Lesson 5.4 End-of-Fiscal Period Activities. Merchandising Business

Transcription

1 Lesson Plan 5.4 End-of-Fiscal Period Activities for a Merchandising Business Course Title Accounting I Session Title End-of-Fiscal Period Activities for a Merchandising Business Lesson Purpose Demonstrate skill performing end-of-fiscal period activities for a merchandising business formed as a partnership. Behavioral Objectives Prepare a Trial Balance after posting to the general ledger and subsidiary ledgers. Analyze adjustments for a merchandising business. Calculate net income or net loss for a merchandising business. Calculate ending capital for partners. Calculate cost of merchandise sold and gross profit. Prepare financial statements for a merchandising business. Record adjusting and closing entries for a merchandising business. Prepare a post-closing Trial Balance. Preparation OLD TEKS Correlations: This lesson, as published, correlates to changes/alterations to the activities may result in the elimination of any or all of C 2.e. generate Trial Balances and endof-period adjustments; 2.f. prepare financial statements; 7.a. follow oral and written instructions; 7.b. develop time management skills by setting priorities for completing work as scheduled 7.c. make decisions using appropriate accounting concepts; 7.e. perform accounting procedures using manual and automated methods; 7.g. demonstrate use of the numeric keypad by touch 2010 TEKS Correlations: This lesson, as published, correlates to changes/alterations to the activities may result in the elimination of any or all of C. 3.h. prepare a trial balance; 5. The student performs accounting functions specific for a merchandising business. The student is expected to explain the nature of special journals and recording transactions in special journals. Lesson 5.4 End-of-Fiscal Period Activities For a Merchandising Business

2 TAKS Correlation: MATH Objective 10: The student will demonstrate an understanding of the mathematical processes and tools used in problem solving. Materials, Equipment and Resources: Textbook Accounting Software Spreadsheet software Multimedia presentation software Word processing software Lesson 5.4 End-of-Fiscal Period Activities For a Merchandising Business

3 Teaching Strategies: Observation Demonstration Learner Preparation: There are errors in the following Trial Balance totals. Explain where the error might be. List the first three things you would do to find the error. No. Trial Balance DR CR What are the first three things you do to find the error? 1 $1, $1, $4, $4, $9, $9, $12, $12, $10, $10, $4, $4, $2, $2, Lesson Content: Introduce end-of-fiscal period activities for a merchandising business using computerized methods. Have students analyze the businesses financial condition as well as progress. Assessment: Observation Graded Assignments Lesson 5.4 End-of-Fiscal Period Activities For a Merchandising Business

4 Additional Resources: Textbooks: Multimedia: Websites: Guerrieri, Donald J., Haber, Hoyt, Turner. Glencoe Accounting Real- World Applications and Connections. Glencoe McGraw-Hill ISBN/ISSN X. Ross, Kenton, Gilbertson, Lehman, and Hanson. Century 21 Accounting Multicolumn Journal Anniversary Edition, 1st Year Course. South- Western Educational and Professional Publishing, ISBN/ISSN: Ross, Kenton, Gilbertson, Lehman, and Hanson. Century 21 General Journal Accounting Anniversary Edition, 7th Edition. South- Western Educational and Professional Publishing, ISBN/ISSN: Yacht, Carol. Southwestern Accounting with Peachtree. South-Western Educational and Professional Publishing, Accessed 27 June Students Trial Balance System. Rutgers Accounting Research Center, Automated Accounting. Department of Education, State of Tennessee, Lesson 5.4 End-of-Fiscal Period Activities For a Merchandising Business

5 Activity Preparing a Trial Balance Course Title Accounting I Session Title End-of-Fiscal Period Activities for a Merchandising Business Activity Purpose Demonstrate skill in preparing a Trial Balance after posting at the end of the fiscal period for a merchandising business. OLD Correlations: C 2.e. generate Trial Balances and end-ofperiod adjustments; 7.a. follow oral and written instructions; 7.b. develop time management skills by setting priorities for completing work as scheduled 7.c. make decisions using appropriate accounting concepts;7.e. perform accounting procedures using manual and automated methods; 7.e. perform accounting procedures using manual and automated methods; 7.g. demonstrate use of the numeric keypad by touch 2010 TEKS Correlations: C. 3.h. prepare a trial balance; 5. The student performs accounting functions specific for a merchandising business. The student is expected to explain the nature of special journals and recording transactions in special journals. TAKS Correlation: MATH Objective 10: The student will demonstrate an understanding of the mathematical processes and tools used in problem solving. Materials, Equipment and Resources: Textbook Accounting software Teaching Strategies: Demonstration Observation Activity Outline: Review the normal balance side of accounts. Demonstrate preparation of a Trial Balance using a manual system. Emphasize accuracy and finding errors before Activity Preparing a Trial Balance

