MBA 502A—Financial Accounting Accounting Cycle Project (KidKare, Inc. 2012S) You have been asked to do the bookkeeping for KidKare Inc. for the last few days of December while their regular bookkeeper is ill. KidKare Inc. began operations on July 1, 2011. It provides childcare services Monday through Friday, except for holidays. End of month adjusting entries have been made for July through November. No entries have been made since Friday, December 23rd. KidKare has a December 31st fiscal year end, but prepares monthly interim financial statements. Laken Henry, manager and principle shareholder, provides you with the following: Trial Balance as of December 23, 2011 Ref. # Account Title Debit Credit 101 Cash $ 12,094 110 Accounts Receivable 240 112 Allowance for Uncollectible Accounts $ 122 120 Supplies on Hand 1,025 135 Prepaid Insurance 420 145 Other Prepaids 150 150 Office Equipment 3,120 155 Accumulated Depreciation—Office Equipment 325 160 Play Equipment 9,200 165 Accumulated Depreciation—Play Equipment 375 170 Van 25,000 175 Accumulated Depreciation—Van 1,600 190 KidKare Trademark 210 201 Accounts Payable 280 240 Income Taxes Payable 200 260 Notes Payable, 6% due through 2014 15,687 310 Common Stock, $1 par value (20,000 shares) 20,000 315 Additional Paid-in Capital 10,000 410 Childcare Revenue 60,600 425 Interest Revenue 61 515 Salaries & Wages Expense 42,500 525 Rent Expense 5,400 530 Utilities Expense 940 532 Insurance Expense 300 535 Supplies Expense 5,040 540 Bad Debt Expense 202 550 Depreciation Expense 2,300 560 Miscellaneous Expense 132 570 Interest Expense 427 580 Income Tax Expense 550 Totals $109,250 $109,250 An examination of the Chart of Accounts revealed the following additional accounts: 140 Prepaid Rent 210 Revenue Received in Advance 215 Utilities Payable 220 Salaries & Wages Payable 235 Interest Payable 245 Dividends Payable 250 Other Short-term Obligations 340 Retained Earnings 380 Dividends 390 Income Summary 430 Miscellaneous Revenue Information after December 24th: a. On December 26, KidKare received $2,400 ($40 per day per child for 12 children for 5 days) from parents for child care services for the week of December 26 - 30. b. On December 27, KidKare ordered 10 folding chairs for $28 each from Seats-Here Company to be delivered and paid for on January 2nd. c. On December 28, KidKare paid $270 for the purchase of food snacks (supplies) for the children. d. On December 28, KidKare’s Board of Directors declared a $.05 per share dividend on the 20,000 shares outstanding. The dividend will be paid on January 11, 2012. e. On December 30, KidKare received a $200 check from the parents of one of the children for care the week of January 2th through 6th. f. On December 30, KidKare paid $900 rent for the building for the month of January 2012. g. On December 30, KidKare received the electricity bill of $230 for December. The bill was ...

1. MBA 502A—Financial Accounting
Accounting Cycle Project (KidKare, Inc. 2012S)
You have been asked to do the bookkeeping for KidKare Inc.
for the last few days of December while their regular
bookkeeper is ill. KidKare Inc. began operations on July 1,
2011. It provides childcare services Monday through Friday,
except for holidays. End of month adjusting entries have been
made for July through November. No entries have been made
since Friday, December 23rd. KidKare has a December 31st
fiscal year end, but prepares monthly interim financial
statements. Laken Henry, manager and principle shareholder,
provides you with the following:
Trial Balance as of December 23, 2011
Ref. #
Account Title
Debit
Credit
101
Cash
$ 12,094
110
Accounts Receivable
240
112
Allowance for Uncollectible Accounts
$ 122
120
Supplies on Hand
1,025

2. 135
Prepaid Insurance
420
145
Other Prepaids
150
150
Office Equipment
3,120
155
Accumulated Depreciation—Office Equipment
325
160
Play Equipment
9,200
165
Accumulated Depreciation—Play Equipment
375
170
Van
25,000
175
Accumulated Depreciation—Van
1,600
190
KidKare Trademark
210

