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Background
Kelly’s Softball Shop Incorporated (KSSI) is a local Vancouver Island company that
specialized in selling softball clothing and equipment in several locations across
Vancouver Island. KSSI uses ASPE for their financial reporting and is required by their
financial institution RBC to submit ASPE GAAP financial statements each year,
specifically – a balance sheet, income statement and a statement of retained earnings.
In addition RBC has requested that KSSI prepare full basic EPS calculations.
KSSI has a year end of January 31 and it is now February 15th, 2017. KSSI’s CEO
Kelly Smith has hired you to complete the year end adjusting entries, financial
statements and closing entries for KSSI. In addition, KSSI has some question they
would like you to answer in memo format.
KSSI has provided you will a pre-adjusted trial balance in alphabetical order (in excel)
and information about their accounting policies and other information you will need to
complete the financial statements (in the attached memo).
Requirements:
Prepare the following in the excel workbook provided:
1) A tab with a workbook of trial balances (Unadjusted, Adjusted, and Closing Trial
Balances)
2) A tab with all adjusting entries (please include the disposal of vehicle here)
3) A tab with the financial statements for Kelly’s Softball Shop Incorporated for the
year ended January 31, 2017 in good form including ALL EPS calculations.
(Please include a Multi-Step Income Statement, Statement of Retained Earnings
and a Classified Balance Sheet. (Please note: A Statement of Cash Flows is not
required)
4) A tab with closing entries, please use the income summary account.
Please save your excel document as your lastnamefirstname (ie smithjohn).
Excel hint: Make sure you are linking cells (ie write an account name or amount once
only) and using formulas. You will be marked based on your formulas and linking, not
just format and correct numbers.
Prepare the following in a word document in memo format:
1) Discuss in 300 words or less the steps in the accounting cycle.
2) SSSI is currently using ASPE for reporting but is currently considering adopting
IFRS. In 300 words discuss the differences between the conceptual framework
for ASPE and IFRS. Hint: Use Chapter 11 as a guide. Make sure you use your
own words.
Please save your word document as your lastnamefirstname (ie smithjohn) Acct 111 Excel Project Summer 2017
To: Acct 111 Student
From: Kelly Smith, CEO Kelly’s Softball Shop Incorporated
Date: February 15, 2017
Subject: KSSI’s Financial Information
Depreciation policies
Depreciation is only taken at the end of each fiscal year and KSSI uses only one
Depreciation expense account for all Depreciation.
Depreciation
Salvage
Useful Life
Method
Value
Office Furniture Straight-line
$0
5 years
Equipment
Straight-line
$15,000
15 years
Vehicles
Units of Production $0
130,000 km
Building
Straight-line
$35,000
30 years
Note: The vehicle was driven 8,000 km during the fiscal year.
Information to prepare other year-end adjusting entries
Management has reviewed the aging accounts receivable and estimates that the
allowance for doubtful accounts should be $50,000.
The prepaid insurance balance is a 12-month insurance policy which was purchased
and paid for on August 1, 2016.
Rent is prepaid quarterly on March 1st, June 1st, September 1st and December 1st and is
expensed at the end of each quarter.
On January 5th KSSI received a deposit of $6,000 for a softball order to be delivered
March 15th. KSSI recorded this as revenue.
Supplies on hand at year-end $9,000. The supplies are expensed to General and
Administrative Expenses.
On September 31, 2016 KSSI issued a 5-year, 4%, $500,000 bond when the market
rate was 5% and it pays interest semi-annually on Mar 31 and Sept 31. KSSI uses the
effective interest rate amortization method.
Other information
When preparing for your arrival I found a cheque for $4,000 included with an invoice for
the sale of the vehicle which is currently recorded in the trial balance. THIS
TRANSACTION HAS NOT YET BEEN RECORDED. Please include in the adjustment
column of the workbook and the adjusting entries tab in the workbook.
There was dividends declared and paid during the year of $55,000 as seen on the trial
balance. Acct 111 Excel Project Summer 2017
KSSI has both preferred shares and common share authorized and outstanding. KSSI
is authorized to issue 10,000 $5 non-cumulative preferred shares and at January 31,
2017 it has 500 issued and outstanding. KSSI is authorized to issue unlimited common
shares and at January 31, 2017 has 125,000 issued and outstanding. On March 1,
2016 KSSI issued 35,000 common shares. KSSI reports the share details on the face of
their Balance Sheet.
In May 2016, management of KSSI determined that their baseball bat equipment rentals
line of business was not profitable and could not compete with other rental shops and
decided to discontinue operations. On Sept 23rd, 2016 KSSI sold all assets relating to
the baseball bat equipment rental business and recorded a gain on the transaction.
The tax rate for KSSI is 40%.
KSSI includes EPS calculations on its Income Statement even though ASPE doesn’t
require it because its shareholders and the bank likes to know this information.
