Two weeks

Week 1

Critical Thinking: Financial Statements (50 points)

The financial statements of Procter & Gamble Company available at http://www.pg.com/en_US/index.shtml .

Refer to P&G’s financial statements and the accompanying notes to answer the following questions:

1. Using the notes to the consolidated financial statements, determine P&G’s revenue recognition policies. Discuss the impact of trade promotions on P&G’s financial statements.

2. Give two examples of where historical cost information is reported in P&G’s financial statements and related notes. Give two examples of the use of fair value information reported in either the financial statements or related notes.

3. How can we determine that the accounting principles used by P&G are prepared on a basis consistent with those of last year?

4. What is P&G’s accounting policy related to advertising? What accounting principle does P&G follow regarding accounting for advertising? Where are advertising expenses reported in the financial statements?

Week 2

Critical Thinking: Trial Balance (50 points)

Listed below are the transactions for Hunter Marketing. Inc. for the month of July:

July 1     Hunter begins his marketing company and invests $50,000 cash.
July 5     Purchases computers and office equipment on account from OfficeMax for $10,250.
July 6     Pays rent for office space $800 for the month.
July 6     Employs a secretary, Mary Jones.
July 8     Purchases office supplies for cash $960.
July 9     Receives $2,430 from customer for services performed.
July 11   Pays miscellaneous office expenses $375.
July 13   Bills customers $4,900 for serviced performed.
July 15   Pays Office Max $3,500 on account.
July 18   Withdraws $2,000 from business for personal use.
July 20   Receives $1,900 from customers on account.
July 23   Bills customers $6,320 for services performed.
July 30   Pays the following expenses in cash: office salaries $2,300 and utilities $400.

1. Enter the transactions shown above in appropriate general ledger accounts (use T-accounts). Use the following ledger accounts: Cash, Accounts Receivable, Supplies on Hand, Office Equipment, Accumulated Depreciation, Accounts Payable, Hunter-Capital, Service Revenue, Rent Expense, Miscellaneous Office Expense, Office Salaries Expense, Supplies Expense, Utilities Expense, Depreciation Expense and Income Summary.

2. Prepare an unadjusted trial balance.

3. Record depreciation using a 5-year life on the office equipment, the straight-line method, and no salvage value. Round to whole numbers. Also, record an adjustment for office supplies used in the amount of $510.

4. Prepare an adjusted trial balance.

5. Prepare an income statement, a statement of retained earnings, and an unclassified balance sheet.

6. Close the ledger.

7. Prepare a post-closing trial balance.