3. 201
Accounts Payable
280
240
Income Taxes Payable
200
260
Notes Payable, 6% due through 2014
15,687
310
Common Stock, $1 par value (20,000 shares)
20,000
315
Additional Paid-in Capital
10,000
410
Childcare Revenue
60,600
425
Interest Revenue
61
515
Salaries & Wages Expense
42,500
525
Rent Expense
5,400

4. 530
Utilities Expense
940
532
Insurance Expense
300
535
Supplies Expense
5,040
540
Bad Debt Expense
202
550
Depreciation Expense
2,300
560
Miscellaneous Expense
132
570
Interest Expense
427
580
Income Tax Expense
550
Totals
$109,250

5. $109,250
An examination of the Chart of Accounts revealed the following
additional accounts:
140
Prepaid Rent
210
Revenue Received in Advance
215
Utilities Payable
220
Salaries & Wages Payable
235
Interest Payable
245
Dividends Payable
250
Other Short-term Obligations
340
Retained Earnings

6. 380
Dividends
390
Income Summary
430
Miscellaneous Revenue
Information after December 24th:
a. On December 26, KidKare received $2,400 ($40 per day per
child for 12 children for 5 days) from parents for child care
services for the week of December 26 - 30.
b. On December 27, KidKare ordered 10 folding chairs for $28
each from Seats-Here Company to be delivered and paid for on
January 2nd.
c. On December 28, KidKare paid $270 for the purchase of food
snacks (supplies) for the children.
d. On December 28, KidKare’s Board of Directors declared a
$.05 per share dividend on the 20,000 shares outstanding. The
dividend will be paid on January 11, 2012.
e. On December 30, KidKare received a $200 check from the
parents of one of the children for care the week of January 2th
through 6th.
f. On December 30, KidKare paid $900 rent for the building for
the month of January 2012.
g. On December 30, KidKare received the electricity bill of
$230 for December. The bill was paid January 3, 2012.
h. On December 30, Kidcare noted that the parents of two
children had not paid the $400 they owed for child care services

7. for the week of December 26-30 ($40/day per child for five
days). Kidcare billed the parents.
i. A physical count revealed $300 of supplies was left on hand
on December 30.
j. On January 3, KidKare received and paid the phone bill of
$72 for December.
k. On Monday, January 2, KidKare paid payroll of $1,200 in
wages and $500 in salary for the week of December 26 through
30.
l. On January 4, KidKare received its December bank statement
from National Sovereign Bank. The $10 monthly checking
account fee had been deducted and the $4 of interest earned on
its savings account had been added to KidKare’s accounts.
m. The December 23rd balance in “Other Prepaids” contains
$150, paid December 1, for water and sewer service for the
three months of December 2011, January 2012 and February
2012.
n. The van was purchased July 1, 2011 for $25,000 by paying
$7,000 down in cash and signing a three-year, 6%, $18,000
note. The note requires monthly payments of $548 due by the
2nd of each month which includes the interest on the
outstanding balance. The payments are made by automatic
transfer on the 1st day of the month. The van has a 50,000 mile
estimated useful life and an estimated salvage value of $5,000.
KidKare uses the units of activity method of depreciation. The
van was driven 600 miles in December.
o. The office equipment was put into use on July 1, 2011. It has
a eight-year estimated useful life and a $300 estimated salvage
value. Kidcare uses the double-declining balance method to
depreciate it. (Round depreciation to the nearest month.)