6 moving to the next stage of the accounting cycle. Have your students print a Trial Balance for CDs Galore using their accounting software. Check the Trial Balance totals for each student before proceeding to the next stage of the accounting cycle. Assessment: Observation Graded Assignment Quality Feature Trial balance printout for CDs Galore accurate Checked balances before moving to next assignment Found any errors in the Trial Balance and corrected them Completes in a timely manner Score Activity Preparing a Trial Balance

7 Activity Analyzing and Journalizing Adjustments Course Title Accounting I Session Title End-of-Fiscal Period Activities for a Merchandising Business Activity Purpose Demonstrate skill in analyzing and journalizing adjustments for a merchandising business. OLD TEKS Correlations: C 2.e. generate Trial Balances and end-ofperiod adjustments; 7.a. follow oral and written instructions; 7.b. develop time management skills by setting priorities for completing work as scheduled 7.c. make decisions using appropriate accounting concepts;7.e. perform accounting procedures using manual and automated methods; 7.e. perform accounting procedures using manual and automated methods; 7.g. demonstrate use of the numeric keypad by touch 2010 TEKS Correlations: C. 5. The student performs accounting functions specific for a merchandising business. The student is expected to explain the nature of special journals and recording transactions in special journals. TAKS Correlation: MATH Objective 10: The student will demonstrate an understanding of the mathematical processes and tools used in problem solving. Materials, Equipment and Resources: Textbook Accounting software General Journal Form Teaching Strategies: Demonstration Observation Activity Outline: Activity Analyzing and Journalizing Adjustments

8 Demonstrate adjustments for a merchandising business using an Adjustments presentation. Have students analyze and journalize adjusting entries for CDs Galore using their computer software. Prepare a General Journal Input Form spreadsheet, and then journalize using this information: The Merchandise Inventory balance at the beginning of the fiscal period was $10, (See Activity 5.1.2). The ending inventory is $10, Beginning inventory for Office Supplies was $ Ending Office Supplies inventory was $ Beginning Store Supplies inventory was $ Ending Store Supplies inventory was $ Prepaid Insurance was valued at $ Ending value for prepaid insurance is $ Assessment: Observation Graded Assignment Quality Feature Adjustments analysis uses the correct accounts Adjustments adjusted using the correct amounts Correct balances and accounts on Input form Computer entries correct Completes in a timely manner. Score Activity Analyzing and Journalizing Adjustments

9 Activity Calculating Net Income or Loss Course Title Accounting I Session Title End-of-Fiscal Period Activities for a Merchandising Business Activity Purpose Demonstrate skill in calculating net income or loss and dividing it between or among partners. OLD TEKS Correlations: C 7.a. follow oral and written instructions; 7.b. develop time management skills by setting priorities for completing work as scheduled 7.c. make decisions using appropriate accounting concepts;7.e. perform accounting procedures using manual and automated methods; 7.e. perform accounting procedures using manual and automated methods; 7.g. demonstrate use of the numeric keypad by touch 2010 TEKS Correlations: C. 11.h. prepare an income statement for a corporation; TAKS Correlation: MATH Objective 10: The student will demonstrate an understanding of the mathematical processes and tools used in problem solving. Materials, Equipment and Resources: Textbook Spreadsheet software Teaching Strategies: Demonstration Observation Activity Outline: Create and demonstrate use of a Calculating Income and Loss spreadsheet for calculating net income or loss and distributing between or among partners. Business 1: Income Summary dr. $3,000.00, Sales $92,000, Purchases $121,000.00, Advertising Expense $500.00, Insurance Expense $600.00, Activity Calculating Net Income or Loss

10 Miscellaneous Expense $250.00, Payroll Taxes Expense $250.00, Rent Expense $1,200, Salary Expense $950, Office Supplies Expense $325, Utilities Expense 750. The owners, Ken and Ben Shackleford distribute the net income or loss equally. Business 2: Income Summary cr. $4,000, Sales $47,000, Purchases $22,000, Advertising Expense $250, Insurance Expense $250, Miscellaneous Expense $125, Payroll Taxes Expense $55, Rent Expense $600, Salary Expense $350, Office Supplies Expense $75, Store Supplies Expense $115, Utilities Expense $276. The owners Jane and Mary Sawyer distribute the net income 60%, 40%. Have your students use their information for CDs Galore to calculate net income or loss. The owners of CDs Galore share the net income or loss equally. Assessment: Observation Graded Assignment Quality Feature Net income or loss accurate for each business Share of net income or loss accurate for each business Completes in a timely manner Score Activity Calculating Net Income or Loss

