Paper

Maltbee Lawn Service Financial Statements

Tiffany Eberhart, Sonjonnia Craighead, Joyce Davidson, Tesha Davis

ACG230-1002A-19: Introduction to Accounting

Professor Michael R. James

April 10, 2010

Abstract

This report focuses on Doug Maltbee whom opened a seasonal lawn service for the purpose of gaining a financial profit. By completing the income statement and balance sheet for Maltbee Lawn Service, we will derive to the conclusion as to whether Mr. Maltbee’s summer business was a financial profit or loss. Included as well will be the steps that should be taken in an accounting cycle to acquire the correct calculations as well brief descriptions of these steps.

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Steps in Accounting Cycle

1. Identifying the transaction: Identify the events of the account that have taken place by evaluating the document sources such as bank statements, checks and purchase orders.

2. Analyzing the transaction: Find which accounts are affected by the amounts and in which direction, profit or loss.

3. Journalizing the transactions: Transactions are recorded as debit or credit a complete record of every transaction so that debits equal the credits.

4. Posting the entries to ledger accounts: Journal entries are transferred to correct T-accounts in a ledger therefore showing all of the details of a company’s accounts.

5. Preparing Trial balance: This must be done in order to verify that the sum of the debits is equal to the credits; the information comes from the ledger.

6. Preparing the adjusted trial balance: Adjusting entries are made for accrued and deferred items. The entries are journalized and posted to the T-accounts ledger. A trial balance is calculated to verify the sum of the debits equal the sum of credits.

7. Preparation of the financial statements: The collections of financial statements are prepped.

8. Closing entries: Transfer any balances for temporary account to the owner’s equity.

9. After closing trial...