Hello, everyone. In this video, I'm going to briefly go over this capstone project. The objective of this project is to provide you guys with an opportunity to apply the accounting knowledge you have mastered in your prior accounting courses to our comprehensive setting. You will be assumed to be the accountant of a company. You will be provided with a detailed transactions of the company that take place in two years. Then, you need to analyze these transactions and record the related journal entries. Based on the journal entries you have recorded, you will need to prepare the balance sheet and income statement for the company for both years. In addition to that, you also need to analyze one accounting issue raised by the top managers and provide your own solution to the problem. For simplicity, let's assume the tax rate is zero for this project. This accounting project, we'll cover the following accounting topics; accrual accounting, inventory and accounts receivable, investments, long-term assets, contingencies, bonds, leases, pension, equity related transactions, as well as EPS calculation. Notice that, EPS is normally associated with income statement. Therefore, you will not be able to calculate the earnings per share or EPS and hereafter, you have calculated the net income of the company. Here is the suggested pace for this project. In the first week, you'll need to record journal entries related to the first five topics, which are accrual accounting, inventory and accounts receivable, investments, long-term assets, as well as contingencies. Notice that, these journal entries should also include all the year end at adjusting entries. Such as the journal entry for depreciation expense. In the second week, you need to record a journal entries related to the following topics: bonds, leases, pension, as well as equity related transactions. Once again, these journal entries should include all the year end at adjusting entries. In the last week, first you need to prepare the balance sheet and income statement for the company for both years. In addition, you need to analyze one accounting issue raised by the CEO and CFO of the company and the provide your own solution to the accounting problem. Notice here, these are just the basic working note you are required to finish for each week. However, I would strongly encourage you guys to walk ahead of this schedule because preparing financial statements may take more time, if you are not careful enough. Now, let me briefly go over the steps for preparing financial statements. First, you need to record all the journal entries, which you should have done in the first two weeks. Following that, you need to post journal entries to individual T-account, and summarize the balances of these T-accounts for each year. In the next step, you need to prepare the adjusted trial balance. Basically, you list all the accounts with their balances listed in either the debit or credit column. You want to make sure the total debits equal total credits. If this is not the case, you will have to go back and check for errors. So, this is a step where you may want to go slow and be careful. After this, you should be able to prepare the income statement. In the next step, you need to close all the temporary or income statement accounts. In other words, you transfer the amount of the net income from the income statement to the retained earnings account. After that, you need to prepare the post-closing trial balance. All the accounts here are permanent accounts. Once again, you need to make sure total debits equal total credits. If this is the case, you should be able to prepare the balance sheet. Now let's wrap up in the first two weeks, you need to record all the relevant journal entries. In the last week, first, you need to prepare the true financial statements for the company for both years. In addition to that, you need to provide your own solution to one accounting issue raised by your boss, CEO, and the CFO. Notice that, this last requirement will be peer evaluated by your fellow classmates. Hopefully, this will give you some basic idea about this capstone course. I hope you guys will enjoy.
