Question

Portfolio Project Option #1 is for accounting students who are sensing learners, and learn best from concrete materials and examples. If this is your learning style preference, you are practical and careful with detail. For this assignment, you are required to complete all three accounting cases: Arizona Consultants Inc., Power and Demolition Company, and Warnerwood. You will then present Parts 1, 2, and 3 of the Portfolio Project in Excel as journal entries, following the exact instructions that accompany each part.

Assignment Template attached below

Part 1:

Arizona Consultants, Inc. opened in March and completed the following transactions:

March 1: Arizona Consultants Inc. issued 17,200 shares of $10 par value capital stock for $150,000 cash and equipment with fair market value of $22,000.

March 2: Arizona Consultants Inc. pre-paid $6,000 cash or six months’ rent for their office.

March 3: Arizona Consultants Inc. made credit purchases for office equipment for $3,000 and office supplies for $1,200. Payment is due within 10 days.

March 6: Arizona Consultants Inc. completed services for a client and immediately received $4,000 cash.

March 9: Arizona Consultants Inc. completed a $7,500 project for a client who must pay within 30 days.

March 12: Arizona Consultants Inc. paid $4,200 cash to settle the account payable created on March 3.

March 19: Arizona Consultants Inc. paid a $5,000 cash premium on a 12-month insurance policy.

March 22: Arizona Consultants Inc. received $3,500 cash as a partial payment for the work completed on March 9.

March 25: Arizona Consultants Inc. completed work for another client for $3,820 on credit.

March 29: Arizona Consultants Inc. declared dividends of $5,000 to its shareholders on record. Dividends were paid in cash the following day.

March 30: Arizona Consultants Inc. purchased $600 of additional office supplies on credit.

March 31: Arizona Consultants Inc. paid $500 cash for this month’s utility bill.

Instructions:

Using the following template, prepare journal entries for the above economic transactions. Enter your journals to the general ledger using the same file name. The following accounts should be used in recording your transactions: cash, accounts receivable, prepaid rent, office equipment, capital stock, prepaid insurance, office supplies, accounts payable, consulting revenue, dividends, and utility expense.

Journal Entries Template for Arizona Consultants Inc.

Part 2:

The following unadjusted trial balance is for Montana Construction Company as of year-end for the December 31, 20x7 fiscal year. The December 31, 20x6 credit balance of the stockholders’ equity account is $46,900, and the stockholders invested $40,000 cash in the company during 20x7.

NO. Account Title Debit Credit

101 Cash $7,000

126 Supplies $16,000

128 Pre-paid insurance $12,600

167 Equipment $200,000

168 Accumulated depreciation – equipment $14,000

201 Accounts payable $6,800

251 Long-term notes payable $30,000

301 Stockholders’ equity $86,900

302 Dividends $12,000

401 Demolition fees earned $187,000

623 Wage expense $41,400

633 Interest expense $3,300

640 Rent expense $13,200

683 Property tax expense $9,700

684 Repairs expense $4,700

690 Utilities expense $4,800

TOTALS $324,700 $324,700

Instructions:

a) Journalize the following adjusting entries as of fiscal year-end December 31, 20x7.

b) Using the worksheet, post the adjusting entries using the adjustments column and prepare the adjusted trial balance.

c) Create financial statements. Namely, i) the income statement, ii) statement of stockholders’ equity, and iii) the balance sheet for 20x7.

Adjustments needed:

The supplies available at the end of fiscal 20x7 year are at a cost of $7,900.

The cost of expired insurance for the fiscal year is $10,600.

Annual depreciation on equipment is $7,000; no other depreciation adjustment was made in 20x7.

The December utilities expense of $800 is not included in the adjusted trial balance because the bill arrived after the trial balance was prepared. The $800 amount owed needs to be recorded.

The company's employees have earned $2000 in accrued wages for the fiscal year.

The rent expense not yet paid or recorded in the fiscal year is $3000.

Additional property taxes of $550 have been assessed for the fiscal year, but have not yet been paid or recorded in the accounts.

The $300 accrued interest for December has not yet been paid and reported.

Use the following template

Montana Construction Company template

Part 3:

Assume you are the chief accountant making a presentation during the stockholders annual meeting for your corporation. Provide a brief explanation to stockholders on each of the following questions:

Shares

In what ways can shares be “preferred”? In which ways are they similar and different from common shares? Give real-world examples.

How does the book value of shares of stock differ from the market value of shares of stock? Use a real-world example in your answer.

Dividends

Discuss at least three key issues that a board of directors considers when making a dividend declaration decision.

How does a share dividend differ from a share split?

Retained Earnings

Explain why companies place restrictions on some of their retained earnings.

Answer 1