Featured Case Study
This case study walks through the complete accounting cycle for an illustrative fashion-retail practice project: 28 journal entries, posted into 19 ledger accounts, summarised in a balanced trial balance and presented as an income statement and balance sheet. Each statement includes its own internal balance check, and the balance sheet closes with four financial ratios calculated on the year-end position.
Statement 01
Chronological record of business transactions, each captured as a balanced debit and credit entry. Toggle the numbered tabs below to see ten different journal entry sets from my work.
Full-year journal covering capital raise, inventory build, production, wholesale and retail sales, operating expenses and year-end adjusting entries. 28 entries posted across 19 GL accounts.
Entries Posted
28
Total Posted
$6,281,325
How I Prepared It
| Date | JE | Account | Description | Debit | Credit |
|---|---|---|---|---|---|
| Jan 02 | J-01 | Cash | Issued common shares to founders to capitalize the business | $600,000 | |
| Common Shares | $600,000 | ||||
| Jan 04 | J-02 | Studio & Showroom Equipment | Bought equipment, part cash, part note | $180,000 | |
| Cash | $60,000 | ||||
| Notes Payable | $120,000 | ||||
| Jan 08 | J-03 | Intangible Assets, Brand & Designs | Trademark and design portfolio registration | $90,000 | |
| Cash | $90,000 | ||||
| Jan 12 | J-04 | Prepaid Insurance | Paid 12-month studio & inventory insurance | $18,000 | |
| Cash | $18,000 | ||||
| Feb 01 | J-05 | Raw Materials Inventory | Purchased fabrics on account | $620,000 | |
| Accounts Payable | $620,000 | ||||
| Feb 28 | J-06 | Design & Sample Development | Spring/Summer pattern making and sampling | $64,000 | |
| Cash | $64,000 | ||||
| Mar 10 | J-07 | Finished Goods Inventory | Production run, fabric and labour into garments | $720,000 | |
| Raw Materials Inventory | $520,000 | ||||
| Cash | $200,000 | ||||
| Mar 25 | J-08 | Fashion Show & Runway Expense | Spring/Summer runway show and lookbook | $75,000 | |
| Cash | $75,000 | ||||
| Apr 15 | J-09 | Accounts Receivable | Wholesale orders shipped on credit | $980,000 | |
| Wholesale Revenue | $980,000 | ||||
| Apr 15 | J-10 | Cost of Goods Sold | Cost of garments sold wholesale | $392,000 | |
| Finished Goods Inventory | $392,000 | ||||
| May 20 | J-11 | Cash | Direct-to-consumer retail sales | $760,000 | |
| Retail Boutique Revenue | $760,000 | ||||
| May 20 | J-12 | Cost of Goods Sold | Cost of garments sold retail | $266,000 | |
| Finished Goods Inventory | $266,000 | ||||
| Jun 30 | J-13 | Cash | Collected payment from wholesale customers | $400,000 | |
| Accounts Receivable | $400,000 | ||||
| Jul 10 | J-14 | Accounts Payable | Paid fabric suppliers on account | $280,000 | |
| Cash | $280,000 | ||||
| Jul 31 | J-15 | Cash | Royalties from licensed accessories | $60,000 | |
| Licensing & Royalty Income | $60,000 | ||||
| Aug 15 | J-16 | Salaries & Wages Expense | Paid atelier and retail staff | $268,000 | |
| Cash | $268,000 | ||||
| Sep 01 | J-17 | Rent Expense | Annual rent for studio and boutique | $96,000 | |
| Cash | $96,000 | ||||
| Sep 30 | J-18 | Utilities Expense | Utilities for studio and retail | $19,000 | |
| Cash | $19,000 | ||||
| Oct 15 | J-19 | Advertising & Marketing | Editorial campaigns and influencer collabs | $88,000 | |
| Cash | $88,000 | ||||
| Oct 31 | J-20 | Shipping & Freight | Freight for wholesale and online orders | $24,000 | |
| Cash | $24,000 | ||||
| Nov 20 | J-21 | Dividends | Declared and paid cash dividends | $50,000 | |
| Cash | $50,000 | ||||
| Dec 15 | J-22 | Design & Sample Development | Fall/Winter sampling and prototyping | $46,000 | |
| Cash | $46,000 | ||||
| Dec 31 | J-23 | Interest Expense | Interest on equipment notes payable | $9,600 | |
| Cash | $9,600 | ||||
