Week 4 Accounting Workshop: Adjusting the Bicycle Shop's Books

Part 1 — The Big Picture

This week you learned that a business records revenue when it is earned and expenses when they are incurred, and that the end of every month needs adjusting entries to put each one in its place. In this workshop you adjust one small set of books end to end: the bicycle shop's Month 1. You compute and record its six month-end adjustments, check that every entry balances and none touches Cash, post them to an adjusted trial balance in a free spreadsheet, read what the result shows in one plain sentence, and then check a chatbot's version of the same work. This is the adjust-and-report mode of the Accounting Workshop: the record-and-post work from Week 3 carries forward into the posting, and the analyze-and-explain work happens in your plain-sentence reading and your critique.

Time budget: Plan for about 90 minutes.

Part 2 — The Task

Guiding question: What do the bicycle shop's six month-end adjustments change in its books, and how do you know the adjusted trial balance is right?

Workshop data: Dataset B, the bicycle shop's month-end (illustrative)

Source: The running case's month-end: an illustrative, unnamed bicycle repair and sales shop, organized as a corporation by two founders, at the end of its first month; it describes no real business.

• Rows: 6 month-end adjustments, (a) to (f); the entry table has 6 rows, and the adjusted trial balance table has 17 account rows plus a totals row
• Unadjusted trial balance: $36,800 on each side at the end of Month 1
• Supplies: $900 bought; a count on Day 31 finds $350 on hand
• Insurance: a 12-month policy that cost $2,400 and began on Day 1
• Equipment: $12,000, expected to last 5 years (60 months) with no residual value
• Cycling club: $1,200 paid in advance on Day 6 for a season of group tune-ups; one quarter performed by the month's end
• Mechanic: $400 of wages earned in the last days of the month and not yet paid
• Delivery company: $250 of repairs finished and not yet billed

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. Read Dataset B in Part 2 twice. For each of the six adjustments, write one line in your own words saying what happened and whether the cash moved before or after the work. Check: Six short lines, one per adjustment, each naming whether cash moved first or will move later.
2. Open a new sheet and copy the entry table from Part 4. For each adjustment, compute the amount, name its kind, and write the account debited and the account credited. Tool: A free spreadsheet (Google Sheets, or any free spreadsheet). Check: Six rows filled, each with one account debited and one credited for the same amount, and Cash in none of them.
3. On a second tab, list the 17 accounts from the adjusted trial balance table in Part 4 with their unadjusted balances, then enter each adjustment beside the accounts it changes and compute every adjusted balance with a formula. Tool: A free spreadsheet (Google Sheets, or any free spreadsheet). Check: Every adjusted balance is a formula of the unadjusted balance and its adjustments; Cash is unchanged.
4. Put each adjusted balance in a debit column or a credit column by its normal balance, total both columns with SUM formulas, and add a check cell that subtracts the credit total from the debit total. Tool: A free spreadsheet (Google Sheets, or any free spreadsheet). Check: Both column totals are equal, and the check cell shows 0.
5. Answer the analysis questions in Part 5, including the plain sentence that says what the adjusted trial balance shows. Check: Written answers to all five questions.
6. Paste your two tables and then the Part 6 prompt into one approved chatbot. Compare every entry, every total, and every claim about a standard or a rate with your own work and with Chapter 4, and write the critique report, or complete the equivalent route instead. Tool: One approved chatbot. Check: A three-to-five-sentence report that quotes at least two of the chatbot's slips and corrects each by hand, or the marked-up equivalent-route analysis.

Fallback route

When to use it: Use this route if you cannot open a spreadsheet or print the tables.

Copy the two tables by hand onto paper or into any text file, read Dataset B from this page, compute each amount and each adjusted balance by hand, add each column twice, and complete every analysis question and the critique step in the same order. 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

Record each adjustment in the same order every time, so the kind tells you the shape of the entry and the amounts let you check that it balances.