8. p. The play equipment was purchased July 1, 2011. It has a ten-
year estimated useful life and a $200 estimated salvage value.
Kidcare depreciates it using the straight-line method. (Round
depreciation to the nearest month.)
q. Prepaid Insurance represents the remaining seven months
(December 2011 through June 2012) on a one-year liability
policy purchased July 1, 2011 for $720.
r. KidKare estimates uncollectible accounts at .4% (or .004) of
total childcare revenue. (Hint: Calculate bad debt expense for
the entire six months. Then subtract the amount already
recognized to calculate the amount to be added to bad debt
expense for December.)
s. KidKare is subject to a 30% income tax rate on net earnings.
t. The December 23rd balance in Account Receivable is related
to the care of two children, who abruptly stopped care in late
November and whose home address is no longer valid.
Attempts to collect are still being made.
u. The Account Payable amount is related to a supplies purchase
made earlier in December. It is expected to be paid in early
January.
v. For financial reporting purposes $5,792 of the remaining
balance on the note is considered “current,” the rest is
considered “long-term.”
Required: Using either the MS Word file provided or the MS
Excel file provided. (Round all final results to the nearest dollar
amount.)
1. Make the appropriate journal entries for December 24
through 31. Use journal page G15. (You may exclude
explanations.)
2. Post the journal entries to the general ledger.

9. 3. Journalize and post the adjusting entries. Use journal page
G16. (Show calculations as the explanation in the journal.)
4. Prepare an adjusted trial balance as of December 31, 2011.
5. Prepare an Income Statement and Retained Earnings
Statement for the six months fiscal period ending December 31,
2011 and a Balance Sheet as of December 31, 2011, in good
form (including an income statement with operating income and
income before taxes subtotals shown and a classified balance
sheet).
6. Journalize and post closing entries for December 31, 2011.
Use journal page G17.
7. Prepare a post-closing trial balance as of December 31, 2011.
8. Submit your journal, general ledger, adjusted trial balance,
financial statements and post-closing trial balance to the
Accounting Cycle Project dropbox by the due date.
Journal & TBsMBA 502A--Financial Accounting: Accounting
Cycle Project (KidKare, Inc. 2011)General
JournalG15DateAccount Titles &
ExplanationsRefDebitCredit2011General JournalG16Adjusted
Trial Balance as of December 31, 2011DateAccount Titles &
ExplanationsRefDebitCreditRef. #Account
TitleDebitCredit2011Adjusting Entries101Cash110Accounts
Receivable112Allowance for Uncollectible
Accounts120Supplies on Hand135Prepaid Insurance140Prepaid
Rent145Other Prepaids150Office Equipment155Accumulated
Depreciation—Office Equipment160Play
Equipment165Accumulated Depreciation—Play
Equipment170Van175Accumulated Depreciation—
Van190KidKare Trademark201Accounts Payable210Revenue
Received in Advance215Utilities Payable220Salaries & Wages
Payable235Interest Payable240Income Tax

10. Payable245Dividends Payable250Other Short-term
Obligations260Notes Payable, 6%,due through 2014310Common
Stock, $1 par value (20,000 shares)315Additional Paid-in
Capital340Retained Earnings380Dividends390Income
Summary410Childcare Revenue425Interest
Revenue430Miscellaneous Revenue515Salaries & Wages
Expense525Rent Expense530Utilities Expense532Insurance
Expense535Supplies Expense540Bad Debt
Expense550Depreciation Expense560Miscellaneous
Expense570Interest Expense580Income Tax
ExpenseTotals$0$0General JournalG17Post-Closing as of
December 31, 2011DateAccount Titles &
ExplanationsRefDebitCreditRef. #Account
TitleDebitCredit2011Closing Entries101Cash110Accounts
Receivable112Allowance for Uncollectible
Accounts120Supplies on Hand135Prepaid Insurance140Prepaid
Rent145Other Prepaids150Office Equipment155Accumulated
Depreciation—Office Equipment160Play
Equipment165Accumulated Depreciation—Play
Equipment170Van175Accumulated Depreciation—
Van190KidKare Trademark201Accounts Payable210Revenue
Received in Advance215Utilities Payable220Salaries & Wages
Payable235Interest Payable240Income Tax
Payable245Dividends Payable250Other Short-term
Obligations260Notes Payable, 6%,due through 2014310Common
Stock, $1 par value (20,000 shares)315Additional Paid-in
Capital340Retained Earnings380Dividends390Income
Summary410Childcare Revenue425Interest
Revenue430Miscellaneous Revenue515Salaries & Wages
Expense525Rent Expense530Utilities Expense532Insurance
Expense535Supplies Expense540Bad Debt
Expense550Depreciation Expense560Miscellaneous
Expense570Interest Expense580Income Tax ExpenseTotals$0$0
LedgerMBA 502A--Financial Accounting: Accounting Cycle
Project (KidKare, Inc. 2011)Cash101Office
Equipment150DateExplanationsRefDebitCreditBalanceDateExpl

