31, 20XX

The Bank Reconciliation Process

(1) Enter General Ledger and Bank Statement ending cash balances…………

Add to Bank balance each G/L deposit not checked-off on bank statement (Deposits-in-Transit):

Deposits In Transit do not affect the G/L balance. Do not enter any amounts in G/L column.

(2) Total General Ledger Deposits-in-Transit (increases Bank balance)

Deduct from Bank balance each G/L check not checked-off on bank statement (Outstanding Checks):

Outstanding checks do not affect the G/L balance. Do not enter any amounts in G/L column.

Check No:

Check No:

Check No:

Check No:

(3) Total General Ledger Outstanding Checks (decreases Bank balance)

Add DEPOSIT or CREDIT items on Bank Statement not checked-off on General Ledger

Bank Credits have been recorded on the company's books.

(4) Total Bank Credit items (increases General Ledger cash balance)

DATE PREPARED: Deduct WITHDRAWAL or DEBIT items on Bank Statement not checked-off on General Ledger

Bank Debit have been recorded on the company's books.

(5) Total Bank Debit items (decreases General Ledger cash balance)

Reconciled balances - General Ledger and Bank cash balances must agree

(6) Adjusted General Ledger and Bank Statement ending cash balances……

Betty's

Bakery Income Statement

Betty's Bakery Financial Ratio Analysis

Betty's Bakery

Sales Journal

Betty's Bakery

Purchases Journal

Betty's Bakery

Cash Receipts Journal

Betty's Bakery

Payroll Journal

Betty's Bakery

Betty's Bakery

Betty's Bakery

Betty's Bakery

Betty's

Bakery Trial Balance Solution For the Month Ended January 31, 20XX

BANK RECONCILATION SOLUTION

COMPANY: Betty's Bakery

MONTH ENDED: January 31, 20XX

The Bank Reconciliation Process

PREPARED BY:

DATE PREPARED:

(1) Enter General Ledger and Bank Statement ending cash balances………… Add to Bank balance each G/L deposit not checked-off on bank statement (Deposits-in-Transit):

Deposits In Transit do not affect the G/L balance. Do not enter any amounts in G/L column.

(2) Total General Ledger Deposits-in-Transit (increases Bank balance)

Deduct from Bank balance each G/L check not checked-off on bank statement (Outstanding Checks):

Outstanding checks do not affect the G/L balance. Do not enter any amounts in G/L column.

(3) Total General Ledger Outstanding Checks (decreases Bank balance) Add DEPOSIT or CREDIT items on Bank Statement not checked-off on General Ledger

ATM Deposits

Bank Credits have been recorded on the company's books. Electronic Funds Transfers In

(4) Total Bank Credit items (increases General Ledger cash balance)

Deduct WITHDRAWAL or DEBIT items on Bank Statement not checked-off on General Ledger

Interest Expense

Service Charges

ATM Withdrawals Bank Debit have been recorded on the company's books.

(5) Total Bank Debit items (decreases General Ledger cash balance)

Reconciled balances - General Ledger and Bank cash balances must agree

(6) Adjusted General Ledger and Bank Statement ending cash balances……

Betty's Bakery Balance Sheet Solution

Betty's Bakery

Income Statement Solution

Betty's Bakery Financial Ratio Analysis Solution

Betty's Bakery General Ledger

Betty's Bakery General Ledger

Betty's Bakery General Ledger

Betty's Bakery General Ledger

Betty's Bakery General Ledger

Betty's Bakery General Ledger

Betty's Bakery General Ledger

Betty's Bakery General Ledger

Betty's Bakery General Ledger

Betty's Bakery General Ledger