Objective: The goals of this assignment is to reinforce the mechanics of accounting.

Assignment: The double entry accounting system dates back to Italian merchants from the 1400s. While the detailed accounting guidance has evolved since then, the basic principles of the double entry accounting system endure today. Pretend you are an Italian tile merchant who is moonlighting as an accounting instructor at the Florence University of Commerce in the mid1500s. You have been asked to write two pages for a textbook about the principles of accounting. Your textbook pages should explain the primary concepts of the double entry accounting system.

Your explanation should include the following:

A brief description of each of the financial statements (i.e., balance sheet, income statement, statement of retained earnings, statement of cash flows).

A diagram of the balance sheet, income statement, and retained earnings equations and how the equations link to one another.

A brief explanation of the rules for journal entries (e.g., explain what accounts increase with debits and what accounts increase with credits).

Illustrations of the following journal entries as examples for your students:

o Luigi Tile Company issued 4,000 shares of stock to Mario Investors in exchange for 20 lira a share.

o Luigi Tile Company purchased tile cutting equipment for 200 lira on account.

o Luigi Tile Company purchased 400 tiles from Tony, a local artisan, for 800 lira total. Luigi Tile Company agreed to pay for 50% of the tiles now and 50% in 3 months.

o Luigi Tile Company sold the Medici Family 300 tiles for 8 lira each. The Medici Family was billed for half of the purchase and paid the remainder immediately.