The document provides information and instructions for a group assignment in ACC201 Principles of Accounting. It includes three parts that require students to:
1) Prepare adjusting entries and T-accounts for various supply, insurance, revenue, and allowance accounts.
2) Compute ending inventory and cost of goods sold using FIFO, LIFO, and moving average costing methods for a company selling snowboards, and compare the impact of each method.
3) Calculate the cost of a machine purchased by Design Factory Co., prepare depreciation schedules using straight-line and double declining balance methods, and journalize the sale and retirement of the machine.
The document provides information and instructions for a group assignment in ACC201 Principles of Accounting. It includes three parts that require students to:
1) Prepare adjusting entries and T-accounts for various supply, insurance, revenue, and allowance accounts.
2) Compute ending inventory and cost of goods sold using FIFO, LIFO, and moving average costing methods for a company selling snowboards, and compare the impact of each method.
3) Calculate the cost of a machine purchased by Design Factory Co., prepare depreciation schedules using straight-line and double declining balance methods, and journalize the sale and retirement of the machine.
The document provides information and instructions for a group assignment in ACC201 Principles of Accounting. It includes three parts that require students to:
1) Prepare adjusting entries and T-accounts for various supply, insurance, revenue, and allowance accounts.
2) Compute ending inventory and cost of goods sold using FIFO, LIFO, and moving average costing methods for a company selling snowboards, and compare the impact of each method.
3) Calculate the cost of a machine purchased by Design Factory Co., prepare depreciation schedules using straight-line and double declining balance methods, and journalize the sale and retirement of the machine.
The document provides information and instructions for a group assignment in ACC201 Principles of Accounting. It includes three parts that require students to:
1) Prepare adjusting entries and T-accounts for various supply, insurance, revenue, and allowance accounts.
2) Compute ending inventory and cost of goods sold using FIFO, LIFO, and moving average costing methods for a company selling snowboards, and compare the impact of each method.
3) Calculate the cost of a machine purchased by Design Factory Co., prepare depreciation schedules using straight-line and double declining balance methods, and journalize the sale and retirement of the machine.
GROUP ASSIGNMENT ACC201 – Principles of Accounting Group Assignment T3.2022
DATE November 20th, 2022
TIME 9:00 am – 12:15 pm SECTION
• PART A 30 marks
• PART B 30 marks
• PART C 30 marks
• Presentation • Calculation process 10 marks • Assignment cover sheet
Important: • Groups that found copying each other will receive zero for both groups. • Late submissions will receive minus 20+. • Peer Evaluation Form should be completed INDIVIDUALLY within the same day. Minus 20 pts for those who do not submit the form.
2|Page ACC201 – Principles of Accounting Group Assignment T3.2022
PART A
ABC Company monthly ledger includes the following accounts: Supplies, Supplies expense, Prepaid Insurance, Insurance Expense, Service Revenue, Unearned Service Revenue, Allowance for Doubtful Account, Bad debts expense. The following transactions occurred during the fiscal year:
Supplies: - On January 1, 2021, the company’s Supplies account reported a cost of $12,000. - On April 1, the business purchased additional supplies at a cost of $140,000 and recorded these in the account Supplies Expense. At the end of the year, a physical count indicated that the supplies on hand had a cost of $15,000.
Insurance: - On January 1, 2021. The company’s Prepaid Insurance account had a debit balance of $12,340 for a policy that ends on 31 August. - On August 1, a company obtained its first insurance policy covering its property. The policy is for one year and it begins immediately on August 1. The insurance premium for this 12-month period is $2,400 and it was paid on August 1.
Service Revenue: - On January 1, 2021, the company’s Unearned Service Revenue account had a credit balance of $128,000. Of this balance, $57,000 is for the services expiring at the end of March and $71,000 is for the services expiring at the end of November. - On April 1, 2021. The company received $33,000 for the service lasting 11 months. - On May 1, 2021. The company received $60,000 for the service lasting 3 months. - On December 1, 2021. The company received $24,000 for the service lasting 12 months.
Allowance for bad debts:
- On January 1, 2021, the company’s Allowance for Doubtful Account has a credit balance of $900 and its aging of Accounts Receivable indicated that $3,000 is not likely to be collected.
Required: For each of the situation listed above
1) Prepare the necessary adjusting entries at December 31, 2021. 2) Open T-accounts and post the transactions directly to the account listed
3|Page ACC201 – Principles of Accounting Group Assignment T3.2022
PART B
Crazy Snowy sells a snowboard, WhiteOut, that is popular with snowboard enthusiasts. Presented below is information relating to Crazy Snowy’s purchases and sales of WhiteOut snowboards during July. During the same month, 121 WhiteOut snowboards were sold at $170 each. Crazy Snowy uses a perpetual inventory system. Units Cost Beginning Inventory, Jul 1 10 $120.00 Purchase, Jul 9 40 $125.00 Sale, Jul 12 20 Purchase, Jul 18 50 $130.00 Sale, Jul 19 20 Sale, Jul 21 30 Purchase, Jul 24 40 $132.00 Sale, Jul 30 20
Required: (a) Compute the ending inventory at July 31 and cost of goods sold using the FIFO, LIFO and moving average costing methods. (b) Compare the effects of LIFO, FIFO, and moving average inventory costing methods on the financial statements in periods of (i) rising inventory costs AND (ii) declining inventory costs. The answer should be lowest, highest, or middle in the format given below:
Financial Statement Element: LIFO FIFO Moving Average
Cost of Goods Sold Net Income Ending Inventory
(c) Crazy Snowy is considering which inventory costing method it should use given that the owner wants to maximize gross profit during this period of inflation. Which inventory method should Crazy Snowy select? Discuss your selection.
4|Page ACC201 – Principles of Accounting Group Assignment T3.2022
PART C
On May 1st, 2020, Design Factory Co. purchased a new machine at $128,000 with credit term of 2/10, n/30. The company was given 10% trade discount for being a loyalty customer. Design Factory Co. also paid for the following cost: delivery charge from seller’s allocation $1,600, sales tax $8,100, cost of test run $2,900, training cost for workers who will operate the machine $1,800, normal repair $950 for the machine in May 2020, insurance cost $4,500, extended warrantly taken out on the machine $5,700. The company made their payment within a discounted period. The machine has a useful life of 6 years and a salvage value of $4,400. Assuming the fiscal year ended at December 31st.
Required: 1) Compute the cost of the machine. Prepare journal entry to record the purchase. 2) Prepare the depreciation schedule to record depreciation expense during 6 years under: a. Straight-line method b. Double declining balance method 3) Prepare journal entry for the below transaction, using straight-line method: a. Assuming Design Factory sold the machine on October 31,2024 for $30,050. b. After 6 years, the company received $8,000 book value on the retirement of the machine.
