Accounting

COURSE CODE :BCO123 COURSE NAME: ACCOUNTING II Task brief & rubrics

Task

Final:

• Individual task • You must answer all the questions. • When solving problems, you must clearly explain all the steps you are doing, and why are you making those steps. • Show all your workings, a numeric answer is not enough. • You should submit a document in Word format. • You should send an excel file with all of the workings.

Formalities:

• Use one page per answer. • Cover, Table of Contents, References and Appendix are excluded of the total wordcount. • Font: Arial 12,5 pts. • Text alignment: Justified.

Submission: Week (13) – Via Moodle (Turnitin). Sunday May 9th.

Weight: This task is a 40% of your total grade for this subject.

It assesses the following learning outcomes:

• understand the purpose and uses of a statement of cash flows; • apply acquired knowledge and skills to be able to analyze a company’s assets, liabilities, shareholder’s equity and the statement of cash flows.

Assignment:

Smith & Johns & Sacher Ltd. is a company dedicated to consulting services.

The company presented the following income statement and Balance sheet for year 2020:

Smith Jones & Sacher Ltd.

Income sratement fot the year ended December 31, 2020

Sales 1.708.000 Cost of the sales 1.020.000 Gross profit 688.000 Depreciation 120.000 Sales and marketing 85.000 Administration 150.000 Total fixed cost 355.000 Operating income 333.000 Earnings before taxes 333.000 Taxes 83.250 Net result 249.750

Balance Sheet

Assets 2.583.000 Fixed assets 2.200.000 Accounts receivable 220.000 Cash 163.000 Liabilities 583.000 Notes payable 379.750 Accounts payable 120.000 Income tax payable 83.250

Stockholders equity 2.000.000 Common stock 2.000.000

During the year 2021, the company reported the following activities:

Month sales Cost of the sales (salaries)

Cost of the sales (Hotels, transports…)

sales & MKT Admin salaries Depreciation over "old" assets

1 155.000 100.000 12.000 12.000 12.500 30.000 2 162.000 100.000 13.000 9.500 12.500 30.000 3 197.000 150.000 14.000 10.500 12.500 30.000 4 208.000 150.000 11.000 11.000 12.500 30.000 5 210.000 160.000 8.000 9.000 12.500 30.000 6 220.000 160.000 14.000 12.000 12.500 30.000 7 230.000 160.000 5.000 7.000 12.500 30.000 8 176.000 160.000 4.000 7.000 12.500 30.000 9 235.000 160.000 17.000 14.000 12.500 30.000

10 242.000 160.000 12.000 12.000 12.500 30.000 11 243.000 170.000 11.000 13.000 12.500 30.000 12 240.000 170.000 8.000 12.000 12.500 30.000

On March 31st, 2021 the company purchased 2 new vehicles for a total amount of 80.000$. The company paid cash. The estimated useful life of said vehicles is 5 years, no salvage value.

The company uses the straight line method for depreciation purposes. Also the half-year convention is applied.

All the sales and purchases of the company are made on account at 30 days.

The note payable was contracted on December 31, 2020 and bears 5% interests to be paid as a lump sum at maturity, in June 15, 2022.

Salaries are paid the 5th day of each month

Taxes (25% rate) are paid at the end of June.

Questions:

1.- Prepare a complete depreciation schedule for the vehicles purchased in 2021 (15 points)

2.- Prepare the income statement for year 2021 (20 points)

3.- Prepare the Balance Sheet for 2021 (20 points)

4.- Prepare Cash Flow Statement for 2021 (30 points)

5.- Explain what are the most important factors in this case that explain the difference between Net income and Cash Flow. (15 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.