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)

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 companys liquidity by the end od the year, show your calculations. (5 points)

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 Jan. 31 Anthony Brown invested 400,000 cash in the business in exchange for 4,000 shares of capital stock. 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. Office furniture was purchased for 150,000 cash. The furniture is planned to be replaced for new in 4 years time. February 28 March 10 Acquired 10 electric silence motorcycles for 3000 each. The invoice has terms 3/030 and Anthony decides to pay cash. April 16 Sold 3 motorcycles at a price of 4500, cash per unit. May 17 Sold 3 motorcycles at a price of 4600, cash per unit. June 30 Acquired 5 electric silence motorcycles for 3050 each. The invoice has terms 3/030 and Anthony decides to pay cash. April 16 Sold 3 motorcycles at a price of 4500, cash per unit. May 17 Sold 3 motorcycles at a price of 4600, cash per unit. June 30 Acquired 5 electric silence motorcycles for 3050 each. The invoice has terms 3/030 and Anthony decides to pay cash. Sep 1 A 1000 invoice was received for several advertising expenses placed in June 25th. The entire amount is due on September 25th. Sep 15 Sold 6 motorcycles at a price of 4400, cash per unit. Dec. 31 Paid commissions 5,890 for previous sales. Dec. 31 Contracted and paid an insurance policy for the next year, until Dec of next year, for an amount of 19,000. The company uses perpetual inventory. The company uses net purchase accounting policy. The company is located in Spain, where the tax rate is 25%