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title page Not For Sale

copyright page Not For Sale

The Lawn Ranger Landscaping Service INTRODUCTION Kyle Cross is a student at Western University. He has worked part time assisting a landscaper since his junior year in high school. At the end of Kyle s freshmen year of college, his employer, Mr. Sanchez, decided to retire. After several conversations with Mr. Sanchez, Kyle decided to try and start his own lawn care business. Following the advice of his former boss, Kyle decided to simplify his business in several ways. Kyle will concentrate on small residential jobs. He will only bid on jobs he can do himself, eliminating the need for employees and the accompanying taxes and reporting requirements. In order to avoid having to invest in expensive equipment, Kyle will only accept jobs that require a lawn mower, small garden tools, or equipment Not that he can rent at a reasonable For price. Sale Kyle realizes that his real future is in his college education, not lawn care or landscaping. Mr. Sanchez reminded him that it is better to be successful in a small niche than a failure in a big one. As such, he realizes he will have to remain disciplined and turn down jobs that are beyond his abilities and resources. Mr. Sanchez suggested that Kyle have his customers select and purchase any plants and materials required at local garden centers. Kyle s business will be too small to receive any price discounts from wholesale nurseries. Naturally, Kyle will assist customers in selecting plants. Kyle Cross and Western University are fictional. However, Kyle s fictional business is a somewhat typical composite of the types of businesses that students have started while in college. This practice set is a narrative practice set. Each transaction is described to you, instead of being provided by source documents. The set is designed to give you the simplest possible introduction to the accounting cycle. Therefore, many real world issues have been omitted. Examples include taxes (state, local, and federal), special licenses, and bonding. You may want to discuss these issues with your instructor. However, this practice set does contain all of the major types of transactions, adjustments, and closing entries. It provides a first introduction to the process of recording, classifying, summarizing, and reporting accounting information. 1

Instructions 1. Familiarize yourself with the contents of this booklet before you begin. 2. Read through the chart of accounts. 3. Prepare the entries using the list of transactions. Put them in the general journal. 4. Post the journal entries from the general journal to the general ledger. 5. Prepare a trial balance using the general ledger totals. Put it on the work sheet. 6. Complete the work sheet using the information for adjustments. 7. Prepare the financial statements from the work sheet. 8. Make the adjusting journal entries in the general journal. 9. Post the adjustments to the general ledger. 10. Make the appropriate closing entries in the general journal. 11. Post the closing entries to the general ledger. 12. Prepare a post-closing trial balance. Not For Sale 2

THE LAWN RANGER LANDSCAPING SERVICE CHART OF ACCOUNTS ASSETS 100 Cash Checking 105 Cash Savings 110 Accounts Receivable Mr. Abrams 111 Accounts Receivable Mrs. Mercado 112 Accounts Receivable Mr. Roker 120 Advertising Materials 130 Office Supplies 140 Landscaping Supplies 150 2006 Nissan Pickup Truck 151 Accumulated Depreciation Pickup Truck 160 Lawn Equipment 161 Accumulated Depreciation Lawn Equipment LIABILITIES 200 Note Payable Aunt Martha 210 Accounts Payable Young s Home & Garden Center 220 Accounts Payable VISA 230 Interest Payable 240 Unearned Revenue Not For Sale CAPITAL 300 Kyle Cross, Capital 310 Kyle Cross, Drawing 320 Income Summary REVENUES 400 Lawn Care/Landscaping Revenue 410 Interest Revenue EXPENSES 500 Landscaping Supplies Expense 510 Gas and Oil Expense 520 Telephone Expense 530 Advertising Expense 540 Office Supplies Expense 545 Interest Expense 550 Pickup Truck Maintenance Expense 560 Equipment Rental Expense 570 Insurance Expense 580 Depreciation Expense Pickup Truck 590 Depreciation Expense Lawn Equipment 3

