Acctg 211 Comprehensive Problem 1: Service Industry
Comprehensive Problem 1: Service Industry
Note: This problem has a value of 10% of the final grade.
Objectives: Demonstrate application of accounting concepts pertaining to a service company, including the following: selection of business form, journalization and posting of daily transactions, creation of unadjusted trial balance, adjustment of the accounts to properly report changes in balances, creation of financial statements, completion of the closing process with appropriate closing entries and posting to T accounts, determination of book value for fixed assets, and discussion of company’s financial position.
As you work through this problem please refer to the Penn State rules regarding Academic Integrity. It is very important that you cite your sources.
Part 1: 5% of Assignment Grade
Monica Porter loves photography and wants to start her own company. She is single, 26 years old, and lives in an apartment in Nicetown. She has a job as a clerk in a grocery store that currently pays her living expenses. Her dream is to be a portrait photographer specializing in events such as weddings, birthdays, graduations, etc. She has saved $10,000 to start this endeavor. She knows nothing about accounting and has hired you to provide her with accounting services as well as guidance in starting this business.
This first task is to determine which business organization entity she should choose. Please explain the different business formats and which one you would suggest for her business, which will be named “Portraits by Porter” (PBP).
Part 2: 85% of Assignment Grade
Monica has followed your advice and on January 11, 2012, she deposited $10,000 into a business bank account for PBP and started pursuing her dream.
It has been a hectic year, and in June Monica contacts you to ask your advice in helping her to determine whether she can leave the grocery store and work the photography business full time. She provides you with a list of the things
Note: This problem has a value of 10% of the final grade.
Objectives: Demonstrate application of accounting concepts pertaining to a service company, including the following: selection of business form, journalization and posting of daily transactions, creation of unadjusted trial balance, adjustment of the accounts to properly report changes in balances, creation of financial statements, completion of the closing process with appropriate closing entries and posting to T accounts, determination of book value for fixed assets, and discussion of company’s financial position.
As you work through this problem please refer to the Penn State rules regarding Academic Integrity. It is very important that you cite your sources.
Part 1: 5% of Assignment Grade
Monica Porter loves photography and wants to start her own company. She is single, 26 years old, and lives in an apartment in Nicetown. She has a job as a clerk in a grocery store that currently pays her living expenses. Her dream is to be a portrait photographer specializing in events such as weddings, birthdays, graduations, etc. She has saved $10,000 to start this endeavor. She knows nothing about accounting and has hired you to provide her with accounting services as well as guidance in starting this business.
This first task is to determine which business organization entity she should choose. Please explain the different business formats and which one you would suggest for her business, which will be named “Portraits by Porter” (PBP).
Part 2: 85% of Assignment Grade
Monica has followed your advice and on January 11, 2012, she deposited $10,000 into a business bank account for PBP and started pursuing her dream.
It has been a hectic year, and in June Monica contacts you to ask your advice in helping her to determine whether she can leave the grocery store and work the photography business full time. She provides you with a list of the things