Task: Test 2 Assignment 15% of total value
You are asked to answer all the questions in the proposed two cases.
This task assesses the following learning outcomes:
· Identify the steps in the accounting cycle
· Demonstrate understanding of the balance sheet and the accounting equation
· Apply acquired knowledge and skills to prepare an income statement and a statement of retained earnings.
LAUNCH: WEEK 10 / DELIVERY: APRIL 23th, 2020, 23:59HRS ON MOODLE
Submission file format: Word document with all the answers.
CASE 1 (100 points)
Samsung Inc. sells flat Hi-tech TV´s . At December 31, 2018, the company’s inventory amounted to 50.000€. During the year 2019, the company made only one purchase and two sales. These transactions were as follows:
February 10. Paid the accounts payable to Samsung India corp.
March 20. Sold TV´s to FNAC for 250.000€ who paid cash. The cost of these items was 200.000€
December 18. Sold Super flat TV´s to El Corte Ingles for 300.000€. The cost of said products was 150.000€, with discount terms 3/10; n/60. Said invoice was still unpaid at December 31, 2019
a. Prepare journal entries to record these transactions, assuming that Samsung Inc. uses a perpetual inventory system using Net purchases and gross sales. Provide with a developed explanation of the different entries and a justification of the amounts recorded. (10 points for the entries, 10 points for the explanations)
b. Compute the ending balance in the Inventory account at the close of business on January 6 Explain your answer. (5 points for the entries, 5 points for the explanations)
c. Prepare the company’s income statement for the year 2019 taking into account that the remaining expenses of the company during the whole year amounted to 40.000€ (10 points). Explain the different entries of the income statement and in particular the effects of the discount terms on the operations where applicable (20 points).
d. Explain the main differences between the perpetual and periodic inventory system and record the transactions using a periodic inventory system (10 points for the entries, 10 points for the explanations)
e. Prepare the company’s trial balance at January 1, 2020 taking into account a Balance sheet at January 1 2019 as follow (20 points):
|January 1, 2019|
|Accumulated depreciation Equipment||-15.000|
|Accumulated depreciation Building||-1.000.000|
|9-10||The student demonstrates an excellent understanding of the concepts.|
|8-8.9||The student demonstrates a good understanding of the concepts.|
|7-7.9||The student demonstrates a fair understanding of the concepts.|
|6-6.9||The student demonstrates some, but insufficient understanding of the concepts.|
|3-5.9||The student demonstrates insufficient understanding of the concepts. They may mention some relevant ideas or concepts, although it is clear that the relationship between them is not understood by the student.|
|1-2.9||The student demonstrates insufficient understanding of the concepts and does not mention any relevant ideas or concepts.|
|0||The student leaves the question blank or cheats.|
Points are at the end of each question.