accounting

accounting

BCO114Accounting I Task brief & rubrics

Task: Assignment 3 (33% of course grade)

You are asked to answer all the questions in the proposed exercises.

This task assesses the following learning outcomes:

• Understand uncollectible receivables and how to account for uncollectible receivables
• Apply acquired knowledge and skills to prepare the income statement
• Demonstrate understanding of merchandising activities and financial assets

LAUNCH: WEEK 4 Friday January 15th, 2021 / DELIVERY: WEEK 4 Sunday January 17th, 2021, 23:59hrs ON MOODLE

Submission file format: Word document with all the answers.

EXERCISE 1 (20 points)

On September 1, 2019, Dental Equipment Corporation sold equipment priced at €350,000 in exchange for a six-month note receivable with an
annual interest rate of 12%, all due at maturity.

(a) Prepare the entry on 1 September 2019 made by Dental to record the receipt of this note receivable.

(b) Prepare the December 31, 2019 (fiscal year-end), adjusting entry made by Dental with regard to this note receivable.

(c) Prepare the entry made by Dental on March 1, 2020 (maturity date of note), to record collection of note and interest.

General Journal
Date Account Titles and Explanation Debit Credit

(a)

(b)

(c)

EXERCISE 2 (20 points)

(1) The general ledger controlling account for Accounts Receivable has a balance of €120,500 at year-end before adjustment. The company uses
the balance sheet approach to estimate uncollectible accounts. By aging the individual customers’ accounts, it was determined that the doubtful
accounts amounted to €5,020.

Prepare the year-end adjusting entry for uncollectible accounts under each of the following independent assumptions:

(a) Allowance for Doubtful Accounts has a credit balance of €2,850.

(b) Allowance for Doubtful Accounts has a debit balance of €925.

General Journal
Date Account Titles and Explanation Debit Credit
(a)

(b)

(2) As of December 31, 2015, Valley Company has $16,920 cash in its current bank account, as well as several other items listed below:

What amount should be shown in Valley’s December 31, 2015, balance sheet as “Cash and cash equivalents”?

EXERCISE 3 (30 points)

(1) Miracle Corporation had gross sales revenue of €1,700,000; cost of goods sold of €950,000; sales returns of €52,500; and sales discounts of
€30,000.

Compute for the year:

(a) What is the net sales?

(b) What is the gross profit?

(c) What is the gross profit rate?

(2) Your store sells computers and software. The average computer sells for €1,350, but the customer buying a computer also buys an average of
€750 in software. You earn only 10% gross profit rate on sales of computers, but you make a 40% gross profit rate on software. You currently are
selling 150 computers per month. What is the total amount of your monthly gross profit?

(3) Indicate whether you would expect each of the following businesses to maintain a perpetual or a periodic inventory system. Explain the reasoning
behind your answers:

(a) A jewelry store.

(b) A roadside vegetable stand.

EXERCISE 4 (30 points)

Beech Soda Inc. uses a perpetual inventory system. The company’s beginning inventory of a particular product and its purchases during the month
of January were as follows:

On January 18, Beech Soda Inc. sold 25 units of this product. The other 28 units remained in inventory at January 31.

(1) Determine the cost of goods sold to be recorded at January 18, using each of the following methods. Show computations.

(a) FIFO

(b) LIFO

(c) Average cost

(2) Determine the cost of 28 units of this product in inventory at January 31, using each of the following methods. Show computations.

(a) FIFO

(b) LIFO
(c) Average cost

Rubrics

Descriptor
9-10 The student demonstrates an excellent understanding of the

concepts.
8-8.9 The student demonstrates a good understanding of the concepts.
7-7.9 The student demonstrates a fair understanding of the concepts.
6-6.9 The student demonstrates some, but insufficient understanding of the

concepts.
3-5.9 The student demonstrates insufficient understanding of the concepts.

They may mention some relevant ideas or concepts, although it is
clear that the relationship between them is not understood by the
student.

1-2.9 The student demonstrates insufficient understanding of the concepts
and does not mention any relevant ideas or concepts.

0 The student leaves the question blank or cheats.

Points are stated for each exercise.