11 Activity Calculating Changes in Owner s Equity Course Title Accounting I Session Title End-of-Fiscal Period Activities for a Merchandising Business Activity Purpose Demonstrate skill in calculating changes in owner s equity. OLD TEKS Correlations: C 7.a. follow oral and written instructions; 7.b. develop time management skills by setting priorities for completing work as scheduled 7.c. make decisions using appropriate accounting concepts;7.e. perform accounting procedures using manual and automated methods; 7.e. perform accounting procedures using manual and automated methods; 7.g. demonstrate use of the numeric keypad by touch 2010 TEKS Correlations: C. 5. The student performs accounting functions specific for a merchandising business. The student is expected to explain the nature of special journals and recording transactions in special journals. 11.i. prepare a statement of equity and retained earnings for a corporation TAKS Correlation: MATH Objective 10: The student will demonstrate an understanding of the mathematical processes and tools used in problem solving. Materials, Equipment and Resources: Textbook Spreadsheet software Teaching Strategies: Demonstration Observation Activity Outline: Demonstrate changes in owner s equity by creating and using a Calculating Owners Equity spreadsheet. Have your students use the spreadsheet for these businesses: Activity Calculating Changes in Owner s Equity

12 Business 1: Partners are equal in share and capital. Beginning capital $220,000, Additional Investments none, Share of Net Income $6,300, No Withdrawals. Business 2: Net Loss. Partner 1: Beginning Capital $44,400, Investment $1,000, Share of Net Loss $502.00, Withdrawals $1,200. Partner 2: Beginning Capital $64,000, Investment $2,000, Share of Net Loss $1,506, Withdrawals $1,200. Have your students use the spreadsheet to calculate the ending owner s equity on their CDs Galore business. Assessment: Observation Graded Assignment Quality Feature Accurate capital for each partner for all three businesses Total Owner s Equity accurate Completes in a timely manner Score Activity Calculating Changes in Owner s Equity

13 Activity Calculating Cost of Merchandise Sold and Gross Profit Course Title Accounting I Session Title End-of-Fiscal Period Activities for a Merchandising Business Activity Purpose Demonstrate skill in calculating cost of merchandise sold and gross profit. OLD TEKS Correlations: C 7.a. follow oral and written instructions; 7.b. develop time management skills by setting priorities for completing work as scheduled 7.c. make decisions using appropriate accounting concepts;7.e. perform accounting procedures using manual and automated methods; 7.e. perform accounting procedures using manual and automated methods; 7.g. demonstrate use of the numeric keypad by touch 2010 TEKS Correlations: C. 5. The student performs accounting functions specific for a merchandising business. The student is expected to explain the nature of special journals and recording transactions in special journals. 11.f. prepare a balance sheet for a corporation; 11.h. prepare an income statement for a corporation; 11.i. prepare a statement of equity and retained earnings for a corporation TAKS Correlation: MATH Objective 10: The student will demonstrate an understanding of the mathematical processes and tools used in problem solving. Materials, Equipment and Resources: Textbook Spreadsheet software Demonstration Observation Activity Outline: Create and use a Calculating CMS and Gross Profit spreadsheet to demonstrate the Activity Calculating Cost of Merchandise Sold and Gross Profit

14 formulas for calculating cost of merchandise sold and gross profit. Have your students figure Cost of Merchandise Sold and Gross Profit for these businesses: Business 1: Beginning Merchandise Inventory $215,000, Purchases $92,000, Ending Inventory $159,000 and Total Revenue $222,222. Business 2: Beginning Merchandise Inventory $102,000, Purchases, $22,500, Ending Inventory $98,000 and Total Revenue $18,999. Ask your students to use their information from CDs Galore to calculate Cost of Merchandise Sold and Gross Profit. Assessment: Observation Graded Assignment Quality Feature Correct Cost of Merchandise Sold for all three businesses Correct Gross Profit for all three businesses Completes in a timely manner Score Activity Calculating Cost of Merchandise Sold and Gross Profit

15 Activity Preparing Financial Statements Course Title Accounting I Session Title End-of-Fiscal Period Activities for a Merchandising Business Activity Purpose Demonstrate skill in preparing financial statements for a merchandising business organized as a partnership. OLD TEKS Correlations: C 2.f. prepare financial statements; 7.a. follow oral and written instructions; 7.b. develop time management skills by setting priorities for completing work as scheduled 7.c. make decisions using appropriate accounting concepts; 7.e. perform accounting procedures using manual and automated methods; 7.g. demonstrate use of the numeric keypad by touch 2010 TEKS Correlations: C. 5. The student performs accounting functions specific for a merchandising business. The student is expected to explain the nature of special journals and recording transactions in special journals. 11.f. prepare a balance sheet for a corporation; 11.h. prepare an income statement for a corporation; 11.i. prepare a statement of equity and retained earnings for a corporation TAKS Correlation: WRITING Objective 5: The student will produce a piece of writing that demonstrates a command of the conventions of spelling, capitalization, punctuation, grammar, usage, and sentence structure. Objective 6: The student will demonstrate the ability to revise and proofread to improve the clarity and effectiveness of a piece of writing. MATH Objective 10: The student will demonstrate an understanding of the mathematical processes and tools used in problem solving. Materials, Equipment and Resources: Textbook Accounting Software Word Processing Software Activity Preparing Financial Statements

