Continuing Case Essay

5997 Words24 Pages
Chapter 1
Accounting in Action: CM Corporation (CMC)
CM Corporation (CMC) was founded in 2000 by Eric Conner and Phil Martin. The company designs, installs, and services security systems for high-tech companies. The founders, who describe themselves as "entrepreneurial geeks," met in a computer lab when they were teenagers and found they had common interests in working on security systems for critical industries. In January 2012, CMC hired you as an accounting intern. Lately Conner and Martin have been working with “radio frequency identification” (RFID) technology. They have developed a detailed system designed to track inventory items using RFID tags embedded invisibly in products. This technology has numerous inventory
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When you look at it, you find that the accounts are not in any particular order, which surprises you.
(a) Download file 3a from the website. Prepare a trial balance in good form.
(b) From the website, access file 3b, which has the unadjusted trial balance with the accounts in proper order. This file also contains an accounting “system” comprised of a series of linked spreadsheets. The linkages enable the effects of all accounting entries (journal, adjusting, and closing) to flow through to spreadsheets for the income statement, balance sheet, and statement of cash flows. You notice that for the fiscal year ended December 31, 2012, someone has made all the journal entries but none of the adjusting or closing entries. The following information is provided for adjustments prior to closing the books. Lopez and Knepp ask you to enter the adjustments into the spreadsheet, in the two columns to the right of the unadjusted trial balance. (CM2 uses a perpetual inventory system.) 1. Wages earned by employees during December and to be paid in January are $33,875; associated payroll taxes on these wages are $2,710. 2. On July 1, a client paid CM2 $205,720 in advance for a year of consulting services. 3. You discover that a product sale was made and recorded in December for $128,600; the product had not yet been shipped. The cost
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