| Dec 31 | J-24 | Depreciation Expense | Adjusting: equipment depreciation | $30,000 | |
| Accumulated Depreciation | $30,000 | ||||
| Dec 31 | J-25 | Amortization Expense | Adjusting: brand & design amortization | $15,000 | |
| Accumulated Amortization | $15,000 | ||||
| Dec 31 | J-26 | Insurance Expense | Adjusting: prepaid insurance expired | $16,500 | |
| Prepaid Insurance | $16,500 | ||||
| Dec 31 | J-27 | Salaries & Wages Expense | Adjusting: accrued unpaid wages | $22,000 | |
| Salaries Payable | $22,000 | ||||
| Dec 31 | J-28 | Income Tax Expense | Adjusting: accrued corporate income tax (25%) | $92,225 | |
| Income Tax Payable | $92,225 | ||||
| TOTAL (Debits = Credits) | $6,281,325 | $6,281,325 | |||
Statement 02
Each journal entry posted into its individual ledger account so closing balances can be carried into the trial balance. Toggle the numbered tabs to see ten different ledger accounts I have prepared.
Main operating cash account for the year. Tracked share issuance, sales receipts, supplier payments, payroll runs and operating expenses across 19 transactions.
Account Type
Asset
Closing Balance
$432,400 Dr
How I Prepared It
Debit
J-01 Share issuance$600,000
J-11 Retail sales$760,000
J-13 AR collection$400,000
J-15 Royalty income$60,000
$1,820,000
Credit
J-02 Equipment purchase$60,000
J-03 Trademark fee$90,000
J-04 Prepaid insurance$18,000
J-06 Sampling expense$64,000
J-07 Production labour$200,000
J-08 Fashion show$75,000
J-14 AP payment$280,000
J-16 Payroll$268,000
J-17 Rent$96,000
J-18 Utilities$19,000
J-19 Marketing$88,000
J-20 Freight$24,000
J-21 Dividends$50,000
J-22 Sampling$46,000
J-23 Interest$9,600
$1,387,600
Statement 03
Listing of every account balance to confirm total debits equal total credits before financial statements are produced. Toggle the tabs to see ten different trial balances from my work.
Full year-end trial balance covering 31 accounts across assets, contra-assets, liabilities, equity, revenue and expenses. Total debits equal total credits at $3,019,225.
Accounts
31
In Balance
$3,019,225
How I Prepared It
| # | Account | Type | Debit | Credit |
|---|---|---|---|---|
| 1 | Cash | Asset | $432,400 | |
| 2 | Accounts Receivable | Asset | $580,000 | |
| 3 | Raw Materials Inventory | Asset | $100,000 | |
| 4 | Finished Goods Inventory | Asset | $62,000 | |
| 5 | Prepaid Insurance | Asset | $1,500 | |
| 6 | Studio & Showroom Equipment | Asset | $180,000 | |
| 7 | Accumulated Depreciation | Contra-Asset | $30,000 | |
| 8 | Intangible Assets, Brand | Asset | $90,000 | |
| 9 | Accumulated Amortization | Contra-Asset | $15,000 | |
| 10 | Accounts Payable | Liability | $340,000 | |
| 11 | Salaries Payable | Liability | $22,000 | |
| 12 | Income Tax Payable | Liability | $92,225 | |
| 13 | Notes Payable | Liability | $120,000 | |
| 14 | Common Shares | Equity | $600,000 | |
| 15 | Dividends | Equity | $50,000 | |
| 16 | Wholesale Revenue | Revenue | $980,000 | |
| 17 | Retail Boutique Revenue | Revenue | $760,000 | |
| 18 | Licensing & Royalty Income | Revenue | $60,000 | |
| 19 | Cost of Goods Sold | Expense | $658,000 | |
| 20 | Design & Sample Development | Expense | $110,000 | |
| 21 | Fashion Show & Runway | Expense | $75,000 | |
| 22 | Salaries & Wages | Expense | $290,000 | |
| 23 | Rent | Expense | $96,000 | |
| 24 | Utilities | Expense | $19,000 | |
| 25 | Advertising & Marketing | Expense | $88,000 | |
| 26 | Shipping & Freight | Expense | $24,000 | |
| 27 | Depreciation | Expense | $30,000 | |
| 28 | Amortization | Expense | $15,000 | |
| 29 | Insurance | Expense | $16,500 | |
| 30 | Interest | Expense | $9,600 | |
| 31 | Income Tax | Expense | $92,225 | |
| TOTALS | $3,019,225 | $3,019,225 | ||
Statement 04
Revenue, cost of goods sold and operating expenses leading to operating income, pre-tax profit and net income. Toggle the tabs to see ten different income statements from my work.
