computer project

DeeDee Double Entry, Incorporated creates accounting games and literature to enhance accounting education and financial literacy. Their business has been quite successful since their incorporation in January 1, 2020. DeeDee recently lost their accountant but luckily, they have arranged for a fine accounting student from Oakland University to assist in the closing process. They have provided you with the unadjusted trial balance for DeeDee Double Entry Incorporated as of 12/31/23. The previous accountant recorded all original entries involving cash, etc. during the year. However, at year-end the previous accountant would make all necessary adjusting/reclassification journal entries so that the principles of US GAAP were followed. Your task will be to create and record all necessary adjusting, correcting, and reclassification entries so that 2023 financial statements in accordance with US GAAP can be issued. The below information was discovered by reviewing contracts, agreements, correspondence and discussions with management.

Your required tasks are as follows:

Read the below information and follow steps #2 through #9 DeeDee does banking at three different financial institutions. The details are as follows:

1. On the “Adjusting Journal Entries” worksheet, prepare in journal entry form all adjusting and correcting journal entries based on the following information. All information was provided to you as of 12/31/2023. (Round all numbers to the nearest dollar). Label journal entries a through r.

(5,000)

1. When looking at the detailed customer accounts that total the current Accounts Receivable balance of $778,500, it is noted that two accounts totaling $12,000 have credit balances and these credits are being netted with the debits.

DeeDee properly wrote off uncollectible accounts during the year. Based on an aging schedule, they have determined that 6% of Gross Accounts Receivable will not be collectible. (Be sure to do the necessary adjusting entry in (b) before applying the 6%)On August 1, 2023, DeeDee renewed a 12-month insurance policy for $18,000. All cash was paid at the time the policy was signed and Insurance Expense was increased. All other transactions involving insurance were properly recorded.On December 1, 2023 DeeDee paid ABC Advertising $12,000 for a three-month campaign of advertising services and recorded Prepaid Advertising. Equal services are provided each month. All other advertising paid for during the year has been consumed.Because of strong demand and a need for additional inventory, DeeDee needed some temporary additional storage space so on May 1, 2023 they rented a unit for an annual rate of 48,000 and they paid the entire amount up front and recorded Prepaid Rent. Per a physical count of office supplies, $6,000 supplies remained at the end of 2023. The balance on the worksheet in the office supplies account represents last years ending balance. During the year, $18,500 of office supplies were purchased and immediately expensed.On August 1,2023 DeeDee loaned a key supplier, $180,000. A promissory note was signed and issued. The agreed upon annual interest rate was 4% and the key supplier has agreed to pay interest and the note receivable on August 1, 2024. The note was recorded in Notes Receivable and is the only note outstanding. At December 31, 2023, the bookkeeper had not accrued any interest.

i. The office building was bought in January 1, 2020 by DeeDee and DeeDee plans to use the building for 40 years with no estimated salvage value. DeeDee depreciates the building on a straight-line basis.

1. DeeDee uses the DDB method to depreciate office equipment. No office equipment was added during 2023. It is estimated that the office equipment has a useful life of 10 years with a salvage value of $4,000. Prior depreciation was correctly calculated based on period of time held.
2. As of 12/31/2023 the Equity Investments have a fair value of $395,000 and the fair value of the Debt Investments, classified as AFS (Available-for -Sale) have a fair value of $110,000. Due to the market conditions, the company does not plan on selling the assets in 2024, but their intent is to sell at some point in time.
3. On March 1, 2023 DeeDee purchased the copyrights of some accounting games for $120,000. They believe the useful life will be five years. The company’s amortization policy is that amortization should be calculated based on partial year if an acquisition is made during the year. Internally, DeeDee also developed some new accounting games and capitalized $50,000 of research and development costs in the copyright account. (Hint: correct the copyright account before amortizing.)
4. Office salaries and sales salaries for the last week of 2023 of $17,800 and $24,900 remained unpaid at 12/31/23 and have not been accrued. The employer portion of FICA expense is 7.65% and no employee has reached the maximum. DeeDee records payroll tax expenses in salary expense. (see Chapter 12 for guidance on entry)
5. On April 1, 2023, DeeDee rented a portion of one store to Marketing Majors Inc. The contract was for 18 months and DeeDee required all of the cash up front. The rent is being earned equally each month. This is the only item in which rent is being earned by the company and the bookkeeper increase rent revenue for the amount of cash received on April 1, 2023.
6. DeeDee Double Entry has a loan outstanding as of 12/31/2023. Interest is paid annually on January 1st. The facts for the loan is:
7. DeeDee uses the FIFO Inventory Method in valuing inventory. The inventory balance of $372,500 was based on a physical count at 12/31/2021. Based on your analysis, you have noted that $4,500 of marketing games that belonged to Marketing Majors Inc. and being held by DeeDee on consignment was included in the physical account at year end. You also note that goods were in transit from a vendor on December 31, 2023 and were not included in ending inventory. The cost of the inventory was $16,200 and the goods were shipped f.o.b. shipping point on December 29, 2023.

