CASE NUMBER ONE (100 points) Quick & Dirty sells Event Hardware and Infrastructure. At December 31, 2018, the company's inventory amounted to $35,000. During the year 2019, the company made only one purchase and two sales. These transactions were as follows: January 17. Purchased merchandises from Solid Furniture. The price of the merchandises was 150.000, discount terms 2/10; n/30 February 27. Paid the accounts payable to Solid Furniture. March 25. Sold merchandises to Partying 4Ever Pack for $97.000 who paid cash. The cost of these items was $.87.360 December 18. Sold equipment to the local school for $67.000. The cost of said equipment was $58.950, with discount terms 3/10; n/50. Said invoice was still unpaid at December 31, 2019 Instructions for questions of case number one: a. Prepare journal entries to record these transactions, assuming that Quicl & Dirty 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) b. 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) C. Prepare the company's income statement for the year 2019 taking into account that the remaining expenses of the company during the whole year amounted to 93.000 including depreciation (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). d. 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) e. Prepare the company's trial balance at January 1, 2020 taking into account a Balance sheet at January 1 2019 as follow. Dont forget to adjust the Accumulated Depreciation (20 points): Quick & Dirty Balance sheet January 1, 2019 Cash Inventory Equipment (useful life 5 years) Accumulated depreciation Equipment Land Building (useful life 20 years) Accumulated depreciation Building 157.000 35.000 35.000 -14.000 123.000 160.000 -96.000 Capital Retained earnings 180.000 220.000 Total 400.000 400.000 CASE NUMBER ONE (100 points) Quick & Dirty sells Event Hardware and Infrastructure. At December 31, 2018, the company's inventory amounted to $35,000. During the year 2019, the company made only one purchase and two sales. These transactions were as follows: January 17. Purchased merchandises from Solid Furniture. The price of the merchandises was 150.000, discount terms 2/10; n/30 February 27. Paid the accounts payable to Solid Furniture. March 25. Sold merchandises to Partying 4Ever Pack for $97.000 who paid cash. The cost of these items was $.87.360 December 18. Sold equipment to the local school for $67.000. The cost of said equipment was $58.950, with discount terms 3/10; n/50. Said invoice was still unpaid at December 31, 2019 Instructions for questions of case number one: a. Prepare journal entries to record these transactions, assuming that Quicl & Dirty 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) b. 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) C. Prepare the company's income statement for the year 2019 taking into account that the remaining expenses of the company during the whole year amounted to 93.000 including depreciation (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). d. 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) e. Prepare the company's trial balance at January 1, 2020 taking into account a Balance sheet at January 1 2019 as follow. Dont forget to adjust the Accumulated Depreciation (20 points): Quick & Dirty Balance sheet January 1, 2019 Cash Inventory Equipment (useful life 5 years) Accumulated depreciation Equipment Land Building (useful life 20 years) Accumulated depreciation Building 157.000 35.000 35.000 -14.000 123.000 160.000 -96.000 Capital Retained earnings 180.000 220.000 Total 400.000 400.000