Student scaffold table 1

Adjustment	What happened	Kind (deferral or accrual)	Account debited	Account credited	Amount
(a)	Supplies used: $900 bought, $350 on hand at the count
(b)	Insurance expired: one month of the 12-month, $2,400 policy
(c)	Depreciation: $12,000 of equipment over 60 months, no residual value
(d)	Unearned revenue earned: one quarter of the club's $1,200 of tune-ups
(e)	Wages accrued: the mechanic's $400 not yet paid
(f)	Revenue accrued: $250 of repairs finished, not yet billed

Post the six adjustments to every account they touch, then foot both columns, so the totals prove the debits still equal the credits.

Student scaffold table 2

Account	Unadjusted balance	Adjustment(s)	Adjusted debit	Adjusted credit
Cash	17,100 debit
Accounts Receivable	800 debit
Supplies	900 debit
Prepaid Insurance	2,400 debit
Equipment	12,000 debit
Accumulated Depreciation	0
Accounts Payable	300 credit
Wages Payable	0
Unearned Revenue	1,200 credit
Common Stock	30,000 credit
Dividends	500 debit
Service Revenue	5,300 credit
Rent Expense	1,500 debit
Wages Expense	1,600 debit
Supplies Expense	0
Insurance Expense	0
Depreciation Expense	0
Totals	36,800 each side

Part 5 — Analysis Questions

1. Compute the amount of each of the six adjustments, showing the subtraction or division behind (a) through (d).
2. Foot both columns of your adjusted trial balance and explain, using the six adjustments, why the total differs from the unadjusted $36,800.
3. Explain why none of the six entries touches Cash, and name one adjustment where cash moved first and one where it will move later.
4. Write one plain sentence saying what the adjusted trial balance shows. Then say how a different allowed estimate, such as a shorter useful life for the equipment, would change adjustment (c) and the equipment's book value, in words.
5. Choose one reflection: (a) which adjustment did your first instinct get wrong, and what changed your mind? or (b) name one thing a balanced adjusted trial balance cannot prove, and one estimate in Dataset B that a lender might question.

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 pasted my completed adjusting entries and adjusted trial balance above. Here is an illustrative bicycle shop at the end of its first month. Its unadjusted trial balance shows $36,800 on each side. Six things need adjusting: (a) it bought $900 of supplies and a count on Day 31 finds $350 on hand; (b) one month of a 12-month, $2,400 insurance policy has expired; (c) its $12,000 of equipment will last 5 years with no residual value; (d) a cycling club paid $1,200 on Day 6 for a season of group tune-ups, and the shop has performed one quarter of them; (e) the mechanic worked the last days of the month for $400 not yet paid; (f) the shop finished $250 of repairs for a delivery company that it has not yet billed. Please write all six adjusting entries, compute the adjusted trial balance total, and say whether the adjustments change the shop's cash. Then tell me which FASB rule covers the club's payment, what Social Security rate and wage base apply to the mechanic's wages, what the $200 of depreciation says about the equipment's value, where Accumulated Depreciation goes on the balance sheet, and whether the shop could use LIFO for bicycles under IFRS.

Test the response for these likely failures:

• Chatbots often book all of the club's $1,200 as Service Revenue on Day 6, because that is when the cash arrived.
• Chatbots sometimes write adjustment (d) backwards, debiting Service Revenue and crediting Unearned Revenue.
• Chatbots sometimes write the supplies entry with unequal sides, such as Supplies Expense 550 against Supplies 350.
• Chatbots often leave the mechanic's $400 out of Month 1 because the cash is paid in Month 2.
• Chatbots often add all six adjustments to the unadjusted total and report $38,700.
• Chatbots sometimes invent a rule, such as a waiting period before prepaid revenue can be recognized, and attribute it to the FASB.
• Chatbots often quote an earlier year's Social Security wage base when asked about the mechanic's wages.
• Chatbots sometimes say a business reporting under IFRS may choose LIFO for its inventory.
• Chatbots sometimes say that because the adjustments change income, the shop's cash changes too.
• Chatbots often describe the $200 of depreciation as the drop in what the equipment would sell for.
• Chatbots sometimes place Accumulated Depreciation among the liabilities because it has a credit balance.

