Vortex

Company Vortex was founded in 2015 as a LLC. The main activity of the company is selling the vacuum cleaners. You were hired as an independent expert to prepare the financial statements for 2018 year.

Additional data:

1) 2)

3)

Reporting date for the company December 31, 2018. The company should prepare the financial statements according to

International Accounting Standards (IAS).

The reporting currency current units (CU)

You have to analyze the following transactions:

1. 1) On July 1, 2018 there was concluded a rent contract for one year. The contract

   came into force from the sign date. The rent payment in amount of 15,000 CU

   was paid on July 5, 2018 and was recorded as Prepaid rent.

2. 2) Accounts receivable include:

   • Account of company Breeze in amount of 10 500 CU.

   • Account of company ABC in amount of 5 600 CU.

3. 3) On December 29, 2018 sales were made in amount of 25,800 CU. This

   transaction was not recorded. The payment is expected to be received in the

   first decade of January, 2019.

4. 4) On December 20, 2018 there was purchased a software for 35,000 CU. Cost of

   this purchase was reflected in Other administrative expenses.

5. 5) Company uses periodic system of inventory, and the weighted-average

   st inventory system. According to data, on December 1 . 2018 the company had

   220 units of inventory costing 44,000 CU. During December the following purchases were made:

   • Dec.5 - 150 units at a price of 209.90 CU per unit;

   • Dec.12 170 units at a price of 215 CU per unit;

   • Dec. 18 120 units at a price of 220 CU per unit. According to inventory taking, on December 31 2018 there were 276 units of inventory available in the stock.

6. 6) According to accounting policy, the company uses percentage of credit sales method for accounting of bad debt expenses. 70% of sales were made on credit. 2.5% were estimated to be bad debt.

7. 7) On December 25, 2018 one of the client of the company, whose indebtedness to the company was in amount of 5,300 CU, was declared to be a bankrupt. The accountant of the company did not pay attention to this event and did not make any entries with respect to it.

8. 8) Administrative building was build and started to be used from October 1, 2016. The accounting policy of the company states the following:

   • Salvage value of the building is 2% of its initial cost;

   • Double-declining method is used for calculating depreciation;

   • Useful life of the building is 25 years.

   • For accounting of all fixed assets the company uses the cost method.

9. 9) A lorry that is required for the delivery of products to customers was acquired on June 25, 2018. The accounting policy uses the unit-of-production method for calculating depreciation. The salvage value was estimated to be 3,500 CU, the useful life was 800,000 km, and the total kilometers logged on December 31, 2018 was 52,000 km.

10. 10) Income tax rate is 20%.

Required:

1. Prepare the adjusting journal entries, all entries should have the calculations. (Write the names of journal entries and codes of the used accounts). You should also do the closing entries.

2. Fill in the worksheet. You may add additional accounts if they are needed.

Make all the numbers round. All calculations should be done on a monthly basis.

Requirements:

1. Complete the adjusting journal entries in the General Journal

Make the closing entries.

1. Fill-in the Work Sheet (Adjustments, Adjusted Trial Balance, Income Statement, Balance Sheet)
2. Complete the Financial Statements (IS, Statement of Retained Earnings, Balance Sheet)
3. Submit the whole assignment

Income Statement Balance Sheet Account number Statement of Retained Earnings Debit Credit Debit Credit Debit Credit Vortex, LLC The worksheet of the year, ending 31 December 2018 Adjusted Trial Trial balance Adjustments Balance Debit Credit Debit Credit Debit Credit 250,000 24,600 185,000 81,005 21,356 105,500 5,400 230,000 25,400 2,800 15,000 44,000 32,200 18,100 20,000 300,000 50,000 194,790 67,468 35,540 Treasury stock Common stock Account title Administrative building Accumulated depreciation - building Work-in-progress construction Sales equipment Accumulated depreciation - equipment Lorry Accumulated depreciation - lorry Investments in "Primavera" Software Accounts receivable Allowance for doubtful accounts Prepaid rent Inventory Bank account Cash Additional paid-in capital Retained earnings Finacial lease Accounts payable Advances from customers Other taxes payable Other accounts payable Accrued salary Current portion of long-term debt Sales aico Returns and allowances Net COGS Purchases Inventory cost adjustments Bad debt expense Selling advertisement expenses Selling transportation expenses Selling rent expenses Selling salary expenses Selling depreciation expenses Selling service expenses Other selling expenses ther selling expenses Administrative salary expenses Administrative tax expenses Administrative service expenses Office supplies expenses Administrative depreciation expenses Other administrative expenses Fees and fines Exchange rate expenses rata Exchange rate income Interest expenses Intermediate total Loss (gain) on income tax Income tax payable Deffered tax Net income TOTAL 11,400 4,800 1,300 9,600 2,978 996,800 2760 492300 94435 10200 2700 6500 23100 we 5400 11950 " To 1300 mood 17600 5189 2980 1456 35000 3490 1,100 3664 3,703 1,729,932 1,729,932 Income Statement Balance Sheet Account number Statement of Retained Earnings Debit Credit Debit Credit Debit Credit Vortex, LLC The worksheet of the year, ending 31 December 2018 Adjusted Trial Trial balance Adjustments Balance Debit Credit Debit Credit Debit Credit 250,000 24,600 185,000 81,005 21,356 105,500 5,400 230,000 25,400 2,800 15,000 44,000 32,200 18,100 20,000 300,000 50,000 194,790 67,468 35,540 Treasury stock Common stock Account title Administrative building Accumulated depreciation - building Work-in-progress construction Sales equipment Accumulated depreciation - equipment Lorry Accumulated depreciation - lorry Investments in "Primavera" Software Accounts receivable Allowance for doubtful accounts Prepaid rent Inventory Bank account Cash Additional paid-in capital Retained earnings Finacial lease Accounts payable Advances from customers Other taxes payable Other accounts payable Accrued salary Current portion of long-term debt Sales aico Returns and allowances Net COGS Purchases Inventory cost adjustments Bad debt expense Selling advertisement expenses Selling transportation expenses Selling rent expenses Selling salary expenses Selling depreciation expenses Selling service expenses Other selling expenses ther selling expenses Administrative salary expenses Administrative tax expenses Administrative service expenses Office supplies expenses Administrative depreciation expenses Other administrative expenses Fees and fines Exchange rate expenses rata Exchange rate income Interest expenses Intermediate total Loss (gain) on income tax Income tax payable Deffered tax Net income TOTAL 11,400 4,800 1,300 9,600 2,978 996,800 2760 492300 94435 10200 2700 6500 23100 we 5400 11950 " To 1300 mood 17600 5189 2980 1456 35000 3490 1,100 3664 3,703 1,729,932 1,729,932