CASE 1 (100 points) CPU Winner sells computer peripherals At December 31, 2018, the companys inventory amounted to $100,000 During the year 2019, the company made only one purchase and two sales These transactions were as follows January 17 Purchased merchandises to CPU World The price of the merchandises was 100 000, discount terms 2 10 n 30 February 15 Paid the accounts payable to CPU World March 25 Sold merchandises to CPU USERS ASSOCIATION for $197 000 who paid cash The cost of these items was $ 88 750 December 18 Sold equipment to the local administration for $227 000 The cost of said equipment was $105 000, with discount terms 3 10 n 50 Said invoice was still unpaid at December 31, 2019 Instructions Prepare journal entries to record these transactions, assuming that CPU Winner uses a perpetual inventory system Provide with a developed explanation of the different entries and a justification of the amounts recorded (10 points for the entries, 10 points for the explanations) Compute the ending balance in the Inventory account at the close of business on January 6 Explain your answer (5 points for the entries, 5 points for the explanations) Prepare the companys income statement for the year 2019 taking into account that the remaining expenses of the company during the whole year amounted to 76 500 (10 points) Explain the different entries of the income statement and in particular the effects of the discount terms on the operations where applicable (20 points) Explain the main differences between the perpetual and periodic inventory system and record the transactions using a periodic inventory system (10 points for the entries, 10 points for the explanations) Prepare the companys trial balance at January 1, 2020 taking into account a Balance sheet at January 1 2009 as follow (20 points) CPU Winner Balance sheet Jauary 1, 2019 Cash 227 000 Inventory 100 000 Equipement 26 000 Accumulated depreciation Equipement 26 000 Land 123 000 Building 75 000 Accumulated depreciation Building 75 000 Capital 250 000 Retained earnings 200 000 Total 450 000 450 000

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CASE 1 (100 points) CPU Winner sells computer peripherals. At December 31, 2018, the companys inventory amounted to $100,000. During the year 2019, the company

CASE 1 (100 points)

CPU Winner sells computer peripherals. At December 31, 2018, the companys inventory amounted to $100,000. During the year 2019, the company made only one purchase and two sales. These transactions were as follows:

January 17. Purchased merchandises to CPU World. The price of the merchandises was 100.000, discount terms 2/10; n/30

February 15. Paid the accounts payable to CPU World.

March 25. Sold merchandises to CPU USERS ASSOCIATION for $197.000 who paid cash. The cost of these items was $.88.750

December 18. Sold equipment to the local administration for $227.000. The cost of said equipment was $105.000, with discount terms 3/10; n/50. Said invoice was still unpaid at December 31, 2019

Instructions

Prepare journal entries to record these transactions, assuming that CPU Winner uses a perpetual inventory system. Provide with a developed explanation of the different entries and a justification of the amounts recorded. (10 points for the entries, 10 points for the explanations)
Compute the ending balance in the Inventory account at the close of business on January 6 Explain your answer. (5 points for the entries, 5 points for the explanations)
Prepare the companys income statement for the year 2019 taking into account that the remaining expenses of the company during the whole year amounted to 76.500 (10 points). Explain the different entries of the income statement and in particular the effects of the discount terms on the operations where applicable (20 points).
Explain the main differences between the perpetual and periodic inventory system and record the transactions using a periodic inventory system (10 points for the entries, 10 points for the explanations)
Prepare the companys trial balance at January 1, 2020 taking into account a Balance sheet at January 1 2009 as follow (20 points):

CPU Winner
Balance sheet
Jauary 1, 2019

Cash	227.000
Inventory	100.000
Equipement	26.000
Accumulated depreciation Equipement	-26.000
Land	123.000
Building	75.000
Accumulated depreciation Building	-75.000

Capital		250.000
Retained earnings		200.000

Total	450.000	450.000