ACCOUNTING
Task: Final Assignment (60% of the Final grade)

You must answer all the questions in the proposed business case.

This task assesses the following learning outcomes:

? Critically understand the differences between the methods of valuation of the inventory

? Knowing how to properly elaborate an income statement and determine the ending inventory balance.

Submission file format: Excel document with all the answers, clearly identifying all steps, results, journals and including c omments besides each answer.

BUSINESS CASE (100 points)

Jim has recently opened a snack food wholesale company dedicated to the sale of peanuts, almonds and

pistachios. During its first month of activity, the company has made the following transactions:

Kg Price per Kg Amount

February 2: Purchase of Pistachios: 2300 $12 $27,600

Purchase of Almonds: 4000 $6 $24,000

Purchase of Peanuts: 4000 $4 $16,000

February 3: Purchase of Pistachios: 1500 $14 $21,000

Purchase of Almonds: 1500 $7 $10,500

Purchas of Peanuts: 2500 $5 $12,500

February 6: Sold to several clients:

Pistachios: 1900 $21 $39,900

Almonds: 2500 $12 $30,000

Peanuts: 2500 $10 $25,000

February 6: Sold to Fruits Lovers Inc.:

BCO114 ACCOUNTING I Task brief & rubrics

LAUNCH: WEEK 3 / DELIVERY: 17th January, 2021. 23:59PM CET NOVEMBER, 2020, 23:59HRS CET MOODLE

Pistachios: 500 $21 $10,500

Almonds: 750 $13 $9,750

Peanuts: 1500 $9 $13,500

February 12 Purchase of Pistachios: 1350 $15 $20,250

Purchase of almonds: 3000 $8 $24,000

February 13: Sale of peanuts to Peanuts Lovers Inc.: 3250 $9 $29,250

February 14: Purchase of Peanuts 2000 $5 $10,000

Besides these transactions, the company has had the following expenses:

Salaries: $3,750

Electricity bill: $400

Renting of equipment: $1,500

Rent of warehouse and office: $3,250

Miscellaneous: $1,250

Jim’s accountant recommended that he should use the average cost method in order to determine the cost of the inventory sold but he is not sure about the

consequences it may have on his financial situation.

Relying on your accounting knowledge, Jim asks you the following questions:

1: Why in your opinion did Jim’s accountant recommend the average cost method and what difference is there with the three other methods? Explain the main

characteristics of each method of valuation of the inventory and the consequences they may have on the valuation of the inventory and determination of the net

income in case of price fluctuation. (20 points)

2: Prepare an Income statement of the company at the end of February using as method of valuation of the inventory the average cost method, FIFO and LIFO for

each one of the products sold by Jim, and calculate the balance of the inventory at the end of the month. Explain the calculations. (40 points: 30 points for the

calculation and 10 for explanations)

3: In order to compare with the records made by his accountant, Jim asks you to prepare the different journal entries for the purchases and sales mentioned above

for each one of the 3 different methods used above. (20 points)

4: Jim would like to know a forecast of the number of days to sell the inventory based on the results of the month of February. Explain your calculation and the

steps followed. (20 points: 10 for calculation and 10 for explanation)

Rubrics

Descriptor

9-10 The student demonstrates an excellent understanding of the concepts.

8-8.9 The student demonstrates a good understanding of the concepts.

7-7.9 The student demonstrates a fair understanding of the concepts.

6-6.9 The student demonstrates some, but insufficient understanding of the concepts.

3-5.9 The student demonstrates insufficient understanding of the concepts. They may mention some relevant ideas or concepts, although it is clear that the relationship between them is not understood by the student.

1-2.9 The student demonstrates insufficient understanding of the concepts and does not mention any relevant ideas or concepts.

0 The student leaves the question blank or cheats.

95% of the grade based on the approach, calculations and comments, and 5% based on the presentation and look & field of the spreadsheet. Points are at the end

of each question.

You must answer all the questions in the proposed business case. This task assesses the following learning outcomes:
Submission file format: Excel document with all the answers, clearly identifying all steps, results, journals and including comments besides each answer.