SIMPSON Corp Prepares its financial statements under U S GAAP During the Year 2018 The company begins operations on January 1, 2018 The company is started by issuing 800,000 shares of common stock for $20,000,000 ($1 Par value stock) The company immediately purchases $2,000,000 in inventory for cash and sells $200,000 of this inventory to customer 1 for $250,000 on credit A larger sale of $500,000 (inventory cost $400,000) is made to customer 2 on Credit Simpson estimates warranty expense as 1 of sales and Bad Debt Expense as 2 of sales (Also note there is an additional sale in December) In January, the company pays $24,000 dollars for a property insurance policy The term of the policy is two years The company immediately purchases a machine for $700,000 cash on January 1 st and depreciates it over 7 years (depreciation is recorded straight line at year end and there is no salvage value) The company immediately purchases a building to house its manufacturing operations for $2,000,000 cash The building is depreciated on a straight line basis over 20 years On June 1, customer 1 pays us $40,000 of the amount due and customer 2 pays us $60,000 of the amount due During June, $100,000 dollars of research and development expenses are incurred $40,000 of this amount has not been paid as of yearend (i e remains a payable) On June 1st, a customer gives Simpson $400,000 in cash for services 80 of these services are rendered during 2018 On June 30 th, the company sells its building to an investment partnership for $2,150,000 and leases it back for a period of 10 years (record building depreciation through June 30 th before recording the sale) On December 1, 2018, the company purchases inventory from a vendor in Europe for 150,000 Euros on credit to be paid 1 31 19 The Euro spot rate on 12 1 18 date is 1 08 The Euro spot rate at 12 31 18 is 1 15 In order to hedge this transaction the company enters into a two month forward contract to purchase 150,000 Euros on 1 31 19 The forward contract rate at 12 1 18 is 1 11 The Forward contract rate at 12 31 18 is 1 14 The Forward Contract is classified as a cash flow hedge of a foreign currency accounts payable Use 90 as the discount rate On December 1, 2018, the company sold inventory costing $200,000 for 300,000 pesos to a foreign customer Payment is expected to be received in late January 2019 The company did not hedge this transaction The peso spot rate was 1 20 on 12 1 18 and 1 22 on 12 31 18 At year end it is determined that the value of the future cash flows associated with the machine are $500,000 (undiscounted) Required Using a separate excel spreadsheet, journalize the transactions and create the Balance Sheet and Income Statement for year end 2018 When creating your financial statements classify the balance sheet (Show totals for Total Assets, Total Liabilities, and Total Liabilities and Shareholders Equity)

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SIMPSON Corp. Prepares its financial statements under U.S. GAAP During the Year 2018: The company begins operations on January 1, 2018. The company is started

SIMPSON Corp. Prepares its financial statements under U.S. GAAP

During the Year 2018:

The company begins operations on January 1, 2018. The company is started by issuing 800,000 shares of common stock for $20,000,000 ($1 Par value stock)
The company immediately purchases $2,000,000 in inventory for cash and sells $200,000 of this inventory to customer #1 for $250,000 on credit.
A larger sale of $500,000 (inventory cost $400,000) is made to customer #2 on Credit.
Simpson estimates warranty expense as 1% of sales and Bad Debt Expense as 2 % of sales. (Also note there is an additional sale in December)
In January, the company pays $24,000 dollars for a property insurance policy. The term of the policy is two years.
The company immediately purchases a machine for $700,000 cash on January 1^st and depreciates it over 7 years (depreciation is recorded straight line at year end and there is no salvage value)
The company immediately purchases a building to house its manufacturing operations for $2,000,000 cash. The building is depreciated on a straight-line basis over 20 years.
On June 1, customer #1 pays us $40,000 of the amount due and customer #2 pays us $60,000 of the amount due.
During June, $100,000 dollars of research and development expenses are incurred. $40,000 of this amount has not been paid as of yearend (i.e. remains a payable).
On June 1st, a customer gives Simpson $400,000 in cash for services. 80% of these services are rendered during 2018.
On June 30^th, the company sells its building to an investment partnership for $2,150,000 and leases it back for a period of 10 years. (record building depreciation through June 30^th before recording the sale)
On December 1, 2018, the company purchases inventory from a vendor in Europe for 150,000 Euros on credit to be paid 1/31/19. The Euro spot rate on 12/1/18 date is 1.08. The Euro spot rate at 12/31/18 is 1.15. In order to hedge this transaction; the company enters into a two-month forward contract to purchase 150,000 Euros on 1/31/19. The forward contract rate at 12/1/18 is 1.11. The Forward contract rate at 12/31/18 is 1.14. The Forward Contract is classified as a cash flow hedge of a foreign currency accounts payable. Use .90 as the discount rate

On December 1, 2018, the company sold inventory costing $200,000 for 300,000 pesos to a foreign customer. Payment is expected to be received in late January 2019. The company did not hedge this transaction. The peso spot rate was 1.20 on 12/1/18 and 1.22 on 12/31/18.
At year end it is determined that the value of the future cash flows associated with the machine are $500,000 (undiscounted)

Required:

Using a separate excel spreadsheet, journalize the transactions and create the Balance Sheet and Income Statement for year-end 2018. When creating your financial statements classify the balance sheet (Show totals for Total Assets, Total Liabilities, and Total Liabilities and Shareholders’ Equity).