11. anationsRefDebitCreditBalanceDec. 23Balance12,094Dec.
23Balance3,120Accumulated Depreciation--Office
Equipment155DateExplanationsRefDebitCreditBalanceDec.
23Balance325Accounts
Receivable110DateExplanationsRefDebitCreditBalanceDec.
23Balance240Play
Equipment160DateExplanationsRefDebitCreditBalanceDec.
23Balance9,200Allowance for Uncollectible
Accounts112DateExplanationsRefDebitCreditBalanceDec.
23Balance122Accumulated Depreciation--Play
Equipment165DateExplanationsRefDebitCreditBalanceDec.
23Balance375Supplies on
Hand120DateExplanationsRefDebitCreditBalanceDec.
23Balance1,025Van170DateExplanationsRefDebitCreditBalance
Dec. 23Balance25,000Prepaid
Insurance135DateExplanationsRefDebitCreditBalanceDec.
23Balance420Accumulated Depreciation--
Van175DateExplanationsRefDebitCreditBalanceDec.
23Balance1,600Prepaid
Rent140DateExplanationsRefDebitCreditBalanceKidKare
Trademark190DateExplanationsRefDebitCreditBalanceDec.
23Balance210Other
Prepaids145DateExplanationsRefDebitCreditBalanceDec.
23Balance150Accounts Payable201Notes
Payable260DateExplanationsRefDebitCreditBalanceDateExplan
ationsRefDebitCreditBalanceDec. 23Balance280Dec.
23Balance15,687Revenue Received in Advance210Common
Stock310DateExplanationsRefDebitCreditBalanceDateExplanati
onsRefDebitCreditBalanceDec. 23Balance20,000Utilities
Payable215Additional Paid-in
Capital315DateExplanationsRefDebitCreditBalanceDateExplana
tionsRefDebitCreditBalanceDec. 23Balance10,000Salaries &
Wages Payable220Retained
Earnings340DateExplanationsRefDebitCreditBalanceDateExpla
nationsRefDebitCreditBalanceInterest
Payable235Dividends380DateExplanationsRefDebitCreditBalan

12. ceDateExplanationsRefDebitCreditBalanceIncome Tax
Payable240Income
Summary390DateExplanationsRefDebitCreditBalanceDateExpla
nationsRefDebitCreditBalanceDec. 23Balance200Dividends
Payable245DateExplanationsRefDebitCreditBalanceOther
Short-term
Obligations250DateExplanationsRefDebitCreditBalanceChildcar
e Revenues410Supplies
Expense535DateExplanationsRefDebitCreditBalanceDateExplan
ationsRefDebitCreditBalanceDec. 23Balance60,600Dec.
23Balance5,040Bad Debt
Expense540DateExplanationsRefDebitCreditBalanceInterest
Revenue425Dec.
23Balance101202DateExplanationsRefDebitCreditBalanceDec.
23Balance61Depreciation
Expense550DateExplanationsRefDebitCreditBalanceMiscellane
ous Revenue430Dec.
24Balance2,300DateExplanationsRefDebitCreditBalanceMiscell
aneous
Expense560DateExplanationsRefDebitCreditBalanceSalaries &
Wages Expense515Dec.
23Balance132DateExplanationsRefDebitCreditBalanceDec.
23Balance42,500Interest
Expense570DateExplanationsRefDebitCreditBalanceRent
Expense525Dec.
23Balance427DateExplanationsRefDebitCreditBalanceDec.
23Balance5,400Income Tax
Expense580DateExplanationsRefDebitCreditBalanceUtilities
Expense530Dec.
23Balance550DateExplanationsRefDebitCreditBalanceDec.
23Balance940Insurance
Expense532DateExplanationsRefDebitCreditBalanceDec.
23Balance300