ACC 296ACCOUNTING CYCLE PROBLEMSUMMER, 2016Please read all directions before starting this assignment.GENERAL INSTRUCTIONS:1) With the exception of posting to T-accounts or the ledger, either of which can be handwritten, all otheranswers for this assignment are required to be typed using either word processing and/or spreadsheetsoftware (e.g., Word, Excel, or similar). This means that you cannot use a computer program such asQuickBooks, or similar to process your transactions.2) Do NOT abbreviate any account titles in your journals, T-accounts (or ledger accounts) or financialstatements. Also, make sure your journal entries are prepared using proper form throughout. Inaddition, be sure to include the word ‘expense’ in the title of any expense account — and be sure to do soin your journal entries, T-accounts (or ledger accounts) and financial statements. Likewise, do not use theword ‘expense’ in the account title if the account is not an expense. Also, you can omit explanations in allof your journal entries (unless you want to include them).3) Available Help: This project must be done INDIVIDUALLY and NOT with the assistance of anyoneelse. (Please refer to the syllabus related to potential penalties for cheating.) Since having a correct solutionstems from having correct journal entries, I will permit each student to verify with me the correctness of up tothree journal entries in total (i.e., from the regular transactional entries and adjusting entries, but not from theclosing entries). If you type the three entries of your choice and send them to me in an email, I will respond toyou indicating if any of those entries are incorrect. I will not tell you the correct entry, only if yours is notcorrect. Please do not send me attachments or financial statements, only journal entries typed into (or cutand pasted into) an email. This help is available only through 5:00 p.m. on Wednesday, May 25th as Icannot assist you at the last minute (and please remember to use professional email etiquette as I discussedthe first day of class). Of course, you are certainly encouraged to inquire of me if you have questions regardingyour understanding of general concepts related to this assignment. Otherwise, you should not be seeking thehelp of anyone else to complete the assignment, as it is essentially a take-home portion of the first exam.4) This assignment is DUE by the start of class on THURSDAY, MAY 26TH, and is worth 25 points. Unlikethe assigned homework, your grade for this assignment will be based on the correctness of your answers.Significant points will be deducted for turning in this assignment late. Submissions that are excessively tardy, asdetermined by the instructor, will not be accepted and a ‘0’ will be assigned for the assignment. In addition,failure to complete this assignment will result in a 10-point penalty in determining your final course grade (i.e.,in addition to receiving a ‘0’ for the assignment). Submissions by email will not be permitted. Finally, do notunder-estimate the amount of time it will take to complete this assignment!SPECIFIC REQUIREMENTS:1) Provided on the next page is the trial balance of the Big Met Golf Club, Inc. as of December 31, 2015. Theyprepare adjusting entries and close their books annually on December 31st. Create T-accounts (or generalledger accounts) for each account listed in the trial balance, and enter the balances from the trial balance intoyour T-accounts (or general ledger accounts) — and allow a few lines per account. (FYI: I recommend using Taccounts due to their simplicity, but the choice is yours.) In order to save paper, you can place multiple Taccounts (or ledger accounts) on a page. For ledger accounts you can use the standard account format asillustrated on page 92 or the T-account format illustrated on page 93 (and elsewhere). Note that you mustcreate ONE (and only one) T-account (or general ledger account) for each and every account (i.e., do notcreate more than one Cash T-account, more than one Retained Earnings T-account, etc.). (You will use thesame T-accounts for posting regular transactional entries, adjusting entries, and closing entries.) Also, to theextent possible, organize your T-accounts (or general ledger accounts) so that Assets are together, Liabilities aretogether, etc. (Please note that the assumption in this problem is that the ‘regular’ (transactional) entries haveALREADY been recorded and posted to the T-accounts (or general ledger), and the trial balance below reflectsthat fact. (Therefore, you do not have to record the original journal entries that resulted in the balances shown inthe trial balance — and in fact, there is no way that you would be able to figure out what those journal entrieswere just by looking at the trial balance, anyway.)Big Met Golf Club, Inc.Trial BalanceDecember 31, 2015Debit$82,00060,000CashAccounts ReceivableAllowance for Doubtful AccountsPrepaid InsuranceLandBuildingsAccumulated Depreciation of BuildingEquipmentAccumulated Depreciation of EquipmentCommon StockRetained