Critically understand the different elements of the financial statements.
Knowing how to record business transactions on the General Journal
Knowing how to prepare a trial balance
Exercise 1:
Calculate the missing retained earnings (X) and inventory (Y) accounts in the following cases: (20 points) Balance Sheet A:
Assets Liabilities
Cash 28000 Accounts payable 65000
Accounts receivable 65000 Notes payable
128000
Land 50000 Salaries payable 23000
Building 300000 Taxes payable 49000
Office Equipement 24000
Vehicles 32000 Stockholders equity
Inventory
125000
Capital stock
Retained earnings 200000
(X)
Balance Sheet B:
Assets Liabilities
Cash 30500 Accounts payable 43000
Accounts receivable 12700 Notes payable
23000
Land 50000 Salaries payable 12000
Building 260000 Taxes payable 75000
Office Equipement 2300
Vehicles 24000 Stockholders equity
Inventory
(Y)
Capital stock 150000
Retained earnings 207000
Exercise 2:
A. Prepare the Balance Sheet based on the information supplied below: (30 points)
Inventory 15000
Loans 40000
Bank Accounts 6000
Accounts payable 12000
Land 60000
Owners’ Capital 35000
Cash 500
Equipments 7000
Retained earnings 55000
Salaries payable 7000
Building 65000
Accounts receivable 22000
Accumulated depreciation 4500
Line of credit 20000
Bonds payable 8000
Vehicles 6000
B. Compute the Accounting Metrics and comment the results. (20 points)
Exercise 3:
Brandon has recently decided to open his new business of retail of toys in a store located in the center of Barcelona. During the month of April 2021, Brandon’s new company BONCO, Ltd. realized the following transactions:
2nd of April: BONCO, Ltd issued to Brandon 100,000 shares in exchange of $350,000 of share capital.
3rd of April: BONCO, Ltd purchased a shop for $250,000. The price of the land is $100,000 and the building $150,000. BONCO, Ltd has signed a mortgage with a bank.
4th of April: BONCO, Ltd purchased furniture to FURNISH YOUR SHOP, Inc. for $35,000.
5th of April: BONCO, Ltd purchased merchandises on account to BIGUP, Inc for $28,000.
6th of April: BONCO, Ltd makes some installations in the shop for $7,500 paid in cash.
7th of April: BONCO, Ltd hires two employees with a salary $1,500/ month each. Salaries are paid on the last day of the month.
8th of April: BONCO, Ltd purchases little gifts to be offered to clients during the first week of activity for $1,500, paid in cash.
16th of April, BONCO, Ltd purchases merchandises to ONSTYLE, Ltd on account for $41,000.
22nd of April, BONCO, Ltd receives an electricity bill for $900 payable in May.
29th of April: BONCO, Ltd pays the accounts payable to FURNISH YOUR SHOP, Inc.
30th of April: BONCO, Ltd records the sales of the month of April that amount to $126,000. All sales have been paid in cash.
Record the transactions of the company on the General Journal using the Double-Entry method (30 points)
Rubrics
Overall Grade Descriptor
90-100 The student demonstrates an excellent understanding of the concepts.
80-89 The student demonstrates a good understanding of the concepts.
70-79 The student demonstrates a fair understanding of the concepts.
60-69 The student demonstrates some, but insufficient understanding of the concepts.
30-59 The student demonstrates insufficient understanding of the concepts. They may mention some relevant ideas or concepts, although the relationship between them is not understood by the student.
1-29 The student demonstrates insufficient understanding of the concepts and does not mention any relevant ideas or concepts.
0 The student leaves the questions blank or cheats.
Points are stated at the end of each question.
