ACCOUNTING I Task brief & rubrics

BCO114 ACCOUNTING I Task brief & rubrics

Task: Resit Assignment (100% of the Final grade)

You must answer all the questions in the proposed business case.

This task assesses the following learning outcomes:

• Understand inventory costs.

• Financial analysis and decision making.

• 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 / DELIVERY Via Turnitin on Moodle.

Submission file format: Excel document with all the answers, clearly identifying all steps, results, journals and including comments besides each answer.

Case

Anthony Brown opened a store selling SEAT motorcycles on January 1, current year. The following are the business transactions for the year 2020.

Jan.  1 Anthony Brown invested €400,000 cash in the business in exchange for 4,000 shares of capital stock.

Jan.  31 A store was purchased for €600,000. A cash payment of €150,000 was made at the time of the purchase, and a note payable maturing on Dec 31st current year was issued for the remaining balance.

February  28

March 10

Office furniture was purchased for €150,000 cash. The furniture is planned to be replaced for new in 4 years time.

Acquired 10 electric silence motorcycles for € 3000 each. The invoice has terms 3/0/n30 and Anthony decides to pay cash.

 

 

The company uses perpetual inventory.

The company uses net purchase accounting policy.

The company is located in Spain, where the tax rate is 25%.

1. Prepare journal entries (including explanations) for each transaction, using average cost method, FIFO & LIFO (20 points)

2. Prepare adjusting entries (including explanations) (10 points)

3. Prepare closing entries.(10 points)

4. Prepare an income statement (using average cost method, FIFO & LIFO) (15 points)

April 16

May 17

June 30

Sep 1

Sep 15

Sold 3 motorcycles at a price of €4500, cash per unit.

Sold 3 motorcycles at a price of €4600, cash per unit.

Acquired 5 electric silence motorcycles for € 3050 each. The invoice has terms 3/0/n30 and Anthony decides to pay cash.

A €1000 invoice was received for several advertising expenses placed in June 25th. The entire amount is due on September 25th.

Sold 6 motorcycles at a price of €4400, cash per unit.

Dec. 31

Dec. 31

Paid commissions €5,890 for previous sales.

Contracted and paid an insurance policy for the next year, until Dec 31 of next year, for an amount of €19,000.

 

 

5. Prepare a balance sheet (after closing) (using average cost method, FIFO & LIFO) (10 points)

Compute the following for the FIFO method

(a) Inventory Turnover (5 points)

(b) Days to Sell Inventory (5 points)

(c) Receivables Turnover (5 points)

(d) Days to Collect Receivables (5 points)

(e) Operating Cycle (5 points)

(f) Would you say that the company is profitable? show your calculations and explain. (5 points)

(g) Comment on the company´s liquidity by the end od the year, show your calculations. (5 points)

Rubrics

Descriptor

9-10 The student demonstrates an excellent understanding of the concepts.

 

 

95% of the grade based on the approach, calculations and comments, and 5% based on the presentation and look & field of the spreadsheet.

Points are at the end of each question.

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.

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