AC1220 The Accounting Cycle Project Part 1
The first part of a project on the accounting cycle in the context of AC 1220.
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AC1220 ACCOUNTING I Project Part 1
Page 1
Project Part 1: The Accounting Cycle
Using the provided transactions and adjustments for December 20x2, journalize all transactions,
complete the accounting worksheet, and prepare the income statement, statement of owner’s equity,
and balance sheet for City Rides as of December 31, 20x2. Additionally, make the necessary closing
entries to close the temporary accounts to the Capital account. Ensure all calculations are accurate and
provide clear explanations for each step. Your response should be between 800 and 1,200 words.
Page 1
Project Part 1: The Accounting Cycle
Using the provided transactions and adjustments for December 20x2, journalize all transactions,
complete the accounting worksheet, and prepare the income statement, statement of owner’s equity,
and balance sheet for City Rides as of December 31, 20x2. Additionally, make the necessary closing
entries to close the temporary accounts to the Capital account. Ensure all calculations are accurate and
provide clear explanations for each step. Your response should be between 800 and 1,200 words.
AC1220 ACCOUNTING I Project Part 1
Page 2
Project Part 1: The Accounting Cycle
Karen Harris starts her own scooter retail business, City Rides, on December 1, 20x2. The business
operates as a proprietorship from a rented space near a busy downtown area. Harris hires Jim Waters as
the sales associate and assistant manager of the business. The following transactions take place during
December 20x2.
Transactions
Dec. 1 Harris deposits $45,000 into the business bank account. In exchange, she receives
capital in the proprietorship.
1 Harris writes and mails check #001 for $2,400 for rent. The rent payment covers rent
for the three months ended February 28, 20x2.
2 Harris purchases office equipment for $1,800 by check #002.
2 Harris purchases office supplies for $420 by check #003.
2 Harris purchases 20 Model X mopeds at $500 each and 15 Model L mopeds at $800
each, costing a total of $22,000, on account from a supplier, Fun Brands:
• Harris elects to use the first-in-first-out (FIFO) method to account for
inventory.
• Fun Brands provides an invoice with the following terms: 2/10 net 30.
9 In the first week of operation, City Rides sells 16 Model X mopeds at $750 each: 10
are sold on account, and the rest are sold for cash.
12 City Rides makes payment to Fun Brands in full settlement of accounts payable by
check #004. Payment is net of the purchase discount. Hint: The terms are 2/10 net 30,
and any purchase discount received reduces the cost of inventory.
13 City Rides purchases 10 Model X mopeds from Fun Brands on account at a cost of
$520 each.
16 The sales for the week are as follows: 6 Model X mopeds sold on account for $750
each—inventory cost accounted using the FIFO method.
18 Cash receipts from customers on accounts receivable are $7,100.
30 Sales for the rest of December are as follows: 2 Model L mopeds sold for cash for
$1,100 each.
30 Harris receives the utilities bill for December 20X2 for $650, still payable at month
end.
30 Harris pays wages amounting to $1,800 by check #005.
30 Harris withdraws $2,500 in cash.
Page 2
Project Part 1: The Accounting Cycle
Karen Harris starts her own scooter retail business, City Rides, on December 1, 20x2. The business
operates as a proprietorship from a rented space near a busy downtown area. Harris hires Jim Waters as
the sales associate and assistant manager of the business. The following transactions take place during
December 20x2.
Transactions
Dec. 1 Harris deposits $45,000 into the business bank account. In exchange, she receives
capital in the proprietorship.
1 Harris writes and mails check #001 for $2,400 for rent. The rent payment covers rent
for the three months ended February 28, 20x2.
2 Harris purchases office equipment for $1,800 by check #002.
2 Harris purchases office supplies for $420 by check #003.
2 Harris purchases 20 Model X mopeds at $500 each and 15 Model L mopeds at $800
each, costing a total of $22,000, on account from a supplier, Fun Brands:
• Harris elects to use the first-in-first-out (FIFO) method to account for
inventory.
• Fun Brands provides an invoice with the following terms: 2/10 net 30.
9 In the first week of operation, City Rides sells 16 Model X mopeds at $750 each: 10
are sold on account, and the rest are sold for cash.
12 City Rides makes payment to Fun Brands in full settlement of accounts payable by
check #004. Payment is net of the purchase discount. Hint: The terms are 2/10 net 30,
and any purchase discount received reduces the cost of inventory.
13 City Rides purchases 10 Model X mopeds from Fun Brands on account at a cost of
$520 each.
16 The sales for the week are as follows: 6 Model X mopeds sold on account for $750
each—inventory cost accounted using the FIFO method.
18 Cash receipts from customers on accounts receivable are $7,100.
30 Sales for the rest of December are as follows: 2 Model L mopeds sold for cash for
$1,100 each.
30 Harris receives the utilities bill for December 20X2 for $650, still payable at month
end.
30 Harris pays wages amounting to $1,800 by check #005.
30 Harris withdraws $2,500 in cash.
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Document Details
University
ITT Technical Institute Chantilly
Subject
Accounting