I need questions A through D. Thank-you! All the following transactions take pla
ID: 2560513 • Letter: I
Question
I need questions A through D. Thank-you!
All the following transactions take place in Year 1:
0. The initial balance sheet shows share capital for 10,000k and cash for the same amount.
1. BeerCo buys a warehouse for 1,100k, plus 100k in fees and 300k in taxes. 1/2 of the value is attributable to the building and half is attributable to the land. Payment in cash. Useful lief is 50 years.
2. BeerCo borrows a loan from the bank for 6,000k. Maturity date is one year later. Interest is 4%.
BeerCo makes an advance payment of 1,000 k to it’s supplier for the acquisition of the first 1,500 bottles.
4. BeerCo acquires new equipment for 800k. Payment in cash. Estimated useful life is 10 years.
5. BeerCo buys a small business from a local retailer. The value of the assets is 2,000k and the value of the liabilities is 500k. However, BeerCo pays 1,700k (payment in cash) because it is a very popular store in downtown Madrid, and therefore BeerCo foresees significant revenues from the sale of its imported beers through this store. Useful life of the assets is 10 years.
6. BeerCo incurs 200k in marketing its new brand and 50k in advertising its new store. Payment is deferred one year.
7. BeerCo imports 1500 bottles from Germany for 3,000k in January. Payment in cash.
8. BeerCo imports 1000 bottles from Germany for 2500k in June. Payment in cash.
9. BeerCo will have only sold 500 beers for 10,000k at closing. Payment in cash.
10. BeerCo finds out that a supplier of the business in the shopping center is claiming a debt for 25k. BeerCo's lawyer says that BeerCo will have to accept the claim and pay to the supplier the amount claimed.
11. CIT rate is 25%
Questions:
A. For points 1, 4, and 5, register the purchase in year 1 and the accounting value of the assets after 5 years.
B. For points 7, 8, and 9, calculate the inventory's value on December 31st.
C. Prepare the Ledger and T accounts, draft the balance sheet, P&L account, and cash statement for BeerCo for year 1.
D. Estimate the value of BeerCo at the end of the year with a brief explanation of assessment and description of additional information on the company that you may need to make a more accurate valuation.
Explanation / Answer
A)
1. cost of ware house=1500(1100+100+300) building = 750
depreciation 750/50=15
valyue at the 5 th year= 750-75(15*5)=675
2. cost of equipment 800
depreciation 800/10=80
value at end of 5 th year
800-400=400
3. value of asset 2000, life 10 year depreciation 200(2000/10)
value at 5th year 1000(2000-1000)
B)
purchase:
1000 bottle for 2500
1500 bottle for 3000
total bottle 2500for 5500
bottle sold 500@2per bottle= 1000 (fifo method)
closing inventory = 2000 bottle for 4500
C)
INCOME STATEMENT
PARTICULARS
AMOUNT
PARTICULARS
AMOUNT
PURCHASE
5500
SALES
10000
DEPRECIATION
295
CLOSING INVENTORY
4500
INTETREST
240
MARKETING EXPENSE
200
ADVERTAISEMENT
50
DEBT CLIMED
25
CIT
2048
PROFIT FOR THE YEAR
6142
TOTAL
14500
TOTAL
14500
BALANCE SHEET FOR THE MONTH ENDED ON 30 TH DEC
LIABILITIES
AMOUNT
ASSETS
AMOUNT
COMMON STOCK
10000
BUILDING
735
LOAN
6000
LAND
750
INTEREST ACCRUED
240
EQUIPMENT
720
OUTSTANDING EXPENCE
250
OTHER ASSET
1800
OTHER LIABILITIES
500
GOODWILL
200
PROFIT FOR THE YEAR
6142
INVENTORY
4500
CASH
14427
TOTAL
23132
TOTAL
23132
CASH A/C
DATE
PARTICULARS
AMOUNT
DATE
PARTICULARS
AMOUNT
COMMON STOCK
10000
BUILDING
750
LOAN
6000
LAND
750
SALES
10000
EQUIPMENT
800
LOCAL UNIT PURCHASED
1700
PURCHASE
5500
DEBT PAID
25
INCOME TAX
2048
BALANCE C/D
14427
TOTAL
26000
TOTAL
26000
DEPRECIACTION
DATE
PARTICULARS
AMOUNT
DATE
PARTICULARS
AMOUNT
BUILDING
15
EQUIPMENT
80
ASSET
200
BALANCE C/D
295
TOTAL
295
TOTAL
295
D)
ROE=
net income/shareholders equity
6142/ 10000=61%
ROA=
income before tax/ total asset
8190/23132= 35%
INCOME STATEMENT
PARTICULARS
AMOUNT
PARTICULARS
AMOUNT
PURCHASE
5500
SALES
10000
DEPRECIATION
295
CLOSING INVENTORY
4500
INTETREST
240
MARKETING EXPENSE
200
ADVERTAISEMENT
50
DEBT CLIMED
25
CIT
2048
PROFIT FOR THE YEAR
6142
TOTAL
14500
TOTAL
14500