Week 2 Accounting Workshop: The Shop's First Month in One Equation

Part 1 — The Big Picture

This week you learned that every business keeps two lists, what it has and what it owes, and that the accounting equation, Assets = Liabilities + Stockholders' Equity, ties them together after every single transaction. You also learned that revenues raise retained earnings, while expenses and dividends lower it, and that equity is the owners' claim, not the cash in the bank. In this workshop you build the shop's first month in a free spreadsheet, one column per account and one row per transaction, so that formulas add every column and a check cell proves the equation balances on every row. Then you read the month's totals in one plain sentence, ask a chatbot to analyze the same month, and catch and correct its slips by hand. Next week the same twelve rows become journal entries.

Time budget: Plan for about 90 minutes.

Part 2 — The Task

Guiding question: After the bicycle shop's twelve Month 1 transactions, what are its total assets, total liabilities, and total stockholders' equity, how much did the month change retained earnings, and how does the shop's equity differ from its cash?

Workshop data: Dataset A: the bicycle shop's twelve Month 1 transactions (illustrative)

Source: The course's running case: twelve illustrative transactions for an unnamed bicycle repair and sales shop organized as a corporation by two founders, written for this course; it describes no real business.

• Rows: 12 transactions, Day 1 to Day 30; the scaffold's first table has 12 rows, one per transaction
• Accounts: Cash, Accounts Receivable, Supplies, Prepaid Insurance, Equipment, Accounts Payable, Unearned Revenue, Common Stock, and retained earnings
• Business: an illustrative bicycle repair and sales shop, organized as a corporation by two founders, in its first month

Part 3 — Materials & Procedure

Tools and materials

• A free spreadsheet (Google Sheets, or any free spreadsheet) for journals, T-accounts, trial balances, schedules, and statements, with every total computed by formula; the SEC's free EDGAR search for public companies' annual reports; and one approved chatbot used as a sparring partner whose entries, totals, and claims about standards and tax rates the student checks by hand and against the pinned source before trusting them
• A free spreadsheet (Google Sheets, or any free spreadsheet)
• One approved chatbot

Ways of working

• record-and-post
• adjust-and-report
• analyze-and-explain

Procedure

1. Open a new spreadsheet. In row 1 type the headers from the first table in Part 4: the transaction number, the day, what happened, one column for each of the nine accounts, then Total assets and Total liabilities + equity. Tool: A free spreadsheet (Google Sheets, or any free spreadsheet). Check: Fourteen labelled columns, with the five asset accounts grouped before the two liabilities and the two equity columns.
2. Enter each of the twelve transactions on its own row as plus or minus amounts in the accounts it changes, and leave every other account cell empty. In the retained earnings column, type a short label after the amount's row note saying which driver moved it: revenue, expense, or dividend. Tool: A free spreadsheet (Google Sheets, or any free spreadsheet). Check: Twelve rows, each touching exactly two account columns, with no debit or credit wording anywhere.
3. Below the twelve rows, add a totals row: for each account column, use a sum formula such as =SUM(D2:D13) for Cash. Then add the five asset totals in one cell and the two liability and two equity totals in another. Tool: A free spreadsheet (Google Sheets, or any free spreadsheet). Check: Every total comes from a formula, not from typing a number, and the Cash total matches the chapter's ending Cash balance.
4. Add a check cell that subtracts liabilities plus equity from assets, for example =N14-O14, and fill running totals down the last two columns so each row shows the totals after that transaction. Tool: A free spreadsheet (Google Sheets, or any free spreadsheet). Check: The check cell shows 0, and on every row the two running-total columns are equal.
5. Complete the second and third tables in Part 4 from your totals row: the ending balances by side of the equation, and the retained earnings drivers. Check: Both tables are filled from the spreadsheet's own totals, with each total written as the sum of its parts.
6. Paste the Part 6 prompt into one approved chatbot, read its reply line by line against your spreadsheet, and write the critique report; or take the equivalent route below. Tool: One approved chatbot. Check: A short report that quotes the chatbot's slips and corrects each one by hand.

Fallback route

When to use it: Use this route if you cannot open a spreadsheet.

Copy the three tables by hand onto paper or into any text file, enter the twelve transactions from Part 2, add each column by hand with the additions written out, and write the check as assets minus liabilities minus equity. Complete every analysis question and the critique step in the same order, and submit a photo or scan of the paper, or the text file, for equal credit.

This route earns the same credit as the primary route.

Part 4 — The Scaffold

Build the month one row at a time so the equation can be checked after every transaction; the first row is filled in as a model.