You can ignore the tax effect on unrealized gains and losses. Unrealized gains/losses on equity investments is recognized on the income statement. Unrealized gains/losses on debt investments classified as available for sales is recognized as other comprehensive income. (Hint: Unrealized Gains and Losses – OCI are closed to Accumulated Other Comprehensive Income at the end of the year.)

Coldstar Bank Loan –outstanding all of 2023 with a 5% interest rate. Interest is due on January 1st of each year. Principle is due in five years on January 1, 2028. Since interest will not be paid to the Bank until January 1st, DeeDee’s office staff did not accrue any interest.

q. DeeDee has been authorized to issue 1,000,000 shares of $10 par Common Stock. At the end of 2020, they had issued 50,000 shares for $25. They had properly accounted for this issuance. On January 2, 2023, they issued an additional 30,000 shares of Common Stock for $25 per share. The previous accountant recorded this transaction as a debit to Cash for $750,000 and a credit to Common Stock $750,000.

r. DeeDee has a straight tax rate of 28%. Income tax expense is Net Income before taxes times 28%. (Hint: Prepare the Income Statement up to Net Income before Taxes and then record this adjusting journal entry.)

After the above adjusting entries are entered on the adjustment worksheet, the cells should be linked to the adjustments column of the worksheet. Your adjustment amounts in the worksheet column should be linked to the adjustment sheet so if you change the debit/credit amount in the adjusting entry, the column amount will automatically change. All adjustments should be labeled a – r and be in the order of the information provided.

Complete the adjusted columns by the use of a formula. Think about the best way to do this. Your last two columns should never contain constant numbers but will include formulas only. (Maximum points are given for using an ‘if” statement, but the majority of the points are just given for having a proper formula).