16 Teaching Strategies: Demonstration Observation Activity Outline: Demonstrate preparation of these financial statements for a merchandising business formed as a partnership: Income Statement Distribution of Net Income Owner s Equity Balance Sheet Have your students print the financial statements for CDs Galore available through their accounting software. Ask them to write an analysis of the financial statements, answering these questions: Income Statement: What was the component percent of Gross Profit to Sales? In your opinion, was this okay? Why or why not? What can be done to make it better, if needed? What was the component percent of Total Expenses to Sales? Were there any expenses that seemed too high? What were they? What measures can be taken to make sure this doesn t happen in the next fiscal period? Owner s Equity Statement: Was the capital at the end more or less than the beginning? What caused the increase or decrease? If it was a decrease, what can be done to change that? Balance Sheet: You are considering expanding the CD store to include a coffee shop. You need to get a loan in a fairly sizeable amount. Based on your Balance Sheet, what do your think your chances are? Why or why not? Will the Income Statement for this fiscal period help you get the loan? Why or why not? Assessment: Observation Graded Assignment Quality Feature Questions all answered Writing clearly thought out, concise and logical No errors in the document Completes in a timely manner Score Activity Preparing Financial Statements

17 Activity Understanding Closing for the Fiscal Period Course Title Accounting I Session Title End-of-Fiscal Period Activities for a Merchandising Business Activity Purpose Demonstrate skill in understanding the closing process for the fiscal period. OLD TEKS Correlations: C 7.a. follow oral and written instructions; 7.b. develop time management skills by setting priorities for completing work as scheduled 7.c. make decisions using appropriate accounting concepts;7.e. perform accounting procedures using manual and automated methods; 7.e. perform accounting procedures using manual and automated methods; 7.g. demonstrate use of the numeric keypad by touch 2010 TEKS Correlations: C. 3.j. prepare a post-closing trial balance; 5. The student performs accounting functions specific for a merchandising business. The student is expected to explain the nature of special journals and recording transactions in special journals. TAKS Correlation: WRITING Objective 5: The student will produce a piece of writing that demonstrates a command of the conventions of spelling, capitalization, punctuation, grammar, usage, and sentence structure. Objective 6: The student will demonstrate the ability to revise and proofread to improve the clarity and effectiveness of a piece of writing. MATH Objective 10: The student will demonstrate an understanding of the mathematical processes and tools used in problem solving. Materials, Equipment and Resources: Textbook Accounting Software Teaching Strategies: Demonstration Activity Understanding Closing For the Fiscal Period

18 Observation Activity Outline: Using a general journal input form, demonstrate closing entries. Have your students answer these questions either verbally or in writing: What are the accounts called that are closed? temporary Which accounts are those that are closed? Income Summary, Purchases, Sales and Expenses What account is affected by closing entries but not closed? Capital What classification of account is Income Summary? What is its normal balance side? In the Owner s Equity classification, but it is neither a normal debit nor credit balance side. What classification of account is Purchases? What is its normal balance side? Cost of Merchandise account and has a normal debit balance How do Purchases affect owner s equity? Decreases Owner s Equity What classification of account is Sales? What is its normal balance side? Revenue and it has a normal balance of credit What classification are expenses? What is the normal balance side of an expense account? Expenses and the normal balance side is debit. What is the balance of the temporary accounts at the beginning of a fiscal period? zero Why is it important that a new fiscal period start off with closed temporary accounts? To match expenses with revenue during that fiscal period and let the owners see what happened during a specific fiscal period without mixing them What is the last step of the accounting cycle? Post-Closing Trial Balance What is the purpose of the last step of the accounting cycle? To be sure the general ledger is balanced after closing entries What accounts show up in the last step of the accounting cycle? Real accounts Assets, Liabilities and Owner s Equity. Temporary accounts are closed and are not on the report. Ask your students to perform period end closing on CDs Galore, using their accounting software. Have them print a Post-Closing Trial Balance. Activity Understanding Closing For the Fiscal Period

19 Assessment: Observation Graded Assignment Quality Feature Answers questions on closing entries and ending the fiscal period Post-Closing Trial Balance accurate for CDs Galore No accounts on the Post-Closing Trial Balance that should not be there Completes in a timely manner Score Activity Understanding Closing For the Fiscal Period