Student scaffold table 1

No.	Day	What happened	Cash	Accounts Receivable	Supplies	Prepaid Insurance	Equipment	Accounts Payable	Unearned Revenue	Common Stock	Retained earnings (driver)	Total assets	Total liabilities + equity
1	1	Founders invest $30,000 cash for 30,000 shares of $1-par common stock	+30,000							+30,000		30,000	30,000
2	2	Pays $12,000 cash for repair equipment
3	3	Buys $900 of shop supplies on account
4	4	Pays $2,400 for a 12-month insurance policy that begins on Day 1
5	6	A cycling club pays $1,200 in advance for tune-ups not yet performed
6	15	Repairs for walk-in customers; $3,500 collected in cash
7	18	$1,800 of repairs for a delivery company on account
8	20	Pays $1,500 rent for the month
9	22	Pays $600 of the $900 owed for supplies
10	25	Collects $1,000 from the delivery company on its account
11	28	Pays $1,600 wages to the part-time mechanic
12	30	Pays a $500 cash dividend to the shareholders

Group the ending balances by side of the equation so the two sides can be compared directly.

Student scaffold table 2

Side of the equation	Accounts and ending balances, added	Total
Assets
Liabilities
Stockholders' equity
Check: liabilities + equity compared with assets

Separate the three drivers of retained earnings so the dividend stays apart from the expenses.

Student scaffold table 3

Driver	Transactions	Amount
Revenues
Expenses
Dividends
Effect on retained earnings

Part 5 — Analysis Questions

1. Using your totals row, add the five ending asset balances and the four ending liability and equity balances. Show both sums and say in words whether the equation balances.
2. From the third table, compute the month's effect on retained earnings as revenues minus expenses minus dividends, and show each driver as the sum of its transactions.
3. Write one plain sentence that reads the shop's month: what it controls, who claims it, and how the owners' claim differs from the cash it holds.
4. Which of your twelve rows leave stockholders' equity unchanged, and which pattern does each of them follow? Name the rows.
5. Your check cell shows 0. Describe one recording mistake that would still leave it at 0, and say what would catch that mistake instead.
6. Reflect on your own first instinct by answering one of these two options, which carry the same weight: (a) which account did you first expect to change when cash arrived from a customer, and what changed your mind? (b) which of this week's classic wrong turns did you nearly make in your spreadsheet, and what question will you ask yourself next time?

Part 6 — AI-Critique Moment

Choose one equal-credit critique route. Route A: ask an approved AI tool to critique your completed work, then check its response against your own evidence. Route B is the no-AI equivalent printed below.

Approved tools: Claude, Gemini, ChatGPT, Grok, Microsoft Copilot.

Prompt to paste:

I've built my equation spreadsheet for the twelve transactions above. Here are the illustrative transactions from my financial accounting course; they describe no real business. A bicycle repair shop organized as a corporation records twelve events in Month 1: T1 Day 1: Founders invest $30,000 cash for 30,000 shares of $1-par common stock. T2 Day 2: Pays $12,000 cash for repair equipment. T3 Day 3: Buys $900 of shop supplies on account. T4 Day 4: Pays $2,400 for a 12-month insurance policy that begins on Day 1. T5 Day 6: A cycling club pays $1,200 in advance for tune-ups not yet performed. T6 Day 15: Repairs for walk-in customers; $3,500 collected in cash. T7 Day 18: $1,800 of repairs for a delivery company on account. T8 Day 20: Pays $1,500 rent for the month. T9 Day 22: Pays $600 of the $900 owed for supplies. T10 Day 25: Collects $1,000 from the delivery company on its account. T11 Day 28: Pays $1,600 wages to the part-time mechanic. T12 Day 30: Pays a $500 cash dividend to the shareholders. Please do five things. First, list each transaction's effect on assets, liabilities, and stockholders' equity, in journal form if you like. Second, give the shop's total revenue, total expenses, and the effect on retained earnings for the month. Third, add up total assets, total liabilities, and total stockholders' equity, and say how much cash the owners have to spend. Fourth, name any accounting rule or tax rate that applies to these transactions, including payroll taxes on the wages. Fifth, say how the equipment and any future inventory should be valued.

Test the response for these likely failures:

• Chatbots often slip one digit when they add the five asset balances, writing $32,200 or $34,200.
• Chatbots often count the cycling club's $1,200 advance, or the $1,000 collected on Day 25, as revenue because cash arrived.
• Chatbots often file the $12,000 of equipment as an expense, or treat the $500 dividend as an expense.
• Chatbots often report totals that do not satisfy the equation, such as assets of 32,200 against liabilities of 1,500 and equity of 33,200.
• Chatbots often say the owners' claim is cash the shop has to spend, equating equity with the bank balance.
• Chatbots sometimes cite a rule that does not exist, such as a 'GAAP rule' that a new business must hold half its equity in cash.
• Chatbots often call the whole $2,400 insurance payment a Month 1 expense on the day it is paid.
• Chatbots asked for 'journal form' often reverse the founders' investment, crediting Cash and debiting Common Stock.
• Chatbots sometimes add payroll withholding to the mechanic's wages using an old wage base such as $168,600 or a combined rate of 7.65 percent.
• Chatbots sometimes say the equipment should be marked down to what it would sell for used.
• Chatbots sometimes add that the shop could later use LIFO for inventory under IFRS.

Write 3–5 sentences that quote at least three things the chatbot said, say which parts it got right, and correct every error you found by hand, citing your own spreadsheet row or Chapter 2. Name any reply you flagged as a later week's topic and the pinned fact you checked it against.