.
DeeDee Double Entry, Incorporated creates accounting games and literature to enhance
accounting education and financial literacy. Their business has been quite successful since their
incorporation in January 1, 2020. DeeDee recently lost their accountant but luckily, they have
arranged for a fine accounting student from Oakland University to assist in the closing process.
They have provided you with the unadjusted trial balance for DeeDee Double Entry
Incorporated as of 12/31/23. The previous accountant recorded all original entries involving
cash, etc. during the year. However, at year-end the previous accountant would make all
necessary adjusting/reclassification journal entries so that the principles of US GAAP were
followed. Your task will be to create and record all necessary adjusting, correcting, and
reclassification entries so that 2023 financial statements in accordance with US GAAP can be
issued. The below information was discovered by reviewing contracts, agreements,
correspondence and discussions with management.
Your required tasks are as follows:
1. Read the below information and follow steps #2 through #9
2. On the “Adjusting Journal Entries” worksheet, prepare in journal entry form all adjusting
and correcting journal entries based on the following information. All information was
provided to you as of 12/31/2023. (Round all numbers to the nearest dollar). Label
journal entries a through r.
a. DeeDee does banking at three different financial institutions. The details are as
follows:
Bank
Account #
Balance
Coterica
123456
95,000
Coterica
123457
(5,000)
th
4 Bank
345689
90,000
Bank Two
397567
(5,000)
b. When looking at the detailed customer accounts that total the current Accounts
Receivable balance of $778,500, it is noted that two accounts totaling $12,000
have credit balances and these credits are being netted with the debits.
c. DeeDee properly wrote off uncollectible accounts during the year. Based on an
aging schedule, they have determined that 6% of Gross Accounts Receivable will
not be collectible. (Be sure to do the necessary adjusting entry in (b) before
applying the 6%)
d. On August 1, 2023, DeeDee renewed a 12-month insurance policy for $18,000.
All cash was paid at the time the policy was signed and Insurance Expense was
increased. All other transactions involving insurance were properly recorded.
e. On December 1, 2023 DeeDee paid ABC Advertising $12,000 for a three-month
campaign of advertising services and recorded Prepaid Advertising. Equal
services are provided each month. All other advertising paid for during the year
has been consumed.
f. Because of strong demand and a need for additional inventory, DeeDee needed
some temporary additional storage space so on May 1, 2023 they rented a unit
1
for an annual rate of 48,000 and they paid the entire amount up front and
recorded Prepaid Rent.
g. Per a physical count of office supplies, $6,000 supplies remained at the end of
2023. The balance on the worksheet in the office supplies account represents last
years ending balance. During the year, $18,500 of office supplies were
purchased and immediately expensed.
h. On August 1,2023 DeeDee loaned a key supplier, $180,000. A promissory note
was signed and issued. The agreed upon annual interest rate was 4% and the key
supplier has agreed to pay interest and the note receivable on August 1, 2024.
The note was recorded in Notes Receivable and is the only note outstanding. At
December 31, 2023, the bookkeeper had not accrued any interest.
i. The office building was bought in January 1, 2020 by DeeDee and DeeDee
plans to use the building for 40 years with no estimated salvage value. DeeDee
depreciates the building on a straight-line basis.
j. DeeDee uses the DDB method to depreciate office equipment. No office
equipment was added during 2023. It is estimated that the office equipment
has a useful life of 10 years with a salvage value of $4,000. Prior depreciation
was correctly calculated based on period of time held.
k. As of 12/31/2023 the Equity Investments have a fair value of $395,000 and
the fair value of the Debt Investments, classified as AFS (Available-for -Sale)
have a fair value of $110,000. Due to the market conditions, the company
does not plan on selling the assets in 2024, but their intent is to sell at some
point in time.
You can ignore the tax effect on unrealized gains and losses. Unrealized
gains/losses on equity investments is recognized on the income statement.
Unrealized gains/losses on debt investments classified as available for sales is
recognized as other comprehensive income. (Hint: Unrealized Gains and Losses
– OCI are closed to Accumulated Other Comprehensive Income at the end of the
year.)
l. On March 1, 2023 DeeDee purchased the copyrights of some accounting
games for $120,000. They believe the useful life will be five years. The
company’s amortization policy is that amortization should be calculated based
on partial year if an acquisition is made during the year. Internally, DeeDee
also developed some new accounting games and capitalized $50,000 of
research and development costs in the copyright account. (Hint: correct the
copyright account before amortizing.)
m. Office salaries and sales salaries for the last week of 2023 of $17,800 and
$24,900 remained unpaid at 12/31/23 and have not been accrued. The
employer portion of FICA expense is 7.65% and no employee has reached the
maximum. DeeDee records payroll tax expenses in salary expense. (see
Chapter 12 for guidance on entry)
2
n. On April 1, 2023, DeeDee rented a portion of one store to Marketing Majors
Inc. The contract was for 18 months and DeeDee required all of the cash up
front. The rent is being earned equally each month. This is the only item in
which rent is being earned by the company and the bookkeeper increase rent
revenue for the amount of cash received on April 1, 2023.
o. DeeDee Double Entry has a loan outstanding as of 12/31/2023. Interest is
paid annually on January 1st. The facts for the loan is:
Coldstar Bank Loan –outstanding all of 2023 with a 5% interest rate. Interest is
due on January 1st of each year. Principle is due in five years on January 1,
2028. Since interest will not be paid to the Bank until January 1st, DeeDee’s
office staff did not accrue any interest.
p. DeeDee uses the FIFO Inventory Method in valuing inventory. The inventory
balance of $372,500 was based on a physical count at 12/31/2021. Based on
your analysis, you have noted that $4,500 of marketing games that belonged
to Marketing Majors Inc. and being held by DeeDee on consignment was
included in the physical account at year end. You also note that goods were in
transit from a vendor on December 31, 2023 and were not included in ending
inventory. The cost of the inventory was $16,200 and the goods were shipped
f.o.b. shipping point on December 29, 2023.
q. DeeDee has been authorized to issue 1,000,000 shares of $10 par Common Stock.
At the end of 2020, they had issued 50,000 shares for $25. They had properly
accounted for this issuance. On January 2, 2023, they issued an additional 30,000
shares of Common Stock for $25 per share. The previous accountant recorded
this transaction as a debit to Cash for $750,000 and a credit to Common Stock
$750,000.
r. DeeDee has a straight tax rate of 28%. Income tax expense is Net Income before
taxes times 28%. (Hint: Prepare the Income Statement up to Net Income before
Taxes and then record this adjusting journal entry.)
s. After the above adjusting entries are entered on the adjustment
worksheet, the cells should be linked to the adjustments column of the
worksheet. Your adjustment amounts in the worksheet column should be
linked to the adjustment sheet so if you change the debit/credit amount in the
adjusting entry, the column amount will automatically change. All
adjustments should be labeled a – r and be in the order of the
information provided.
t. Complete the adjusted columns by the use of a formula. Think about the best
way to do this. Your last two columns should never contain constant numbers
but will include formulas only. (Maximum points are given for using an ‘if”
statement, but the majority of the points are just given for having a proper
formula).
3
u. Prepare a multiple-step income statement on the proper worksheet. Your
Income Statement should be in good form (proper titles, etc., use examples
from your book) and well formatted. Do your best designating between
selling and administrative expenses. Judgement is involved in creating your
income statement and there is no one correct answer. You should use
formulas in all cells, not constant numbers. (That means, your income
statement should be linked to the adjusted numbers on your worksheet.)
v.
Prepare a Comprehensive Income Statement on the proper worksheet.
DeeDee Double Entry Inc. uses the Second Income Statement Approach.
(See Chapter 3)
w. Prepare a Statement of Changes in Stockholder’s Equity. You should use
formulas in all cells, not constant numbers. (See class notes for an example.)
x. Prepare a Classified

