Accounting Assignemnt
Task
Learning Outcomes:
1. Understand the nature and general purpose of financial statements.
2. Identify the steps in the accounting cycle, adjusting entries.
3. Closing temporary accounts.
4. Demonstrate understanding of the Balance Sheet and the accounting equation.
5. Apply acquired knowledge and skills to prepare an income statement and a statement of retained earnings.
6. Inventories and the cost of goods sold.
Task:
I) General Journals.
On 1 January 2020, ana Almeida began a new business, called Future Inc., a service company dedicated to developing digital marketing campaigns for financial institutions. The following transactions were completed by the business during January:
2 January: Issued 1000 shares of capital stock in exchange for her investment of €100,000 cash.
3 January: Purchased IT equipment for €50,000, paying €15,000 cash and signing a note payable for the balance.
7 January: Acquired furniture for the new office for 60,000, paying $10,000 cash and signing a note payable for the balance.
8 January: Borrowed €100,000 from a bank.
10 January: Billed customers €75,000 for services performed.
II) Adjusting entries.
By the end of December 2020, Peter Ustinov, chief accountant of Pearl associates is working to finish his accounting for the month. He realizes that he still needs to prepare the adjusting entries, and he has the following information:
• Salaries earned by employees that have not yet been recorded or paid amount to €15,600.
• Depreciation of the IT equipment is based on an estimated life of 3 years. The straight-line method is used. Depreciation of the Furniture is based on an estimated life of 5 years. The straight-line method is used.
IT equipment was acquired December 31st last year for a price of €1,500,000.
Furniture was acquired June 30th 2020 for a value of €150,000.
• The company signed an insurance contract by February 1st 2020 for one year, with a value of €45,000.
• A 12-month bank loan in the amount of €100,000 had been obtained with an interest computed at an annual rate of 10 percent on July 31st 2020. The entire €100,000, plus all of the interest accrued over the 12-month life of the loan, is due in full on July 31st of the upcoming year.
• Unrecorded Income Taxes Expense accrued in December amounts to €8,400. This amount will not be paid until January 15.
III) The company Mediaset has the below trial balance by December 31st 2019.
• Prepare closing entries in general journal format.
• Prepare an Income Statement.
• Prepare a Balance Sheet.
• Prepare a Statement of retained earnings.
|
Trial Balance
Company Mediaset.
December 31st 2020
|
|
Cash
|
25.369
|
|
|
Store (Buildings)
|
979.794
|
|
|
Office Furniture
|
45.698
|
|
|
Inventories
|
21.548
|
|
|
Unexpired insurance
|
20.000
|
|
|
Capital Stock
|
|
300.000
|
|
Retained Earnings
|
|
100.000
|
|
Note Payable
|
|
295.899
|
|
Acc. Payable
|
|
85.125
|
|
Tax Payable
|
|
5.000
|
|
Acc. Depreciation
|
|
27.419
|
|
Acc Depreciation store
|
|
244.949
|
|
Dividend
|
12.000
|
|
|
Sales
|
|
1.125.000
|
|
COGS
|
996.182
|
|
|
Consulting expenses
|
1.100
|
|
|
Insurance expenses
|
950
|
|
|
Salary expenses
|
5.892
|
|
|
Utility expenses
|
3.164
|
|
|
Depreciation expense
|
9.140
|
|
|
Store depreciation expense
|
48.990
|
|
|
Tax expense
|
13.565
|
|
|
TOTAL
|
2.183.391
|
2.183.391
|
IV) Brief questions
• Define what is a balance Sheet and its use.
• Define what is an Income Statement and its use.
• Explain and give a numeric example of the differences between LIFO, FIFO and Average methods for inventory valuation.
Format your assignment according to the give formatting requirements:
• The answer must be using Times New Roman font (size 12), double spaced, typed, with one-inch margins on all sides.
• The response also includes a cover page containing the student's name, the title of the assignment, the course title, and the date. The cover page is not included in the required page length.
• Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.