Equivalent route (no AI required)

No AI account is required for this workshop. This route assesses the same objectives, Objective 2 (analyze business transactions with the accounting equation and record them in a journal using double-entry bookkeeping, post them to the ledger, and prepare a trial balance) and Objective 1 (explain the purpose of financial accounting, its users, the forms of business organization, the roles of GAAP, the FASB, the SEC, and IFRS, and the ethical principles that guide accountants), takes comparable effort of about the same 90 minutes, uses the same rubric, and earns the same credit. Instead of the chatbot, critique this flawed analysis of the bicycle shop's month, printed here in full: "After the shop's first month, revenue is $6,500: $3,500 from walk-in repairs, $1,800 from the delivery company, and the cycling club's $1,200, because the cash came in. The $1,000 the delivery company paid on Day 25 is more revenue as well. Expenses are $1,500 rent, $1,600 wages, the $500 dividend, and the $12,000 of equipment, which the shop used up by paying for it. The $2,400 insurance is all a Month 1 expense. Total assets are $17,100 + $800 + $900 + $2,400 + $12,000 = $32,200. Equity is $33,200, the same as the shop's assets, so the owners have $33,200 of cash to spend. Under GAAP Rule 2.1, every new business must hold half of its equity in cash. In journal form, the founders' investment is a credit to Cash and a debit to Common Stock. The mechanic's $1,600 also needs Social Security withheld at 7.65 percent on a $168,600 wage base. The equipment should be marked down to what it would sell for used. If the shop later keeps an inventory of helmets, it can use LIFO under IFRS. Total liabilities are $1,500 and equity is $33,200, so the books balance." Mark every error you find, name the failure it shows, and correct it by hand against your own spreadsheet and Chapter 2; find at least three. Treat every figure and rule in it as suspect until you have checked it: the $168,600 wage base in it is an outdated figure planted as an error, not a course figure. Submit the marked-up analysis with your corrections in place of the chatbot report and share link.

Part 7 — What to Submit

• The completed spreadsheet, or the hand-built tables, with the totals row and the check cell
• The second and third tables from Part 4
• Written answers to all six analysis questions, including the plain sentence and one reflection option
• The chatbot critique report with its share link, or the equivalent route's marked-up flawed analysis

Deliverable:

A short Accounting Workshop report on the bicycle shop's first month: the equation spreadsheet (or hand-built tables) with one row per transaction, column totals by formula, and a zero check; the ending balances and retained earnings tables; written answers to six analysis questions, including one plain sentence that reads the month; and a critique of a chatbot's analysis of the same month, or, on the equivalent route, a marked-up correction of the printed flawed analysis. Choose how you show it: written answers, a recorded explanation with a transcript, or labelled tables with short notes; every form is graded by the same scoring criteria. Submit in any accessible file type or as a link; a recorded response may be submitted as audio or video with a transcript, or as text.

Rubric

The rubric below shows how each submitted part is evaluated; bands are full, partial, or none.

Workshop evaluation criteria

Criterion	Full	Partial	None
Twelve transactions recorded in the equation	All twelve rows change the right accounts in the right direction, each row touches exactly the accounts its transaction affects, and the running totals are equal on every row.	Nine to eleven rows are right, or every row is right but the running totals are missing on some rows.	Fewer than nine rows are right, or the transactions are not recorded.
Totals computed and the equation checked	Every account total and both side totals come from a formula or a written-out addition, and the check shows the two sides equal.	The totals are present but one is entered as a bare number with no working or is added wrongly, or the check is missing.	No totals, or totals with no visible working.
Ending balances and retained earnings tables	Both tables are complete: each side of the equation is the sum of its balances, and the effect on retained earnings is revenues minus expenses minus dividends with the dividend kept apart from the expenses.	One table is complete, or both are present with one driver or balance misplaced.	Neither table is completed.
Plain sentence, limitation, and reflection	The plain sentence separates the owners' claim from the cash, the limitation names a mistake a zero check would not catch and what would, and one reflection option is answered specifically.	One of the three is thin or missing.	The plain sentence, the limitation, and the reflection are all missing.
Caught-and-corrected AI slip, on either route	The chatbot critique report, or the equivalent route's marked-up flawed analysis, quotes at least three errors and corrects each by hand against the spreadsheet and Chapter 2, flagging any later-week topic; either route earns this band equally.	One or two errors are quoted and corrected on either route, or errors are named without a correction.	No critique on either route, or chatbot output is pasted without checking it.

Quality Gate

• Every one of the twelve rows changes exactly the accounts the transaction affects, and no row uses debit or credit wording.
• Every column total and both side totals come from a formula or a written-out addition, and the check shows 0.
• The club's advance sits in Unearned Revenue, the equipment in Equipment, and the dividend apart from the expenses.
• Equity and cash are reported as two different figures, and the plain sentence says why.
• No standard, rule, rate, or figure is invented anywhere in the submission; any rate or rule the chatbot raises is checked against a pinned issuing-body source or flagged for a later week.
• The critique quotes the chatbot or the flawed analysis and corrects at least three errors by hand.