EXERCISE 1 Alfa srl is a company that produces car parts. At the end of 2018, it has the following Balance Sheet: ASSETS 2018 LIABILITIES 2018 Fixed assets 700.000 Paid in capital 400.000 Raw materials inventories 350.000 Retained earnings 200.000 WIP inventories 530.000 Net income 350.000 Final product inventories 550.000 Credit risk fund 80.000 Accounts 300.000 Short-term bank debt 530.000 Cash 700.000 Long-term bank debt 1.000.000 Current liabilities 570.000 Total assets 3.130.000 Total liabilities 3.130.000 von 7064 3232 LE NON szezodorno mo $24706 1706 OTON Lolore sx 400 1070 S7088 $.24706 At the end of the year raw materials is paid cash only. 1070_o Toa st During the 2019, the following events take place: 1.000.000 of revenues are realized and the 70% is cashed immediately. Accounts receivables in the initial Balance Sheet are cashed at 90%, meanwhile the 10% is uncollectible. Raw materials' purchases are 250.000 and the 450,000, 300,000 of WIP are completed and final product inventories are 420,000 The 1 July it is sold an old machine, purchased at 250.000, amortized for half, sold for 150.000. At 31/12/2019 it is bought a new machine to cover the sold one at the price of 500.000, financed by a new bank debt that cover the 60% of the purchase, meanwhile the rest is paid with cash. Annual amortization is 50.000. At 31/12/2019 50.000 of current liabilities are paid and 10% of the long-term debts present at the beginning of the period. Interest tax is 6% with the same reasoning as the debts. Services costs are 30.000, labour's costs are 25.000, both of them paid completely. WWe pay all payable accounts from the previous year Company distributes net income of the previous year as dividends. Taxes rate is 50% and it is paid cash only Based on this information, prepare Income Statement (selling cost classification) and Balance sheet for 2019. At the end of the year raw materials inventory is + 400,000, 300,000 of WIP are completed and final product inventories are 420,000. What are the correct registrations to make? 70 a (a) WIP inventories decreases by 300.000, final product inventories increase by 300.000. Final product inventories decrease by 420.000, 420.000 as selling cost in the Income Statement. (b) Raw materials inventories decrease by 450.000, final product inventories increase by 450.000. Final product inventories decrease by 420.000, 420.000 as selling cost in the Income Statement. O (C) Raw materials inventories decrease by 150.000, WIP inventories increases by 150.000. WIP inventories decreases by 300.000, final product inventories increase by 300.000. Final product inventories decrease by 430.000, 430.000 as selling cost in the Income Statement. O (d) Raw materials inventories decrease by 150.000, inventories increase by 150.000. WIP inventories decreases by 300.000, final product inventories increase by 300.000. Final product inventories decrease by 450.000, 450.000 as selling cost in the Income Statement. 0 (e) Raw materials inventories decrease by 450.000, WIP inventories increases by 450.000. WIP inventories decreases by 300.000, final product inventories increase by 300.000. Final product inventories decrease by 420.000, 420.000 as selling cost in the Income Statement