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Project-1 1

The document provides instructions for completing Project 1.1 Journal Entries for Accrual Accounting, including a balance sheet for Illini Company as of 12/31/20X0. It outlines various financial transactions related to insurance, utilities, rent, and compensation expenses for the years 20X1 and 20X2. The document also includes a structured table for recording journal entries corresponding to these transactions.

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32 views3 pages

Project-1 1

The document provides instructions for completing Project 1.1 Journal Entries for Accrual Accounting, including a balance sheet for Illini Company as of 12/31/20X0. It outlines various financial transactions related to insurance, utilities, rent, and compensation expenses for the years 20X1 and 20X2. The document also includes a structured table for recording journal entries corresponding to these transactions.

Uploaded by

sarth.u
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Instructions for Project 1.

1 Journal
Entries for Accrual Accounting
Project Instructions
 Please read the following instructions and review the table below carefully. Then, enter answers
for journal items [A] to [V] in the next item in this lesson, called Project 1 Part 1 Journal Entries
for Accrual Accounting.
 You may keep these instructions open in a separate browser or download the instructions as a
PDF, and open it as you work through the exercise.

The Balance Sheet of the Illini as of 12/31/20X0:

Illini Company, Inc.


Balance Sheet
as of 12/31/20X0

Assets
Current Assets:
Cash $1,500,000
Accounts receivable, net 18,000
Inventory 50,000
Total current assets 1,568,000
Equipment 90,000
Goodwill 20,000
Total assets $1,678,000

Liabilities and shareholders' equity

Shareholders' equity:
Common stock, 20,000 shares
outstanding, $1 par $20,000
Additional paid-in capital 280,000
Retained earnings 1,378,000
Total shareholders' equity 1,678,000

Total liabilities and shareholders'


equity $1,678,000
1
Financial Reporting Capstone, University of Illinois at Urbana-Champaign, Dept of Accountancy
 Note that all additional paid-in capital (APIC) sub accounts (e.g., APIC-options and APIC-
treasury stock), if any, are tracked in the “Additional paid-in capital” account on the Balance
Sheet.

Project 1.1 Topic: Accrual Accounting


 On 1/1/20X1, Illini prepays 2-year $10,000 insurance premiums for certain assets: $4,000 for 20X1
and $6,000 for 20X2.
 Illini pays $30,000 utility fees and $20,000 rentals each year for 20X1 and 20X2.
 In 20X1, Illini incurs cash-based compensation expense of $100,000, for which $10,000 will be paid
in Jan, 20X2 (others are paid in 20X1). In 20X2, Illini incurs cash-based compensation expense of
$110,000. The actual total cash compensation payment made in 20X2 is $100,000.
 On 12/31/20X2, Illini receives $50,000 from a customer for a service it will provide in 20X3.

Project 1.1 Balance Sheet


Credi
Date Account Name Debit t
1/1/20X1 Prepaid insurance [A]
Cash [B]
12/31/20X1 Insurance expense [C]
Prepaid insurance [D]

12/31/20X1 Utility expense [E]


Rent expense [F]
Cash [G]

12/31/20X1 Compensation expense [H]


Cash [I]
Wage payable [J]

Jan, 20X2 Wage payable [K]


Cash [L]

12/31/20X2 Insurance expense [M]


Prepaid insurance [N]

12/31/20X2 Utility expense [O]


Rent expense [P]
Cash [Q]

2
Financial Reporting Capstone, University of Illinois at Urbana-Champaign, Dept of Accountancy
12/31/20X2 Compensation expense [R]
Cash [S]
Wage payable [T]

12/31/20X2 Cash [U]


Unearned revenue [V]

3
Financial Reporting Capstone, University of Illinois at Urbana-Champaign, Dept of Accountancy

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