ACC 201 Module 5 Project Milestone One example

Project Milestone One: General Journal, Ledger and Unadjusted Trial Balance for a Composite Mobile Detailing Company

[Student Name]

Southern New Hampshire University

ACC 201: Financial Accounting

Module Five Project Milestone One

[Instructor Name]

[Date]

The organization, setting and figures below are a composite written as a model document. No real employer, client, colleague or patient is described.

Project Milestone One: General Journal, Ledger and Unadjusted Trial Balance for a Composite Mobile Detailing Company

The Company

Harborline Mobile Detailing, LLC, a composite business with one owner, washes, polishes and details cars and small fleets at customers' homes and workplaces. It began operations on April 1, 2025, uses the accrual basis and prepares monthly statements. Its chart of accounts includes Cash, Accounts Receivable, Prepaid Insurance, Supplies, Vehicle, Equipment, Accounts Payable, Unearned Revenue, Notes Payable, Owner's Capital, Owner's Drawings, Service Revenue, Wages Expense and Fuel Expense, with further accounts to be added at the adjustment stage (Franklin et al., 2019). Every entry below follows the double-entry rule that total debits equal total credits.

General Journal, April 2025

Table 1 records each April transaction in date order.

Table 1

General Journal Entries, Harborline Mobile Detailing, April 2025

Note. Composite figures in dollars. The April 1 vehicle purchase is a compound entry with one debit and two credits totaling $42,000.

Ledger Balances

After posting each journal entry to its ledger account, the April 30 balances are shown in Table 2. Cash is the most active account, with nine receipts and payments; its balance is 30,000 plus 4,200, 1,500, 2,100 and 5,300 in receipts, minus 8,000, 2,400, 1,850, 2,600, 3,400, 780 and 1,500 in payments, or 22,570 dollars.

Table 2

Unadjusted Trial Balance, Harborline Mobile Detailing, April 30, 2025

Note. Composite figures in dollars. Accounts are listed in balance sheet order followed by equity, revenue and expense accounts.

Entries That Required Judgment

Four entries involved choices worth explaining. The April 1 van purchase is recorded at its full cost of 42,000 dollars even though only 8,000 dollars was paid, because the cost principle records an asset at what it took to acquire it, and the unpaid 34,000 dollars is a liability. The insurance payment on April 2 is recorded as Prepaid Insurance, an asset, rather than as an expense, because it buys twelve months of coverage and only one month has been used. Supplies are treated the same way for the same reason: the 1,850 dollars of chemicals and pads will be used over several weeks, so they remain an asset until a count shows how much has been consumed. The April 20 package sales are recorded as Unearned Revenue, a liability, because customers have paid for washes Harborline has not yet performed; recording them as revenue would recognize income before it is earned (Financial Accounting Standards Board [FASB], 2014).

The fleet customer's billing on April 12 is revenue in April even though cash arrived later, and the April 25 collection is not revenue a second time; it simply converts part of the receivable into cash. The owner's withdrawal is recorded in Owner's Drawings, not as an expense, because it is a distribution to the owner rather than a cost of earning revenue.

What the Trial Balance Proves and What It Does Not

Debits and credits both total 82,000 dollars, which proves that every entry was recorded with equal debits and credits and posted correctly in amount. A balanced trial balance is evidence of arithmetic, not of accuracy. It would not reveal an entry posted to the wrong account, such as fuel recorded as supplies, a transaction omitted entirely, a transaction recorded twice, or an amount entered incorrectly on both sides. To guard against those errors, each journal entry was traced to its source document, the cash balance was reconciled to the April bank statement, and the receivable balance of 1,500 dollars was confirmed against the fleet customer's statement, which shows 3,600 dollars billed and 2,100 dollars paid. Those three checks took less than an hour and would have caught most of the errors a balanced trial balance can hide.

Accounts to Adjust in the Final Project

Several balances in the unadjusted trial balance do not yet reflect April's full activity, and the final project will adjust them. One month of the 2,400 dollar insurance policy has expired. A count on April 30 shows 620 dollars of supplies on hand, so 1,230 dollars were used. The van and equipment have been in service for a month and must be depreciated. One month of interest has accrued on the 34,000 dollar note at 6 percent. The assistant worked the second half of April but is paid on May 1. Some prepaid packages have been used, and fleet work performed late in April has not yet been billed. Each of these adjustments will change both the income statement and the balance sheet, which is why they are made before statements are prepared (Weygandt et al., 2021). Two of them, supplies and depreciation, also require estimates or counts rather than a document, so the final project will state the basis for each: the April 30 physical count for supplies, and the useful lives and salvage values the owner expects for the van and equipment. Recording those bases alongside the entries means a reviewer can test them later, and it keeps the owner from quietly changing an estimate to make a month look better.

References

Financial Accounting Standards Board. (2014). Revenue from contracts with customers (Topic 606) (Accounting Standards Update No. 2014-09). FASB.

Franklin, M., Graybeal, P., & Cooper, D. (2019). Principles of accounting, volume 1: Financial accounting. OpenStax. https://openstax.org/details/books/principles-financial-accounting

Weygandt, J. J., Kimmel, P. D., & Mitchell, J. E. (2021). Accounting principles (14th ed.). Wiley.