Week 5 Accounting Workshop: Closing the Bicycle Shop's Books

Part 1 — The Big Picture

This week you learned to turn an adjusted trial balance into three statements, in order, and then to close the books so the next month starts clean. In this workshop you finish one small set of books end to end: the bicycle shop's Month 1. You prepare its income statement, its statement of retained earnings, and its classified balance sheet in a free spreadsheet, journalize the four closing entries, prove the post-closing trial balance, read what the statements show 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 Weeks 3 and 4 carries forward into the closing entries, 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 Month 1 statements show, and how do you know its books are correctly closed for Month 2?

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 after its six adjustments; it describes no real business.

• Rows: 17 adjusted account balances; the statement table has 18 rows, the closing-entry table has 4 rows, and the post-closing trial balance table has 11 account rows
• Adjusted trial balance: $37,650 on each side at the end of Month 1
• Revenue: Service Revenue $5,850
• Expenses: Wages Expense $2,000; Rent Expense $1,500; Supplies Expense $550; Insurance Expense $200; Depreciation Expense $200
• Dividends and Retained Earnings: Dividends $500; Retained Earnings $0 at the start of Month 1
• Assets: Cash $17,100; Accounts Receivable $1,050; Supplies $350; Prepaid Insurance $2,200; Equipment $12,000 with Accumulated Depreciation $200
• Liabilities and stock: Accounts Payable $300; Wages Payable $400; Unearned Revenue $900; Common Stock $30,000

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. Mark each of the 17 accounts as temporary (revenue, expense, or dividend) or permanent (asset, liability, or stockholders' equity). Check: Seven accounts marked temporary and ten marked permanent, plus Retained Earnings, which starts at 0 and is permanent.
2. Open a new sheet and copy the statement table from Part 4. Fill in each amount from Dataset B and compute every subtotal and total with a formula, in order: the income statement first, then the statement of retained earnings, then the balance sheet. Tool: A free spreadsheet (Google Sheets, or any free spreadsheet). Check: Net income, ending Retained Earnings, and the balance sheet totals are all formulas, and total assets equal total liabilities plus total stockholders' equity.
3. On a second tab, copy the closing-entry table from Part 4 and write the four closing entries, debit first, with Income Summary for the revenue and the expenses and Dividends closed straight to Retained Earnings. Tool: A free spreadsheet (Google Sheets, or any free spreadsheet). Check: Four entries, each with equal debits and credits, and Income Summary reading zero after the third one.
4. On a third tab, copy the post-closing trial balance table from Part 4, enter every balance left after closing, 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, the check cell shows 0, and no revenue, expense, or dividend account appears.
5. Answer the analysis questions in Part 5, including the plain sentence that says what the statements show. Check: Written answers to all five questions.
6. Paste your three tables and then the Part 6 prompt into one approved chatbot. Compare every statement line, every closing entry, every total, and every claim about a standard or a rate with your own work and with Chapter 5, 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 three tables by hand onto paper or into any text file, read Dataset B from this page, compute each amount and each total 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

Build the three statements in order, because each one hands a figure to the next and the balance sheet cannot balance without the ending Retained Earnings.

Student scaffold table 1

Statement	Line	Amount
Income Statement, For Month 1	Service Revenue
Income Statement, For Month 1	Total expenses (five expense accounts)
Income Statement, For Month 1	Net income
Statement of Retained Earnings, For Month 1	Retained earnings, beginning
Statement of Retained Earnings, For Month 1	Add: net income
Statement of Retained Earnings, For Month 1	Less: dividends
Statement of Retained Earnings, For Month 1	Retained earnings, end of Month 1
Balance Sheet, End of Month 1	Total current assets
Balance Sheet, End of Month 1	Equipment
Balance Sheet, End of Month 1	Less: Accumulated Depreciation
Balance Sheet, End of Month 1	Property, plant, and equipment, net
Balance Sheet, End of Month 1	Total assets
Balance Sheet, End of Month 1	Total current liabilities
Balance Sheet, End of Month 1	Long-term liabilities
Balance Sheet, End of Month 1	Common Stock
Balance Sheet, End of Month 1	Retained Earnings
Balance Sheet, End of Month 1	Total stockholders' equity
Balance Sheet, End of Month 1	Total liabilities and stockholders' equity

Write each closing entry with its debit first, so the amounts show that every entry balances and that only temporary accounts are closed.

