Accounting assignment

BCO114 Accounting I Task brief & rubrics

Task: Re-sit Assignment (Grade will be capped at 70%).

This task assesses the following learning outcomes:

· Demonstrate understanding of the steps in the accounting cycle.

· Apply acquired knowledge and skills to prepare an income statement and a statement of retained earnings.

· Demonstrate understanding of the balance sheet and the accounting equation.

· Estimate cost of goods sold and ending inventory.

This assignment includes 4 questions.

Submission file format: Word document with all the answers, clearly identifying each question separately.

DEADLINE TO SUBMIT: SUNDAY 11th APRIL 2021

QUESTION 1

Dr. Cravati, DMD, opened a dental clinic on August 1, current year. The following are the business transactions for August.

Aug.  1	Dr. Cravati invested €280,000 cash in the business in exchange for 1,000 shares of capital stock.
Aug.  4	Land and a building were purchased for €400,000. Of this amount, €60,000 applied to the land and €340,000 to the building. A cash payment of €80,000 was made at the time of the purchase, and a note payable was issued for the remaining balance.
Aug.  9	Medical instruments were purchased for €75,000 cash.
Aug. 16	Office fixtures and equipment were purchased for €25,000. Dr. Cravati paid €10,000 at the time of purchase and agreed to pay the entire remaining balance in 15 days.
Aug. 21	Office supplies expected to last several months were purchased for €4,200 cash.
Aug. 24	Dr. Cravati billed patients €13,000 for services rendered. Of this amount, €1,000 was received in cash, and €12,000 was billed on account (due in 30 days).
Aug. 27	A €450 invoice was received for several newspaper advertisements placed in August. The entire amount is due on September 8.
Aug. 28	Received a €500 payment on the €12,000 account receivable recorded August 24.
Aug. 31	Paid employees €2,200 for salaries earned in August.

A partial list of account titles used by Dr. Cravati includes the following.

Cash	Office Fixtures and Equipment
Accounts Receivable	Land
Office Supplies	Building
Notes Payable	Service Revenue
Accounts Payable	Advertising Expense
Capital Stock	Salary Expense
Medical Instruments

Instructions:

(1) Prepare journal entries for each transaction. (15 points)

(2) Post each transaction to the appropriate ledger accounts (use the T account format). (15 points)

(3) Prepare a trial balance dated August 31, current year. (10 points)

QUESTION 2

Harold Co. adjusts its books each month but closes its books at the end of the year. The Trial Balance at March 31 before adjustments is as follows:   

The following information relates to month end adjustments:

(1) According to service contracts, $4,810 of the Unearned Service Revenue has been earned in March.

(2) On March 1, Harold paid in advance for four months' insurance.

(3) At March 31, the amount of supplies on hand is $520.

(4) The equipment had an estimated useful life of five years.

(5) Employees are owed $750 for their work since the last payday in March, to be paid the first week in April.

Instructions:

Prepare the adjusting entries required at March 31. (4 points per each adjusting entry, in total 20 points per question)

QUESTION 3

The accountant for Ramsey Co. prepared the following Adjusted Trial Balance at 31 December:

	Debit	Credit
Cash	€5,700
Accounts Receivable	4,500
Prepaid Insurance	2,100
Office Equipment	18,300
Accumulated Depreciation: Office Equipment		€600
Accounts Payable		3,600
Capital Stock		15,300
Retained Earnings		2,700
Dividends	1,100
Revenue		21,750
Salaries Expense	6,600
Utilities Expense	1,800
Rent Expense	2,700
Depreciation Expense	600
Income Taxes Expense	550	______
	€43,950	€43,950

Instructions:

Prepare financial statements for Ramsey Co.

(1) Income Statement (10 points)

(2) Statement of Retained Earnings (5 points)

(3) Balance Sheet (10 points)

QUESTION 4

Baobab Inc. uses a perpetual inventory system. The company's beginning inventory of a particular product and its purchases during the month of January were as follows:

On January 18, Baobab Inc. sold 25 units of this product. The other 28 units remained in inventory at January 31.

Instructions:

Determine the cost of goods sold to be recorded at January 18 and the cost of 28 units of this product in inventory at January 31, using each of the following methods. Show solutions.

(1) FIFO (5 points)

(2) LIFO (5 points)

(3) Average Cost (5 points)

Rubrics

	Descriptor
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 stated at the end of each question.