No. Date Transaction NARRATIVE OF TRANSACTIONS (Note: Unless stated otherwise, assume that all cash in and out is checking account related.) 1 7/1 Kyle opened two accounts at Pioneer State Bank, using $3,000 of his own money. He deposited $2,500 in a checking account and $500 into savings. 2 7/2 Kyle borrowed $6,000 from his Aunt Martha and signed a note with 8% interest. Under the terms of the note, he must make payments of $250 plus accrued interest on the first day of each month. Kyle put $4,500 into his checking account and $1,500 into savings. 3 7/3 Kyle purchased a 2006 Nissan pickup truck by writing a check for $4,820. 4 7/3 Kyle purchased insurance for the pickup truck at a cost of $150 per month. He paid for the month of July. 5 7/3 Kyle established a cell phone account for the business. The phone was free, and he paid $75 for the first month s service. 6 7/5 Kyle returned to the bank and applied for a VISA card. He received a card with a $1,000 credit limit. 7 7/5 Kyle Not purchased a lawn mower For and garden tools Sale on account from Young s Home & Garden Center. The total cost was $1,080. (Debit Lawn Equipment.) 8 7/6 Kyle purchased $185 worth of gloves, stakes, trimmer lines, and other supplies at the local hardware store using his VISA card. 9 7/6 Kyle paid $80 cash for gas and oil for his pickup truck and the mower. 10 7/7 A box of 500 additional checks arrived from the bank along with a memo that the $25 cost was charged to Kyle s checking account. He considered this an immaterial amount and charged it all to Office Supplies Expense. 11 7/7 Kyle had 1,500 advertising flyers printed to promote his new business. The flyers cost $225 and are considered advertising materials. He also purchased $90 of office supplies. Kyle used his VISA for all of these purchases. 12 7/8 One of Kyle s neighbors, Mr. Lee, is leaving town for six weeks. He paid Kyle $360 to mow his lawn each week and keep his hedges trimmed while he is away. 13 7/9 Kyle paid $75 cash to rent some equipment needed for the Abrams job (see transaction 15). 14 7/10 Kyle purchased another $60 of gas using his VISA card. 15 7/11 Kyle completed a landscaping and clean-up job for Mr. Abrams. He left Mr. Abrams a bill for $720. 16 7/13 Kyle charged another $140 in landscaping supplies at Young s Home & Garden Center. 4

No. Date Transaction 17 7/14 Kyle completed a $550 job for Mrs. Mercado. She had hired him to mow her lawn and create a perennial flower bed in the front of her house. Mrs. Mercado paid him $250 and agreed to pay the rest later. 18 7/15 Kyle s girlfriend insisted that he take a break. He withdrew $120 from his checking account to go out for a nice evening with his girlfriend, Melissa. They went in Melissa s car, as an evening out in a landscaping truck wasn t exactly what they were looking for. 19 7/16 Kyle charged $110 on his VISA card for an oil change and some other minor maintenance on his truck. 20 7/17 Kyle paid Young s Home & Garden Center $175 on his account. 21 7/17 Kyle transferred $300 from his checking account to his savings account. 22 7/18 Kyle wrote a check for $40 for fuel for the truck and mower. 23 7/19 Kyle had no cash on him, so he wrote a business check for $12 to pay for his lunch. 24 7/19 Kyle completed a job in which he mowed Mrs. O Brien s lawn and created two new flower beds. She paid him $425 in cash. 25 7/20 Kyle paid $55 to rent a piece of equipment to assist in trimming Mr. Lovette s trees (transaction Not 26). For Sale 26 7/20 Mr. Lovette paid Kyle $150 to mow his lawn and trim his trees. 27 7/21 Kyle received $400 from Mr. Abrams, with a note that he would pay the balance next week. 28 7/22 Kyle paid $80 to rent some equipment needed for the Roker job (see transaction 29). 29 7/23 Kyle completed a $700 job landscaping Mr. Roker s pool area. He was paid $200 in cash, and Mr. Roker agreed to pay the balance in August. 30 7/24 A check for $150 was received from Mrs. Mercado as partial payment on the work Kyle completed on July 14. 31 7/24 Kyle charged (on his VISA) another $65 for landscaping supplies. 32 7/25 Mrs. Feldman paid Kyle $140 to mow, weed, and put new mulch in her garden beds. 33 7/26 Kyle wrote a check for $85 for more fuel for his truck and mower. 34 7/27 Kyle purchased an additional $45 of office supplies. 35 7/30 Kyle paid another $75 on his account at Young s Home & Garden Center. 7/31 Now that Kyle has completed his first month in business he wants to prepare financial statements. He has gathered the information needed to make adjustments for the month ended July 31. 5

