Question

Portfolio Project Option #2 is for accounting students who are intuitive learners by nature. You learn best from abstract materials like theories and concepts, enjoy challenges, and tend to be more innovative. For this assignment, you are required to complete the accounting case for Denver Works Co in Part 1, KPWC Service in Part 2, and Virginia Company in Part 3. Follow the additional instructions provided below.

Part 1:

Denver Works Co, a global marketing company, completed the following transactions during the first month of operations:

April 1: Denver Works stockholders’ issued 5,300 shares of $20 par value capital stock for $80,000 cash along with equipment valued at $26,000.

April 2: Denver Works prepaid $9,000 for 12 months’ rent for their office space.

April 3: Denver Works made credit purchases of $8,000 for office equipment and $3,600 for office supplies. Payment is due within 10 days.

April 6: Denver Works completed services for a client and immediately received $4,000 cash.

April 9: Denver Works completed a $6,000 project for a client who must pay within 30 days.

April 13: Denver Works paid $11,600 cash to settle the accounts payable created on April 3.

April 19: Denver Works paid $2,400 cash for the premium on a 12-month insurance policy.

April 22: Denver Works received $4,400 cash as a partial payment for the work completed on April 9.

April 25: Denver Works completed work for another client for $2,890 on credit.

April 28: Denver Works paid a dividend of $5,500 cash to its stockholders.

April 29: Denver Works purchased $600 of additional office supplies on credit.

April 30: Denver Works paid $435 cash for this month’s utility bill.

Instructions:

Prepare journals for the above economic transactions. Use the following assignment template for Denver Works Co.

Denver Works Assignment Template

Part 2:

The unadjusted trial balance of KPWC Service is entered on the partial worksheet below.

KPWC Service

Work Sheet

For the year ended December 31

 

 

Account

 

Unadjusted Trial Balance

 

 

Adjustments

 

Adjusted Trial Balance

 

Income Statement

Balance Sheet and Statement of Stockholders’ Equity

 

Debit

Credit

Debit

Credit

Debit

Credit

Debit

Credit

Debit

Credit

Cash

38,000

 

 

 

 

 

 

 

 

 

Accounts Receivable

10,000

 

 

 

 

 

 

 

 

 

Supplies

14,000

 

 

 

 

 

 

 

 

 

Automobiles

160,000

 

 

 

 

 

 

 

 

 

Accum. Depr. - Autos

 

  45,000

 

 

 

 

 

 

 

 

Accounts payable

 

15,000

 

 

 

 

 

 

 

 

Unearned fees

 

22,000

 

 

 

 

 

 

 

 

Salaries payable

 

 

 

 

 

 

 

 

 

 

Capital Stock

 

55,000

 

 

 

 

 

 

 

 

Dividends

45,000

 

 

 

 

 

 

 

 

 

Fees earned

 

275,400

 

 

 

 

 

 

 

 

Salary expense

115,000

 

 

 

 

 

 

 

 

 

Rent expense

30,400

 

 

 

 

 

 

 

 

 

Advertising expense

 

 

 

 

 

 

 

 

 

 

Supplies expense

 

 

 

 

 

 

 

 

 

 

Depreciation expense

______

______

 

 

 

 

 

 

 

 

Totals

412,400

412,400

 

 

 

 

 

 

 

 

Instructions:

Using the following information, complete the worksheet to record adjustments, adjusted trial balance, income statement, balance sheet & statement of stockholders’ equity:

(a)  Unpaid and unrecorded salaries earned by employees, $5,000.

(b)   Unused supplies still on hand is $2,000.

(c)   Machinery depreciation, $25,000.

(d)   Customers who paid $11,000 in advance have received their services.

(e)   Advertising for last quarter of the year in the amount of $4,000 remains unpaid and unrecorded.

(f)  The rent expense incurred and not yet paid or recorded at fiscal year-end is $3,000.

Part 3:

Virginia Company, a battery retailer, began year 20x7 with 23,000 units of product in its January 1 inventory, at a cost of $15 per unit. It made successive purchases of its product in year 20x7, as follows. The company uses a periodic inventory system. On December 31, 20x7, a physical count reveals that 40,000 units of its product remain in inventory.

 

Mar. 7

30,000 units

@ $18 each

May 25

39,000 units

@ $20 each

Aug. 1

23,000 units

@ $25 each

Nov. 10

35,000 units

@ $26 each

Instructions

Using the following template

Compute the number and total cost of the units available for sale in year 20x7.Compute the amounts assigned to the 20x7 ending inventory, and the cost of goods sold for FIFO, LIFO, and weighted average.The 110,000 units sold are $35 each. Prepare comparative income statements for the three inventory costing methods of FIFO, LIFO, and weighted average, which include a detailed cost of goods sold section as part of each statement. (Round your average cost per unit to 2 decimal places.)As the chief accountant of Virginia Company, provide recommendations, giving all reasons based on your research on retail industry inventory best practices, management on:Which inventory method (FIFO, LIFO, average cost, or specific identification) you should use.Whether it is a good idea to keep using the periodic system as opposed to the perpetual inventory system.

Reminder: Your Part 3 paper should be 2-3 pages in length total and conform to CSU-Global Guide to Writing and APARequirements.  Include scholarly references as needed in addition to the course textbook to support your views.  The CSU-Global Library is a good place to find these references.

Answer 1