The whole assignment is described in the file below

The whole assignment is described in the file below


The aim of the project is to demonstrate an understanding of the accounting cycle by engaging with the basic steps of the bookkeeping process and the preparation of the financial reports.  The hopefully interesting and challenging aspect of the project is that you are not simply asked to do the bookkeeping and the preparation of the financial reports based on given transactions for a specific existing small business.  Instead, let's assume you are in the process of setting up a new small business. The business may be in the broader service sector or maybe a business that buys and resells goods.  The business should not be a manufacturing firm. The total initial capital investment range should be between 50,000 to 100,000 Euros and it will be a single owner business. Also it might be best to avoid platform based business such as an e- commerce business as it may be difficult to obtain some of the information that is needed. On the other hand, if you think you'll be able to collect the needed information, you can attempt to go with this type of business.  In any case, you will need to get approval prior to going forward with your preferred type of business.  Part.A1. Transactions needed to set up the business Preparatory Work: The first thing you need to think about is roughly how much capital you need to start the specific business and how you allocate the initial investment made by you the owner in regards to acquiring the needed resources.  More specifically, you will need to think about the type of assets that you will need in order to run the business. But you also need to ensure that you will have enough cash on hand which not only covers the acquisition of the assets, but also leaves an amount of cash available for the firm’s ongoing operating expenses once the business starts operating. On the other hand, at the pre-launch stage of the business, apart from acquiring specific assets, you may also have to spend money on pre startup expenses. For example, you may need to obtain a license, to pay upfront money for rent, to make leasehold improvements, to pay deposits for utilities or Telcos and perhaps even to advertise and promote your business prior to launching operations. In regards to the acquisition of the assets, you may assume that you can also use trade credit. Clearly, this helps to save from using all of your cash to acquire assets and not to have any cash left to be able to pay for the operating expenses. In order to complete this task, you need to do a ‘bit of research’ in terms of what type of assets would be needed as well as their acquisition costs.  If you are going to be buying and reselling goods you would have to find out about the prices of the products that you would be selling.  For example, let's say you would be selling kitchen equipment for restaurants. This means you would need to get information about the indicative prices at which you would be buying the products from the manufacturing firm (supplier) as well as your mark up and selling prices. You need to first state these as business transactions and then prepare the journal entries. Part A2: Transactions after launching operations: As already stated above. You need to think about the prices that you would charge for the service(s) and/or the one or two products at most that you would be selling. Clearly, it would be helpful to get information about the prices of the similar services and or products.  The other aspect that you would also need to think about concerns the operating expenses of the business.  Some of these expenses will be fixed, meaning that you would have to pay them every month once you made the commitment  and have started running your business.  A typical example of that would be the rent it would be paying for the premises you may have leased to house your business. Other such expenses would be the utilities and the payroll for any employees that you have hired.  Some expenses may be incurred periodically, such as repairs and maintenance, advertising, etc. You need to think about these transactions in terms of keeping in mind that the objective is for the business to be profitable in the long run. On the other hand, the operating expenses should be realistic, which means you need to include the necessary expenses to run the particular type of business. Having decided on your pricing and having set out the cost structure (operating expenses) of your business, you should come up with several transactions that concern generating sales and incurring expenses.  You should come up with at least 12 to 15 such transactions.  A few additional transactions beyond the ones concerning revenue & expenses may be paying for any of the company's liabilities. For example, making a partial or full payment to a supplier for a prior purchase that's been made on credit.  All of these transactions would hypothetically concern the first month of operations. Do not forget: The transactions need to be stated first and then prepared as journal entries. Part B1: Posting in the T-accounts and preparing the Trial Balance You need to set up all of the T-accounts that you will need in order to post the transactions of Parts A1&2. After posting all of the transaction in the T-accounts compute the balances of the accounts and prepare the Trial balance. Also set up in this section the additional T-accounts that you may need to post the adjusting and closing entries for Part B.2 (see below) Part B2 Adjusting entries and closing the accounts This is the step where you need to consider the adjusting entries that may be required at the end of the accounting period prior to the preparation of the financial reports. State the information that pertains to the adjusting entries first. Assuming you have pre-paid expenses such as prepaid rent or any other type such as accrued expenses and depreciation for the fixed assets, proceed with the preparation of the adjusting entries and then the Adjusted Trial balance. Prepare the needed closing entries at the end of the accenting period and post to the relevant accounts updating the balances as needed. Do not forget to post the above entries in the relevant T-accounts and update the balances. Part C: Preparation of Financial Reports: The last step in the accounting process would be to prepare the financial reports.  You will prepare the Income Statement and Balance Sheet for the ended period. The balance sheet will include the changes in Owner’s Equity. You should present the reports in proper format. NOTE: You need to present all of your work in proper format.