The best way to prepare the assignment is to solve the exercise Manchester in the spreadsheet journal, ledger and trial balance (file). Please remember to add also the closing accounts and to calculate the income statement and the ending balance. Once you got that you just need to answer different questions about the exercise using this google form file (FA Assignment 7)

Exercise 2 MANCHESTER is a company that uses the PERIODIC INVENTORY SYSTEM and on December 31st 2021 presents the following Balance Statement.

ASSETS (in )		EQUITIES (in )
Non Current Assets		Owners Equity
Buildings	21,000	Paid-in-Capital	25,000
Equipment	6,000	Retained Earnings	2,000
Current Assets		Long Term Liabilities
Inventories	7,000	Creditors	8,500
Accounts receivable		Short Term Liabilities
Advances to suppliers	300	Suppliers	2,500
Customers	2,200	Salaries payable	2,000
Cash and equivalents		Tax payable	1,500
Bank	5,000
	41,500		41,500

During 2022 the company takes the following transactions:

1. A new capital contribution for 8,000.

2. Sales amount of 18,000 on credit terms. The payment terms of this sale should be made within 90 days.

3. Inventory purchases of 5,000, applying the advance paid to suppliers, 500 are paid through a bank transfer and the rest will be paid in the future.

4. For this last acquisition, the supplier grants a 2% quantity discount. The amount is deducted from the pending amount.

5. Part of the merchandise bought (see item 3 above), 800, is returned to the supplier because of bad quality. This amount is deducted from the pending invoice.

6. The customer (see item2 above), returns us 10% of the merchandise sold. This amount is deducted from the pending invoice.

7. Payment made of Salaries payable (account found in the beginning balance sheet).

8. Payment made of Taxes payable(account found in the beginning balance sheet).

9. The customer's balance on Dec, 31st 2021 is received.

10. Wage expenses for 2022 amount to 1,300. These expenses are totally paid (bank transfer), except the December ones, their value is 400 and will be paid on January 5th 2023.

11. During 2022 the company purchases some merchandise valued at 6,000; 60% paid through bank transfer, and 40% will be paid to the suppliers in 2023.

12. During 2022 the company acquired on credit, a vehicle valued at 7,200. The payment will take place in January 2023.

Final data:

The physical count of merchandise on Dec 31st, 2022 shows an amount of inventories of 4,300.

Is required:

1. Open the journal and the ledger.

2. Register all the transactions in the journal and in the ledger.

3. Close the accounting cycle.

4. Elaborate the final Balance Sheet Statement

A new capital contribution for 8,000

A. Debit: Paid-in-capital Credit: Banks Amount 8.000

B. Debit: Banks Credit Paid-in-capital Amount 8.000

C. Debit: Banks Credit Accounts payable Amount 8.000

D. Debit: Accounts payable Credit: Banks Amount 8.000

3. Purchase of inventories of 5,000, applying the advance paid to suppliers, 500 are paid through a bank transfer and the rest will be paid in the future

A. Debit: Purchase of Merchandise Amount 5.000 Credit: Suppliers 300 and Banks 500 and Accounts Payable / Suppliers 4.200

B. Debit: Merchandise Amount 5.000 Credit: Advances to suppliers 300 and Cash 500 and Accounts Payable / Suppliers 4.200

C. Debit: Purchase of Merchandise Amount 5.000 Credit: Advances to suppliers 300 and Banks 500 and Accounts Payable / Suppliers 4.200

D. Debit: Purchase of Merchandise Amount 5.000 Credit: Advances to Suppliers 300 and Banks 4.700

4. For this last acquisition, the supplier grants a 2% quantity discount. This amount is deducted from the pending invoice

A. Debit: Suppliers / Accounts Payable Amount 100 Credit: Sales Quantity Discounts (Revenues) Amount 100

B. Debit: Purchase Quantity Discounts (Revenues)Amount 100 Credit: Suppliers / Accounts Payable Amount = 100

C. Debit: Suppliers / Accounts Payable Amount 100 Credit: Purchase Quantity Discounts (Revenues) Amount = 100

5. Part of the merchandise bought (see item 3 above), 800, is returned to the supplier because of bad quality. This amount is deducted from the pending invoice

A. Debit: Suppliers / Accounts Payable Credit: Purchases Return Amount = 800

B. Debit: Sales Return Credit: Clients / Accounts receivable Amount = 800

C. Debit: Purchases Return Credit: Suppliers / Accounts Payable Amount = 800

D. Debit: Clients / Accounts receivable Credit: Sales Return Amount = 800

6. The customer (see item2 above), returns us a 10% of the merchandise sold. This amount is deducted from the pending invoice.

A. Debit: Suppliers / Accounts Payable Credit: Purchases Return Amount = 1.800

B. Debit: Sales Return Credit: Clients / Accounts receivable Amount = 1.800

C. Debit: Clients / Accounts receivable Credit: Sales Return Amount = 1.800

D. Debit: Purchases Return Credit: Suppliers / Accounts Payable Amount = 1.800

10. Wage expenses for 2022 amount to 1,300. These expenses are totally paid, except the December ones, their value is 400 and will be paid on the January 5th 2023

A. Debit: Wage Payable Amount 1.300 Credit: Banks 1.300

B. Debit: Wage Expense Amount 1.300 Credit: Wages payable (400) and Banks 900

C. Debit: Wage Expense Amount 1.300 Credit: Wages payable (1.300)

D. Debit: Wage Expense Amount 1.300 Credit: Wages payable (900) and Banks 400

Regarding the income statement: The expense amount equals...

A. 14100

B. 16800

C. 17600

D. 17700

Regarding the income statement: The revenues amount equals...

A. 18000

B. 18800

C. 18900

D. 21600

E. 23400

Regarding the Balance sheet: Which of the following accounts can be found on the Assets Section:

A. Vehicles, buildings, machinery, Inventories, Banks

B. Vehicles, buildings, machinery, customers/ Acc Receivable, Banks

C. Vehicles, buildings, machinery, Inventories, customers/ Acc Receivable, Banks

D. Inventories, customers/ Acc Receivable, Banks

C. Other: ?

Regarding the Balance sheet: What is the ending balance of the paid-in-capital account

A. 25.000

B. 33.000

C. 37100

D. Other: ?