accounting

BCO114 ACCOUNTING I Task brief & rubrics

Task: Final Assessment

• This is an assignment to be done individually.

• You must answer all the questions in the proposed problem.

• Submission file format: Word document with all the answers, clearly identifying all steps, results, journals, ledger accounts and including comments

when requested.

Submission: Week 8– Via Moodle (Turnitin). Deadline: 18 July 2021 at 23:59.

Weight: This task is a 60% of your total grade for this subject.

This task assesses the following learning outcomes:

• Understand how merchandising companies operate and the basic difference between the two systems of keeping inventory: perpetual and periodic.

• Understand how to apply cash discounts.

• Learn the different types of financial assets and their accounting treatment.

• Understand the different cost flow assumptions for evaluating the COGS and be able to determine which system is adequate for the business.

Problem 1 (30 points)

Kitchen Delight, Inc. sells kitchen cabinets. On December 31, 2020, Harris’ inventory amounted to $900,000. During the first week of January 2020,
the company made the following transactions:

Jan. 5 Purchased 100 cabinets from Kitchen Empire. The total cost of this purchase was
$82,000, terms 3/10, n/60.

Jan. 10 Sold 70 cabinets on account to Harold’s, Inc. The total sales price was $70,400, terms 5/10, n/90. The total cost of these 70 units to Kitchen
Delight was $30,000 (net of the purchase discount).

Jan. 12 Kitchen Delight, Inc. paid the amount due to Kitchen Empire in order not to lose the discount.

March 2 Harold’s Inc. returned 15 of the 70 cabinets it had purchased from Kitchen Delight, Inc. on January 10.

March 3 Harold’s pays the full amount due to Kitchen Delight, Inc.
.

Kitchen Delight, Inc. has a full-time accountant and a computer-based accounting system. The business records sales at the gross sales price
(does not apply discount) and purchases at net cost (discount included).

Instructions

a. Briefly describe the operating cycle of a merchandising company. (5 points)
b. Prepare journal entries to record these transactions, assuming Kitchen Delight, Inc. uses a perpetual inventory system. (10 points)
c. Prepare journal entries to record the transactions, assuming Kitchen Delight, Inc. uses a periodic inventory system. (10 points)
d. Which type of inventory system do you think Kitchen Delight, Inc. would most likely use? Explain your reasoning. (5 points)

Problem 2 (15 points)

Accounts receivable turnover rate

During 2019, Larsen Company’s accounts receivable averaged $750,000. Larsen’s 2019 income statement reported net sales of $6,780,000, and

net income of $768,000. (Assume 365 days in a year.)

Using the information, compute the following for Larsen Company:

1. Accounts receivable turnover: (Round to the nearest two decimals.) (5 points)

2. Average number of days to collect accounts receivable (round to nearest day, if necessary) (5 points)

3. What does the accounts receivable turnover rate and the number of days to collect receivables indicate in terms of company liquidity? (5 points)

Problem 3 (25 points)

On March 31, the balance of the Cash account according to the records of Fisher Company was $7,261. The March 31 bank statement showed

a balance of $8,798. You are to prepare the bank reconciliation of Fisher Company at March 31, using the following supplementary information:

(a.) Deposit in transit at March 31, $6,772.

(b.) Outstanding checks: no. 120, $140; no. 121, $932; no. 127, $307; no. 134, $2,200.

(c.) Service charge by bank, $50.

(d.) A note receivable for $5,050 left by Fisher Company with bank for collection that had been collected and credited to company’s account. No

interest involved.

(e.) A check for $90 drawn by a customer, Stuart Sands, but deducted from Fisher’s account by the bank and returned with the notation “NSF.”

(f.) Fisher’s check no. 480, issued in payment of $970 worth of office equipment, correctly written in the amount of $970 but erroneously recorded in

Fisher’s accounting records as $790.

Problem 4 (30 points)

Canfield 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:

Quantity Unit Cost Total Cost

Beginning inventory (Jan. 1) …………………………………….. 50 $6 $300

Purchase (Jan. 10) ………………………………………………….. 25 $7 $175

Purchase (Jan. 22) ………………………………………………….. 25 $8 $200

Total ……………………………………………………………… 100 $675

On January 25, Canfield sells 55 units of this product. The other 45 units remain in inventory at January 31.

a Determine the cost of goods sold using each of the following flow assumptions:(5 points each)

(1) LIFO $_____________

(2) FIFO $_____________

(3) Average cost $_____________

b Determine the cost of the 45 units in inventory at January 31 using each of the following flow assumptions (5 points each)

(1) LIFO $_____________

(2) FIFO $_____________

(3) Average cost $_____________

Rubrics

Exceptional 90-100 Good 80-89 Fair 70-79 Marginal fail 60-69

Knowledge &
Understanding

(20%)

Student demonstrates
excellent understanding of
key concepts and technical
vocabulary used.

Student demonstrates
good understanding of the
task and mentions some
relevant concepts and
demonstrates use of the
relevant vocabulary.

Student understands the
task and provides minimum
theory and/or some use of
vocabulary.

Student understands the task
and attempts to answer the
question but does not
mention key concepts or uses
minimum amount of relevant
vocabulary. Shows lack of
study.

Application (30%) Student applies fully
relevant knowledge from
the topics delivered in
class.

Student applies mostly
relevant knowledge from
the topics delivered in
class.

Student applies some
relevant knowledge from
the topics delivered in
class. Misunderstanding
may be evident.

Student applies little relevant
knowledge from the topics
delivered in class.
Misunderstandings are
evident.

Critical Thinking
(30%)

Student critically assesses
in excellent ways, drawing
outstanding conclusions
from material learned.

Student critically assesses
in good ways, drawing
conclusions from relevant
topics learned in class.

Student provides some
insights but stays on the
surface of the topic.
References may not be
relevant.

Student makes little or no
critical thinking insights and
is unable to show having
assimilated the concepts
dealt with in class.

Communication
(20%)

Student communicates
their ideas extremely
clearly and concisely,
providing accurate and
clear explanations
required.

Student communicates
their ideas clearly and
concisely.

Student communicates
their ideas with some
clarity and concision.

Student communicates their
ideas in a somewhat unclear
and unconcise way.
Conceptual and numeric
errors are evident.