Full-year income statement for FY22. Revenue split across wholesale, retail boutique and licensing channels. Net margin of 15.4% after 25% corporate tax provision.
Total Revenue
$1,800,000
Net Income
$276,675
Gross Profit
$1,142,000
Net Margin
15.4%
How I Prepared It
| REVENUE | |
| Wholesale Revenue | $980,000 |
| Retail Boutique Revenue | $760,000 |
| Licensing & Royalty Income | $60,000 |
| Total Revenue | $1,800,000 |
| COST OF GOODS SOLD | |
| Cost of Goods Sold | ($658,000) |
| Gross Profit | $1,142,000 |
| OPERATING EXPENSES | |
| Design & Sample Development | ($110,000) |
| Fashion Show & Runway | ($75,000) |
| Salaries & Wages | ($290,000) |
| Rent | ($96,000) |
| Utilities | ($19,000) |
| Advertising & Marketing | ($88,000) |
| Shipping & Freight | ($24,000) |
| Depreciation | ($30,000) |
| Amortization | ($15,000) |
| Insurance | ($16,500) |
| Total Operating Expenses | ($763,500) |
| Operating Income (EBIT) | $378,500 |
| Interest Expense | ($9,600) |
| Income Before Income Tax | $368,900 |
| Income Tax Expense (25%) | ($92,225) |
| NET INCOME | $276,675 |
Statement 05
Assets, liabilities and shareholders’ equity at period-end with current ratio, debt-to-equity, working capital and return on equity calculated on the closing position. Toggle the tabs to see ten different balance sheets from my work.
FY22 closing balance sheet. Current assets dominated by AR and cash; intangibles reflect brand and trademarks. Equity built from common shares plus retained earnings less dividends.
Current Ratio
2.59
Debt to Equity
0.69
Working Capital
$721,675
ROE
33.5%
How I Prepared It
| ASSETS | |
| Current Assets | |
| Cash | $432,400 |
| Accounts Receivable | $580,000 |
| Raw Materials Inventory | $100,000 |
| Finished Goods Inventory | $62,000 |
| Prepaid Insurance | $1,500 |
| Total Current Assets | $1,175,900 |
| Property & Equipment | |
| Studio & Showroom Equipment | $180,000 |
| Less: Accumulated Depreciation | ($30,000) |
| Net Book Value, Equipment | $150,000 |
| Intangible Assets | |
| Brand & Design Portfolio | $90,000 |
| Less: Accumulated Amortization | ($15,000) |
| Net Book Value, Intangibles | $75,000 |
| TOTAL ASSETS | $1,400,900 |
| LIABILITIES | |
| Current Liabilities | |
| Accounts Payable | $340,000 |
| Salaries Payable | $22,000 |
| Income Tax Payable | $92,225 |
| Total Current Liabilities | $454,225 |
| Non-Current Liabilities | |
| Notes Payable | $120,000 |
| TOTAL LIABILITIES | $574,225 |
| SHAREHOLDERS' EQUITY | |
| Common Shares | $600,000 |
| Net Income for the Year | $276,675 |
| Less: Dividends Declared | ($50,000) |
| Retained Earnings | $226,675 |
| TOTAL SHAREHOLDERS' EQUITY | $826,675 |
| TOTAL LIABILITIES & EQUITY | $1,400,900 |
Next
Browse nine more samples covering payments, receipts, month-end journal entries, GL reconciliations, indirect tax filings, vendor master data and ad hoc management reports.