Student scaffold table 2

Closing entry	Purpose	Account(s) debited and amount	Account(s) credited and amount
1	Close the revenue account
2	Close the expense accounts
3	Close Income Summary to Retained Earnings
4	Close Dividends to Retained Earnings

List only the balances left after closing and foot both columns, so the totals prove the books still balance as Month 2 begins.

Student scaffold table 3

Account	Debit	Credit
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Accumulated Depreciation
Accounts Payable
Wages Payable
Unearned Revenue
Common Stock
Retained Earnings

Part 5 — Analysis Questions

1. Compute net income, ending Retained Earnings, total current assets, and total assets, showing the sum or subtraction behind each one.
2. Foot both columns of your post-closing trial balance and explain why its total differs from both the adjusted trial balance total and total assets.
3. Explain why the statements must be prepared before the closing entries, and why Dividends closes straight to Retained Earnings instead of through Income Summary.
4. Write one plain sentence saying what the shop's three statements show about Month 1. Then say, in words, how closing the revenue and the expenses straight to Retained Earnings, without Income Summary, would change the ending Retained Earnings.
5. Choose one reflection: (a) which account did your first instinct sort wrong, temporary or permanent, and what changed your mind? or (b) name one thing the shop's net income does not tell a founder who wants to pay a larger dividend next month.

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 statements, closing entries, and post-closing trial balance above. Here is an illustrative bicycle shop at the end of its first month, after its adjustments. Its adjusted trial balance shows $37,650 on each side: debits Cash 17,100, Accounts Receivable 1,050, Supplies 350, Prepaid Insurance 2,200, Equipment 12,000, Dividends 500, Rent Expense 1,500, Wages Expense 2,000, Supplies Expense 550, Insurance Expense 200, Depreciation Expense 200; credits Accumulated Depreciation 200, Accounts Payable 300, Wages Payable 400, Unearned Revenue 900, Common Stock 30,000, Service Revenue 5,850. Retained Earnings starts at 0. Please prepare the income statement, the statement of retained earnings, and a classified balance sheet; write the closing entries; and give the post-closing trial balance total. Then tell me how much cash the shop's net income gave it, which FASB rule sets the order of the statements, what Social Security rate and wage base apply to the mechanic's wages this year, whether the $200 of depreciation means the equipment is now worth $11,800 on the market, whether the cycling club's $900 of unearned revenue belongs in this month's revenue, and whether the shop could value bicycles it buys next month by LIFO under IFRS.

Test the response for these likely failures:

• Chatbots often say the shop's net income gave it $1,400 of cash, or call the $17,100 in Cash the month's profit.
• Chatbots often list the $500 dividend among the expenses, put Unearned Revenue with the revenues, or show Accumulated Depreciation as a liability.
• Chatbots sometimes add the club's remaining $900 of Unearned Revenue to Service Revenue because the club already paid.
• Chatbots sometimes close the revenue backwards, debiting Income Summary and crediting Service Revenue.
• Chatbots sometimes write closing entry 2 as a debit to Income Summary of 4,450 against credits that leave out one expense, such as only 4,250.
• Chatbots often report the post-closing trial balance as $32,500, the total assets figure, or keep the adjusted $37,650.
• Chatbots sometimes drop the mechanic's $400 of accrued wages from Month 1 because it is paid in Month 2, showing Wages Expense of $1,600.
• Chatbots sometimes cite a FASB standard number that supposedly requires the order of the statements.
• Chatbots often give an older Social Security wage base from an earlier year.
• Chatbots sometimes say the equipment is now worth $11,800 on the market.
• Chatbots sometimes say any inventory method, LIFO included, is allowed under IFRS.

