The accounting cycle for Apex Tech Solutions for the period ending January 31, 2024, has been executed in strict adherence to Generally Accepted Accounting Principles (GAAP). The objective was to record financial transactions, adjust accounts for accruals and deferrals, and produce accurate financial statements representing the company's financial health (Weygandt et al., 2018). The data indicates the company is well-capitalized with strong liquidity metrics.
Financial Performance: Apex Tech Solutions achieved a Net Income of $3,400 in its operational debut. With Service Revenue at $5,000 and operating expenses minimized to $1,600, the company realized a net profit margin of 68%. This margin exceeds the industry average for startups in the technology service sector, demonstrating effective initial cost control.
Financial Position: As of January 31, 2024, the Balance Sheet reflects Total Assets of $64,200. Key assets include $47,800 in Cash and $10,000 in Office Equipment. Total Liabilities stand at $10,800. The resulting Current Ratio of 5.0 ($54,400 / $10,800) indicates superior short-term liquidity, ensuring Apex Tech Solutions can comfortably meet its short-term obligations (FASB, 2023).
| Date | Account Titles and Explanation | Ref. | Debit | Credit |
|---|---|---|---|---|
| Jan 1 | Cash | 101 | 50,000 | |
| Owner's Capital | 301 | 50,000 | ||
| (Owner investment of cash) | ||||
| Jan 2 | Prepaid Insurance | 130 | 1,200 | |
| Cash | 101 | 1,200 | ||
| Jan 10 | Office Equipment | 157 | 10,000 | |
| Accounts Payable | 201 | 10,000 | ||
| Jan 15 | Accounts Receivable | 112 | 5,000 | |
| Service Revenue | 400 | 5,000 |
Adjusting entries are critical for adhering to the accrual basis of accounting. The following adjustments were journalized on January 31:
| Account | Debit | Credit |
|---|---|---|
| Cash | 47,800 | |
| Accounts Receivable | 5,000 | |
| Supplies | 500 | |
| Prepaid Insurance | 1,100 | |
| Office Equipment | 10,000 | |
| Accumulated Depreciation | 200 | |
| Accounts Payable | 10,000 | |
| Salaries Payable | 800 | |
| Owner's Capital | 50,000 | |
| Service Revenue | 5,000 | |
| Insurance Expense | 100 | |
| Supplies Expense | 500 | |
| Depreciation Expense | 200 | |
| Salaries Expense | 800 | |
| Totals | $66,000 | $66,000 |
| Revenues | ||
| Service Revenue | $5,000 | |
| Expenses | ||
| Salaries Expense | $800 | |
| Supplies Expense | 500 | |
| Depreciation Expense | 200 | |
| Insurance Expense | 100 | |
| Total Expenses | (1,600) | |
| Net Income | $3,400 |
| Assets | |
| Total Current Assets | $54,400 |
| Total Property, Plant, Equip | 9,800 |
| Total Assets | $64,200 |
| Liabilities & Equity | |
| Total Liabilities | 10,800 |
| Total Equity | 53,400 |
| Total Liab. & Equity | $64,200 |
The successful completion of the accounting cycle for Apex Tech Solutions confirms the integrity of the financial data and the company's robust financial position. The Balance Sheet balances at $64,200, and the Post-Closing Trial Balance verifies that only permanent accounts remain for the next period. The financial analysis suggests a promising start for the entity, with strong recommendations to maintain liquidity controls as operations expand.
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To identify and analyze a transaction, first determine if the event has a financial impact on the business. Then, identify which specific accounts are affected (e.g., Cash, Accounts Payable, Revenue). Finally, apply the accounting equation (Assets = Liabilities + Equity) to ensure that the transaction keeps the equation in balance.
Journal entries should be recorded in chronological order. Each entry includes the date, the account to be debited (listed first and flush left), the account to be credited (listed second and indented), and the amounts in their respective debit and credit columns. A brief explanation of the transaction is often included below the entry.
To prepare an unadjusted trial balance, list all the accounts from the general ledger with their current balances. Separate the balances into debit and credit columns. Sum each column to verify that total debits equal total credits. This step helps identify any recording errors before making adjustments.
Adjusting entries are necessary to adhere to the accrual basis of accounting. They ensure that revenues are recognized in the period they are earned and expenses are recorded in the period they are incurred, regardless of when cash is exchanged. This aligns financial statements with the matching principle.
Depreciation is typically calculated using the straight-line method for these projects: (Cost of Asset - Salvage Value) / Useful Life. This annual amount is then divided by 12 to find the monthly depreciation expense to record in the adjusting entry.
Only temporary accounts are closed. These include Revenue accounts, Expense accounts, and the Owner's Drawings (or Dividends) account. They are closed to the Income Summary account (for revenues and expenses) and then to Retained Earnings or Capital, effectively resetting their balances to zero.
Yes, for comprehensive accounting projects, we typically provide the full Excel workbook containing the journal entries, ledgers, and financial statements, ensuring you can see exactly how the numbers flow.
Absolutely. ACCT 201 is one of our most common requests. Our team is well-versed in the standard curriculum, including the full accounting cycle, financial statement preparation, and ratio analysis.
Yes. Our accounting experts double-check all entries and trial balances to ensure mathematical accuracy and adherence to the double-entry system. A balanced trial balance is a standard quality check for our work.