Information for Adjustments A1 Kyle estimates that his truck will last four years and have an estimated salvage value of $500. (Kyle is using straight-line depreciation for all assets.) A2 A3 A4 The lawn mower and tools should last three years, with no salvage value. Kyle needs to accrue one month s interest on his loan from Aunt Martha. By July 31, Kyle had mowed Mr. Lee s yard three of the six agreed-upon times. A5, A6 As of July 31, Kyle had $25 of office supplies, $75 of landscaping supplies, and 200 & A7 advertising flyers still on hand. A8 Kyle s bank statement showed that his savings account had earned $5 in interest revenue. Not For Sale 6

GENERAL JOURNAL Not For Sale

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GENERAL JOURNAL DATE ACCOUNTS AND EXPLANATION DEBIT PAGE 1 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 Not For Sale 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 29 29 30 30 31 31 32 32 33 33 9

GENERAL JOURNAL DATE ACCOUNTS AND EXPLANATION DEBIT PAGE 2 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 Not For Sale 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 29 29 30 30 31 31 32 32 33 33 10

GENERAL JOURNAL DATE ACCOUNTS AND EXPLANATION DEBIT PAGE 3 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 Not For Sale 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 29 29 30 30 31 31 32 32 33 33 11

GENERAL JOURNAL DATE ACCOUNTS AND EXPLANATION DEBIT PAGE 4 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 Not For Sale 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 29 29 30 30 31 31 32 32 33 33 12

GENERAL JOURNAL DATE ACCOUNTS AND EXPLANATION DEBIT PAGE 5 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 Not For Sale 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 29 29 30 30 31 31 32 32 33 33 13

GENERAL JOURNAL DATE ACCOUNTS AND EXPLANATION DEBIT PAGE 6 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 Not For Sale 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 29 29 30 30 31 31 32 32 33 33 14

GENERAL JOURNAL DATE ACCOUNTS AND EXPLANATION DEBIT PAGE 7 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 Not For Sale 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 29 29 30 30 31 31 32 32 33 33 15

GENERAL JOURNAL DATE ACCOUNTS AND EXPLANATION DEBIT PAGE 8 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 Not For Sale 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 29 29 30 30 31 31 32 32 33 33 16

GENERAL LEDGER Not For Sale

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ACCOUNT Cash Checking GENERAL LEDGER ACCOUNT NO. 100 DATE ITEM DEBIT Not For Sale 19

ACCOUNT Cash Savings ACCOUNT NO. 105 DATE ITEM DEBIT ACCOUNT Accounts Receivable Mr. Abrams ACCOUNT NO. 110 DATE ITEM DEBIT Not For Sale 20

ACCOUNT Accounts Receivable Mrs. Mercado ACCOUNT NO. 111 DATE ITEM DEBIT ACCOUNT Accounts Receivable Mr. Roker ACCOUNT NO. 112 DATE Not For Sale ITEM DEBIT 21

ACCOUNT Advertising Materials ACCOUNT NO. 120 DATE ITEM DEBIT ACCOUNT Office Supplies ACCOUNT NO. 130 DATE Not For Sale ITEM DEBIT 22

ACCOUNT Landscaping Supplies ACCOUNT NO. 140 DATE ITEM DEBIT ACCOUNT 2006 Nissan Pickup Truck ACCOUNT NO. 150 DATE Not For Sale ITEM DEBIT 23

