Question
Samsung Inc. sells flat Hi-tech TVs . At December 31, 2018, the companys inventory amounted to 50.000. During the year 2019, the company made only
Samsung Inc. sells flat Hi-tech TVs . At December 31, 2018, the companys inventory amounted to 50.000. During the year 2019, the company made only one purchase and two sales. These transactions were as follows:
January 12. Purchased merchandises to Samsung India corp. The price of the merchandises was 600.000, discount terms 3/10; n/30
February 10. Paid the accounts payable to Samsung India corp.
March 20. Sold TVs to FNAC for 250.000 who paid cash. The cost of these items was 200.000
December 18. Sold Super flat TVs to El Corte Ingles for 300.000. The cost of said products was 150.000, with discount terms 3/10; n/60. Said invoice was still unpaid at December 31, 2019
Instructions
- Prepare journal entries to record these transactions, assuming that Samsung Inc. uses a perpetual inventory system using Net purchases and gross sales. 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 40.000 (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 2019 as follow (20 points):
| Samsung Inc | ||
| Balance sheet | ||
| January 1, 2019 | ||
|
|
|
|
| Cash | 700.000 |
|
| Inventory | 50.000 |
|
| Equipment | 15.000 |
|
| Accumulated depreciation Equipment | -15.000 |
|
| Land | 250.000 |
|
| Building | 1.000.000 |
|
| Accumulated depreciation Building | -1.000.000 |
|
|
|
|
|
| Capital |
| 800.000 |
| Retained earnings |
| 200.000 |
|
|
|
|
| Total | 1.000.000 | 1.000.000 |
|
|
|
|
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Be Audit You Can Be
Authors: Awesome Auditor
1st Edition
1659095700, 978-1659095708