EarningsDues RevenueGreens Fee RevenueRent RevenueUtilities ExpenseSalaries and Wages ExpenseMaintenance ExpenseCredit$1,00036,000265,000880,00096,000370,00064,000800,000365,00080,000775,000352,000$164,000400,000276,0002,533,000$2,533,0002) Assume the regular transactional entries for the year have already been recorded leading to the accountbalances in the trial balance above. However, assume that the following December 2015 transactions wereoverlooked and not previously recorded by the company. (These are regular transactional entries, not adjustingentries). Record the journal entries for these transactions and then post them to your T-accounts (or ledger).a) On December 1, additional land was purchased for $120,000, with $40,000 paid as a down payment andthe balance is due on a 1-year, 6% note payable.b) On December 15, dividends of $20,000 are declared; payment of the dividends will be made at a laterdate the following year. (Hint: Do not use ‘Accounts Payable’ for this transaction.)3) Record the adjusting journal entries listed below (see letters ‘a-j’) and then post those adjustingentries to T-accounts (or the ledger). Create new accounts, as needed. (Again, the company preparesadjusting entries at year-end only.) Also, be sure to show your calculations (typed) for each item below thathas an ‘*’ next to it — or there will be a deduction for each one. [Note: Adjusting entries should always bemade in journal form first, and then only after the journal entries are prepared should they be posted to Taccounts (ledger accounts). When your posting is complete, be sure to compute (show) ending balances inyour T-accounts (or ledger accounts).]*a) The buildings have an estimated useful life of 35 years with an estimated salvage value of $40,000.(Use the straight-line method.)*b) The equipment is depreciated at 5% per year and has an estimated salvage value of $50,000.*c) The amount for prepaid insurance relates to a payment for six months of insurance coverage that waspaid for on November 1st. The insurance coverage began on that date.*d) The rent revenue represents the amount received for 11 months for dining facilities. The samemonthly amount is owed from customers for December, but that rent has not yet been received.(Do not use accounts receivable in this entry — use a more descriptive account name.)*e) It is estimated that 5% of the accounts receivable will be uncollectible.f) Salaries and wages incurred but not paid by December 31st amount to $10,000.g) Of the $80,000 of Dues Revenue on the trial balance, $5,000 of that amount is considered to be‘received in advance’ (i.e., services have not been performed for that portion, yet).h) Advertising costs of $8,000 were incurred for ads that already ran during the year, but the company hasyet to record or pay for them.i) Property taxes incurred but not yet paid amount to $45,000. (Be specific in both account names here.)*j) Record the accrued interest on the note from the December 1st transaction above.4) Using your updated balances in your T-accounts (or ledger) prepare the year-end income statement,statement of retained earnings, and balance sheet for 2015. Be sure to use proper form in preparing yourfinancial statements, including proper headings and dating of the financials. Page 168 (Single-Step IncomeStatement), p. 115 (Statement of Retained Earnings), and p. 116 (Balance Sheet) provide good examples tofollow for this requirement (but obviously, you will have some different account names than the examplesprovided in the text). For your balance sheet, be sure to use your updated retained earnings balance from yourstatement of retained earnings since you have not prepared closing entries, yet. For your income statement, besure to list each revenue and expense account, but do not worry about computing income tax expense.5) Prepare closing entries (using compound entries where appropriate) and post them to your T-accounts(or ledger). Put these journal entries on a separate page from your adjusting journal entries and label them,‘Closing Entries.’ (When posting, be sure to create a T-account or ledger account for Income Summary.)6) Place your name at the top right corner of every page and make sure that each part is clearly andprecisely identified. Your submission should be neatly prepared and free of spelling mistakes, and pleasenote that points can be deducted for unprofessional / non-neat work and/or for multiple spellingmistakes. Arrange all your work in the following order (and please note that points will be deducted ifitems are not submitted in this order): 1) The two additional ‘regular’ transactional entries, 2) Adjustingentries, 3) Income statement, 4) Statement of retained earnings, 5) Balance sheet, 6) Closing entries, and 7)T-accounts or general ledger accounts. [Note: You can combine more than one financial statement on one page,if you wish — assuming they ‘fit’ on one page and it is clearly readable and not too small.] Do not use a reportcover; simply staple once in the upper left hand corner.