Write three to five sentences: name one thing the chatbot got right, quote at least two of its slips, and correct each one by hand against your own statements, Chapter 5, and the pinned source.

Equivalent route (no AI required)

No AI account is required for this workshop. This route assesses the same objectives, Objective 4 (complete the accounting cycle: prepare an income statement, a statement of retained earnings, and a classified balance sheet, journalize closing entries, and prepare a post-closing 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 shop's net income is 5,850 − 4,450 − 500 = $900, because the dividend is one more expense, and that net income means the shop gained $900 of cash this month. The club's remaining $900 of Unearned Revenue has been paid, so it belongs in Month 1's revenue too. The mechanic's $400 is paid in Month 2, so Wages Expense for Month 1 is $1,600. On the balance sheet, Accumulated Depreciation of $200 is listed with the liabilities, and the equipment is now worth $11,800 on the market. The FASB's Statement Order Rule No. 12 requires the balance sheet to be prepared first. Closing: debit Income Summary 5,850 and credit Service Revenue 5,850; debit Income Summary 4,450 and credit the expenses for 4,250; debit Income Summary 500 and credit Dividends 500. The post-closing trial balance totals $32,500 on each side, the same as total assets. The mechanic's wages also need Social Security withheld at 6.2 percent on wages up to a $168,600 wage base, and under IFRS the shop could choose LIFO for the bicycles it buys next month." Mark every error you find, name the failure it shows, and correct it by hand against Dataset B, Chapter 5, and the pinned source; find at least two. The rule name and the $168,600 wage base in it are wrong on purpose and are themselves errors; neither is a course fact. Submit the marked-up analysis with your corrections in place of the chatbot report and share link.

Part 7 — What to Submit

• The completed statement table, closing-entry table, and footed post-closing 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: three completed tables (the statements in order, the four closing entries, and the footed post-closing trial balance), written answers to five analysis questions, and a critique of a chatbot's version of the same work, 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
Three statements, in order and footed	The income statement, the statement of retained earnings, and the classified balance sheet are complete and in order, net income is 1,400, ending Retained Earnings is 900, current items are separated from long-term items, and total assets equal total liabilities and stockholders' equity at 32,500.	All three statements are present but one figure is wrong or one item is misclassified, or the statements are right but out of order.	A statement is missing, the dividend is listed as an expense, or the balance sheet does not balance.
Balanced closing entries	All four closing entries are right, each balances with the debit listed first, Income Summary reads zero after the third, and Dividends closes straight to Retained Earnings.	Three entries are right, or all four are present but one is reversed or leaves out an expense.	Fewer than three correct entries, a balance sheet account closed, or Dividends closed to Income Summary.
Post-closing trial balance, footed and explained	Only permanent accounts are listed, both columns total 32,700 by formula or written sum, and the answer explains the gap to total assets and to the adjusted 37,650.	The columns balance but one balance is wrong, or the totals are right without the explanation.	No post-closing trial balance, a temporary account still listed, or columns that do not balance.
Plain-sentence reading and the effect of a different choice	One plain sentence says what the statements show, and the answer says in words that closing straight to Retained Earnings leaves the ending balance at 900 unchanged, without ranking either way.	The plain sentence or the effect of the other choice is present, but not both, or one is vague.	Neither the plain sentence nor the effect of the other choice 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 5, 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.

Quality Gate

• Every closing entry lists its debit first and has equal debits and credits.
• Only temporary accounts are closed, and Dividends is closed straight to Retained Earnings.
• Every subtotal, statement total, and trial balance column is computed by formula or written as a sum, and the balance sheet and the post-closing trial balance both balance.
• No standard, rule, rate, statistic, or quotation is invented anywhere in the submission.
• The plain-sentence reading names what the statements show and keeps net income apart from Cash.
• The critique quotes the chatbot or the flawed analysis and corrects at least two errors by hand.