Everything is in the file.
BCO114 ACCOUNTING I Task brief & rubrics
Task: Test 2 Assignment 15% of total value
You are asked to answer all the questions in the proposed two cases.
This task assesses the following learning outcomes:
Identify the steps in the accounting cycle
Demonstrate understanding of the balance sheet and the accounting equation
Apply acquired knowledge and skills to prepare an income statement and a statement of retained earnings.
LAUNCH: WEEK 10 / DELIVERY: APRIL 20th, 2020, 23:59HRS ON MOODLE
Submission file format: Word document with all the answers.
CASE 1 (100 points)
Digital Wizards sells computer peripherals. At December 31, 2018, the companys inventory amounted to $800,000. During the year 2019, the
company made only one purchase and two sales. These transactions were as follows:
January 17. Purchased merchandise from PC Universe. The price of the merchandise was 340.000, discount terms 2/10; n/40
February 15. Paid the accounts payable to PC Universe.
March 25. Sold merchandise to Best Buy for $450.000 who paid cash. The cost of these items was $210.000
December 18. Sold equipment to Shore Pharmaceuticals for $525.000. The cost of said equipment was $330.000, with discount terms 3/10; n/60.
Said invoice was still unpaid at December 31, 2019
a. Prepare journal entries to record these transactions, assuming that Digital Wizards uses a perpetual inventory system. 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
b. Compute the ending balance in the Inventory account at the close of business on December 31. Explain your answer. (5 points for the
entries, 5 points for the explanations)
c. 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 90.500 (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).
d. 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)
January 1, 2019
Accumulated depreciation Equipment -90.000
Accumulated depreciation Building -85.000
Retained earnings 638.000
Total 1.638.000 1.638.000
9-10 The student demonstrates an excellent understanding of the
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
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
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 at the end of each question.