You have been called in to help Nicole Dunn, who recently started a personal training business called DunnRite Training, Inc. Nicole began operations on January $1,2024,$ and had limited activity in her first month. Nicole has provided a summary of all of her activities during the month of January $2024.$ Nicole is an astute businessperson with limited experience with accounting and would like your assistance in understanding how her business activities should be interpreted. Specific deliverables are listed below.

Economic Events

January $1.$ Nicole invested $$15,000$ into her business in exchange for $1500$ shares of common stock.

January $1.$ DunnRite Training borrowed $$10,000$ from Aqua Bank at an interest rate of $12\%$; interest and principal payments are due in two years.

January $1.$ DunnRite Training purchased a one$-$year business insurance policy for $$2,400.$

January $1.$ DunnRite Training signed a one$-$year lease on a shared office for $$600$ per month. Nicole paid three months of the lease in advance.

January $1.$ DunnRite Training paid $$13,000$ cash for training equipment purchased from IronHead Equipment. The equipment has a useful life of $5$ years and a salvage value of $$1,000.$ DunnRite uses straight line depreciation.

January $9.$ DunnRite Training purchased $$1500$ in office supplies on account.

January $10.$ DunnRite Training decided to expand and begin providing logoed merchandise. The company purchased $200$ logoed tank tops for $$9$ per tank and $150$ logoed t$-$shirts for $$10$ per t$-$shirt. This inventory was purchased on account with payment due in $30$ days.

January $15.$ DunnRite Training received $$7,000$ cash for training services from January $1$ to January $14.$

January $17.$ DunnRite Training performed $$3,000$ of training services on account. Payment is due in $30$ days.

January $20.$ DunnRite Training completed $$2,000$ training for DunnRite Scholastic Programs on account. Payment is due in $30$ days.

January $25.$ DunnRite Training paid $$1,500$ in dividends.

January $28.$ DunnRite Training received $$3,000$ from Wagner Enterprises, a client, for training to be performed from February $1$ through June $30.$ An equal amount of services will be performed each month.

January $31.$ DunnRite Training received $$5,000$ cash for training services to be performed from February $1$ to February $29.$

January $31$ DunnRite sold $75$ tanks during the month of January for $$20$ per tank and $33$ t$-$shirts at $$25$ per t$-$shirt. All customers paid cash at the time of purchase.

January $31.$ Nicole completed an inventory of supplies and determined that $$1,200$ was on hand.

Assignment

Review the transactions and develop a chart of accounts for DunnRite Training, Inc. The chart of accounts should list the name of the account, the type of account $($e$.$g$.,$ asset, liability, revenue, etc.$),$ and where the account will appear $($e$.$g$.,$ balance sheet, income statement, etc.$)$ Include all accounts needed for the monthly transactions and for the month$-$end adjustments.

$1.$ Record the transactions using the horizontal balance sheet method throughout the course minilectures.

$$ Set up an Excel spreadsheet with all the accounts identified in part $1$ of this assignment listed in the spreadsheet's columns. Accounts should appear in the following order:

$$ Assets

$$ Liabilities

$$ Equity

$$ Revenue

$$ Expense

$$ Record each transaction in the rows under the account name.

$$ The last two columns should be for the statement of cash flows. Indicate the amount of the change in cash $(+,-)$ and the type of cash flow $($e$.$g$.,$ Investing, Financing, Operating$)$

$$ Record any necessary adjusting entries in the spreadsheet.

$$ Determine the ending balance in each account by summing each column.

$2.$ Prepare the income statement, statement of changes in stockholders' equity, balance sheet, and statement of cash flows for DunnRite Training, Inc.

Note: Create tabs in the Excel worksheet to help with each of these tasks.

$3.$ Prepare a video presentation to explain the chart of accounts, each transaction, and the financial statements you prepared. Nicole is your audience; remember that she is an astute business professional with limited accounting knowledge. Be sure to explain $($not just define$)$ the following.

$$ Financial Statement Elements: assets, liabilities, equity, common stock, retained earnings, revenues, and expenses.

$$ Why there is a difference between cash flows for the month and net income for the month?

$$ The relationship between the financial statements $($e$.$g$.,$ net income calculated in the income statement becomes part of the statement of retained earnings.

Answer rating: 100% (QA)

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