ACCOUNT Accumulated Depreciation Pickup Truck ACCOUNT NO. 151 DATE ITEM DEBIT ACCOUNT Lawn Equipment ACCOUNT NO 160 DATE Not For Sale ITEM DEBIT 24

ACCOUNT Accumulated Depreciation Lawn Equipment ACCOUNT NO. 161 DATE ITEM DEBIT ACCOUNT Note Payable Aunt Martha ACCOUNT NO 200 DATE Not For Sale ITEM DEBIT 25

ACCOUNT Accounts Payable Young's Home & Garden Center ACCOUNT NO 210 DATE ITEM DEBIT ACCOUNT Accounts Payable VISA ACCOUNT NO 220 DATE Not For Sale ITEM DEBIT 26

ACCOUNT Interest Payable ACCOUNT NO 230 DATE ITEM DEBIT ACCOUNT Unearned Revenue ACCOUNT NO 240 DATE Not For Sale ITEM DEBIT 27

ACCOUNT Kyle Cross, Capital ACCOUNT NO 300 DATE ITEM DEBIT ACCOUNT Kyle Cross, Drawing ACCOUNT NO 310 DATE Not For Sale ITEM DEBIT 28

ACCOUNT Income Summary ACCOUNT NO 320 DATE ITEM DEBIT ACCOUNT Lawn Care/Landscaping Revenue ACCOUNT NO. 400 DATE Not For Sale ITEM DEBIT 29

ACCOUNT Interest Revenue ACCOUNT NO 410 DATE ITEM DEBIT ACCOUNT Landscaping Supplies Expense ACCOUNT NO 500 DATE Not For Sale ITEM DEBIT 30

ACCOUNT Gas and Oil Expense ACCOUNT NO 510 DATE ITEM DEBIT ACCOUNT Telephone Expense ACCOUNT NO 520 DATE Not For Sale ITEM DEBIT 31

ACCOUNT Advertising Expense ACCOUNT NO 530 DATE ITEM DEBIT ACCOUNT Office Supplies Expense ACCOUNT NO 540 DATE Not For Sale ITEM DEBIT 32

ACCOUNT Interest Expense ACCOUNT NO 545 DATE ITEM DEBIT ACCOUNT Pickup Truck Maintenance Expense ACCOUNT NO 550 DATE Not For Sale ITEM DEBIT 33

ACCOUNT Equipment Rental Expense ACCOUNT NO 2 DATE ITEM DEBIT 560 ACCOUNT Insurance Expense ACCOUNT NO 570 DATE Not For Sale ITEM DEBIT 34

ACCOUNT Depreciation Expense Pickup Truck ACCOUNT NO 580 DATE ITEM DEBIT ACCOUNT Depreciation Expense Lawn Equipment ACCOUNT NO 590 DATE Not For Sale ITEM DEBIT 35

The Lawn Ranger Work For the Month ACCOUNT TITLE TRIAL ADJUSTMENTS DEBIT DEBIT 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 Not For Sale 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 29 29 30 30 31 31 32 32 33 33 34 34 35 35 36 36 37 37 36

Landscaping Service Sheet Ended July 31, 20-- ADJUSTED TRIAL DEBIT INCOME STATEMENT DEBIT SHEET DEBIT 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 Not For Sale 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 29 29 30 30 31 31 32 32 33 33 34 34 35 35 36 36 37 37 37

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FINANCIAL STATEMENTS Not For Sale

The Lawn Ranger Landscaping Service Income Statement For the Month Ended July 31, 20-- Not For Sale 40

The Lawn Ranger Landscaping Service Statement of Owner s Equity For the Month Ended July 31, 20-- Not For Sale 41

The Lawn Ranger Landscaping Service Balance Sheet July 31, 20-- Not For Sale 42

The Lawn Ranger Landscaping Service Post-Closing Trial Balance July 31, 20-- Not For Sale 43

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