Accounting management

This task assesses the following learning outcomes: • Understand how to register all business transactions in the Journal. • Understand how to prepare a company’s Trial Balance. • Learning how to record adjusting entries at the end of each month • Understand how to close temporary accounts • Understand how to prepare a company’s Income Statement and Balance Sheet • Learning how to record closing entries • Understand how to process a Sale in a merchandising company • Understand COGS and inventory Business case On January 1, Mr Garrulous started a new business, called Calling-U Inc, dedicated to retail of mobile phones. The shop opened its doors on 16th of January on offers one unique product but with very low prices compared to competitors. The following transactions were completed by the business during its first month of activity. January 5 January 10 January 12 January 13 January 15 January 24 January 25 January 26 January 27 January 31 Mr Garrulous started the business by investing 200,000 EUR into the company account and received 1.000 shares of € 200 par value Purchased small shop for 300,000 EUR, paying 100,000 EUR in cash and issuing a 10 years non-interest note payable for the remaining 200,000 EUR. The value of the building is €200,000 and the land is worth €100,000. No salvage value. Purchased office equipment for €1,400 on account to OFFICE&SUPPLY Ltd. Payment is due within 20 days Purchased a Computer system for € 2,000 at CPU KING Ltd. Paid €200 cash and agreed to pay the balance in 1 month. Purchased Merchandises (1,600 units of inventory) to PHONE4EVERY1 Ltd for €220,000 on account to be paid in 3 months. Paid the remaining amount from the purchase of 12 of January to OFFICE&SUPPLY Ltd. Paid insurance coverage for one year starting from 1st of January to WINSURE, Ltd. for a total amount of €1,200. Purchased Merchandises (1,000 units of inventory) to [login to view URL] Inc. for €88,000 on account to be paid in 2 months. Paid the Utilities (electricity) for 300 EUR used in January Records all the sales from the month of January. All have been paid in cash and amount to €444,000 Instructions: 1. Record the above transactions in the general journal. (10 points) 2. If we assume that the building has a useful life of 20 years, record the corresponding adjusting entry for the month of January (you may use the same General journal as for Question 1) (5 points). 3. Records the adjusting entry for the insurance expense of January (you may use the same General journal as for Question 1) (5 points) 4. If we assume that all the merchandises have the same price and characteristics, calculate the cost of the goods sold and the balance in the inventory at 31 of January using FIFO method taking into account the following information regarding the sales (20 points): Date Units sold Selling price/Unit Total price 22 Jan 900 240 216.000 25 Jan 450 240 108.000 29 jan 500 240 120.000 Total sales 444.000 5. Prepare a trial balance at January 31 including all the accounts involved in all 4 previous questions and considering that the company uses a perpetual inventory system. (20 points) 6. Prepare an income statement for the month of January based on the trial balance. (10 points) 7. Prepare the closing entries on the general journal at 31 of January (10 points) 8. Prepare the Balance sheet of the company at 31 of January (20 points)