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ACCT71210-Group Assignment - S20

- Naples Retail Ltd. operated in 2019 and 2020, with provided financial information including balance sheets as of December 31, 2019 and transactions during 2020. - Key transactions in 2020 include $100,000 in credit sales, inventory purchases and cost of goods sold, equipment depreciation, operating expenses of $20,000, interest expense of $1,000, and partial payment of the mortgage payable. - The student is required to record the 2020 transactions, prepare an income statement for 2020, and a classified balance sheet as of December 31, 2020.

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93 views6 pages

ACCT71210-Group Assignment - S20

- Naples Retail Ltd. operated in 2019 and 2020, with provided financial information including balance sheets as of December 31, 2019 and transactions during 2020. - Key transactions in 2020 include $100,000 in credit sales, inventory purchases and cost of goods sold, equipment depreciation, operating expenses of $20,000, interest expense of $1,000, and partial payment of the mortgage payable. - The student is required to record the 2020 transactions, prepare an income statement for 2020, and a classified balance sheet as of December 31, 2020.

Uploaded by

Amisha
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Group Members:_____________________________________

Student #:________________________________________________

ACCT71210-Case Assignment
To be submitted by a group of 3 Students
Total Marks: 60 (To be converted to 5%)
Naples Retail Ltd. started its operation in 2019.The following is the balance sheet of Naples
Retail Ltd as at Dec. 31, 2019.

Assets
Current Assets:
Cash $99,000
Accounts receivable 15,000
Allowance for doubtful accounts (AFDA) (2,000)
Inventory 1,750
Prepaid expenses 9,250
Property, Plant and Equipment:
Equipment 125,000
Accumulated depreciation (62,500)
Total assets $185,500
Liabilities and Equities
Current Liabilities:
Accounts payable $8,000
Long-term Liabilities:
Mortgage payable 10,500
Equity:
Common stock 114,500
Retained earnings 52,500
Total liabilities and stockholders’ equity $185,500

It is the second year of its operation.

The transactions of the company for the year 2020 are described below:

 Net sales for the year were $100,000 All the sales were on credit (Transaction #1) The
company collected 50% of credit sales during the year (Transaction #2) and 90% of the
accounts receivable of last year (Transaction #3). The rest of last year’s receivable was
uncollectible and written off as bad debt (Transaction #4). The company uses allowance
method for recording allowances for doubtful accounts (AFDA). It calculates AFDA by
using the percentage method. It estimates that 1% of credit sales will be uncollectible
(Transaction #5).
 Naples buys finished goods for resale to the customers. It records inventory under
perpetual method following FIFO cost flow. The company sold 800 units of inventory
during the year. All the purchases are on credit and the ending balance of accounts
payable was $4,500 (Transaction #7 paid payables). The details of all purchases for the
year are as follows; (Transaction #6 – do not include beginning inventory)

Date Units Cost Per Unit Amount


Beginning inventory 50 $35 $1750
Jan.30,2020 100 $30 3,000
March,30,2020 200 $32 6,400
Sept.30,2020 200 $35 7,000
Dec.28,2020 300 $34 10,200
Total 850 - $28,350

 Naples purchased the equipment in 2019. The useful life of the equipment was estimated
to be 4 years. The salvage value of the equipment was estimated to be $5,000. The
Company uses double-declining method of depreciation for equipment. (Transaction #8)

Other information:
 Interest expenses for the year were $ 1,000, relates to Mortgage Payable. (Transaction #9)
 Operating expenses of Naples for 2020 was $ 20,000 (Transaction #10)
 Prepaid expenses of last year relates to prepaid insurance premium. The total amount of
insurance premium paid in last year has expired during current year. (Transaction #11)
 Mortgage payable amount of $3,500 is paid by the company in the month of February.
(Transaction #12)
 Record Cost of Goods Sold of 800 Units (Transaction #13)

Required:
1. Record the above transactions in the accounting equation. (Show necessary
calculations). (35 Marks) Hint: Record the beginning balances from the above
Balance Sheet first
2. Prepare a multi-step income statement. (10 Marks)
3. Prepare a Classified Balance Sheet (15 Marks)
Balance Sheet Income Statement

Bal.
1.
2.
3
4
5
6
7
8
9
10
11
12
13

Bal.
Naples Retail Limited
Income Statement
For the Year Ended December 31, 2020

Naples Retail Limited


Balance Sheet
As at December 31, 2020
Assets
Current Assets:

Total Current Assets


Property, Plant and Equipment:

Total Property Plant & Equipment


Total assets
Liabilities and Equities
Current Liabilities:

Long-term Liabilities:

Total Liabilities
Equity:

Total Shareholders’ Equity


Total Liabilities and Stockholders’ equity

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