Write three to five sentences naming what the chatbot got right and at least two places where it slipped into one of the failures above, quoting its words and correcting each by hand against Dataset B, Chapter 4, and the pinned source.

Equivalent route (no AI required)

No AI account is required for this workshop. This route assesses the same objectives, Objective 3 (apply accrual accounting: recognize revenue and expenses in the right period, prepare adjusting entries for deferrals and accruals, and prepare an adjusted trial balance) and 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), 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 Dataset B, printed here in full: "The club paid $1,200 on Day 6, so the shop earned $1,200 of Service Revenue that day, and no tune-up adjustment is needed. For adjustment (d), if one is wanted, debit Service Revenue 300 and credit Unearned Revenue 300. The mechanic's $400 will be paid in Month 2, so it is a Month 2 expense and nothing is recorded now. Supplies: debit Supplies Expense 550 and credit Supplies 350, because $350 is what is left. Depreciation of $200 shows that the equipment's market value fell by $200 this month, and Accumulated Depreciation is a liability, listed with Accounts Payable. The adjusted trial balance shows 36,800 + 550 + 200 + 200 + 300 + 400 + 250 = $38,700 on each side. The adjustments raised net income, so the shop now has more cash than the $17,100 in its bank account. The FASB's revenue standard also says a business must wait 30 days before recognizing any prepaid revenue. The $400 of wages needs Social Security withheld at 6.2 percent on wages up to a $168,600 wage base. Under IFRS, the shop could also choose LIFO for the bicycles it will sell later." Mark every error you find, name the failure it shows, and correct it by hand against Dataset B, Chapter 4, and the pinned source; find at least two. The $168,600 wage base in it is out of date on purpose and is itself one of the errors; it is 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 entry table and the footed adjusted trial balance from Part 4
• Written answers to all five analysis questions
• 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 Month 1: two completed tables (the six adjusting entries and the footed adjusted trial balance), written answers to five analysis questions, and a critique of a chatbot's version of the same adjustments, or, on the equivalent route, a marked-up correction of the printed flawed analysis. Choose how you show it: a completed spreadsheet with written answers, a recorded explanation with a transcript, or hand-drawn 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
Balanced, correctly classified adjusting entries	All six entries have the right amount, kind, and accounts, each balances with the debit listed first, and none touches Cash.	Four or five entries are right, or all six are present but one is reversed, unbalanced, or misclassified.	Fewer than four correct entries, or entries that credit or debit Cash.
Adjusted trial balance, posted and footed	Every adjusted balance is correct, the debit and credit columns each total 37,650 by formula or written sum, and the change from 36,800 is explained by adjustments (c), (e), and (f).	The columns balance but one or two adjusted balances are wrong, or the totals are right without an explanation of the change.	No adjusted trial balance, or columns that do not balance.
Plain-sentence reading and the effect of a different estimate	One plain sentence says what the adjusted trial balance shows, and the answer says in words how a shorter useful life would raise adjustment (c) and lower book value, without ranking either estimate.	The plain sentence or the estimate effect is present, but not both, or one of them is vague.	Neither the plain sentence nor the estimate effect is present.
Caught-and-corrected AI slip, on either route	The chatbot critique report, or the equivalent route's marked-up flawed analysis, quotes at least two errors and corrects each by hand against Dataset B, Chapter 4, and the pinned source; either route earns this band equally.	One error is 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.
Limits and reflection	The answers explain why no adjustment touches Cash with one example of each timing, and the chosen reflection option is answered with a specific adjustment or estimate from Dataset B.	Either the Cash explanation or the reflection is present, but not both, or one is general.	Neither the Cash explanation nor the reflection is present.

Quality Gate

• Every adjusting entry has one account debited and one credited for the same amount, with the debit listed first.
• No accrual or deferral adjusting entry touches Cash.
• Every adjusted balance and both column totals are computed by formula or written as a sum, and the two totals are equal.
• No standard, rule, rate, statistic, or quotation is invented anywhere in the submission.
• The plain-sentence reading names what the adjusted trial balance shows and ranks no allowed estimate as better.
• The critique quotes the chatbot or the flawed analysis and corrects at least two errors by hand.