Balance

Sheet on the proper worksheet as of 12/31/23.
Your Statement should be formatted. You should use formulas in all cells, not
constant numbers.
y. Prepare closing entries on the proper tab. You may close directly to Retained
Earnings (if you wish). (Please remember, Retained Earnings is impacted by
net income and dividends).
4
A
B
C
1
DeeDee Double Entry, Incorporated
2
End of Period Worksheet
3
For the Year Ended December 31, 2023
4
Unadjusted
5 Account Title
Trial Balance
6
DR
CR
7 Cash
175,000
8 Accounts Receivable
778,500
9 Allowance for Doubtful Accounts
2,500
10 Interest Receivable
11 Merchandise Inventory
372,500
12 Prepaid Insurance
13 Prepaid Advertising
12,000
14 Prepaid Rent
48,000
15 Office Supplies
3,000
16 Note Receivable
180,000
17 Debt Investments (AFS)
100,000
18 Equity Investments
400,000
19 Office Building
3,100,000
20 Accumulated Depreciation – Office Building
232,500
21 Land
850,000
22 Office Equipment
250,000
23 Accumulated Depreciation – Office Equipment
122,000
24 Copyrights
170,000
25 Accounts Payable
395,000
26 Sales Tax Payable
27 Salaries Payable
28 Payroll Taxes Payable
29 Interest Payable
30 Income Tax Payable
31 Unearned Revenue
32 Loan Payable – Coldstar Bank
1,350,000
33 Common Stock
1,250,000
34 Additional Paid in Capital
750,000
35 Retained Earnings
907,420
36 Accumulated Other Comprehensive Income
8,500
37 Dividends
240,000
38 Sales
4,693,750
39 Sales Returns and Allowances
24,700
40 Sales Discounts
17,200
41 Cost of Goods Sold
1,770,870
42 Sales Salaries Expense
476,400
43 Office Salaries Expense
434,000
44 Advertising Expense
54,000
45 Depreciation Expense – Office Building
46 Depreciaiton Expense – Office Equipment
47 Leasing Expense – Stores
244,000
48 Miscellaneous Selling Expense
16,950
49 Research & Development Expense
50 Rent Expense – Storage Facility
51 Insurance Expense
24,000
52 Office Supplies Expense
18,500
53 Miscellaneous Administrative Expense
11,250
54 Rent Revenue
43,200
55 Interest Revenue on Note Receivable
56 Unrealized Gain/Loss – Income
57 Unrealized Gain/Loss – OCI
58 Interest Revenue on Debt Investments
6,000
59 Dividend Revenue on Equity Investments
15,000
60 Interest Expense
61 Bad Debt Expense
62 Amortization Expense
63 Income Tax Expense
64
9,773,370
9,773,370
D
E
Adjustments
DR
CR
F
G
Adjusted
Trial Balance
DR
CR