Use the financial statements for H&M AB in Appendix A at the end of the book to answer the following questions.
a. Assume that H&M made all of their purchases of inventory (stock-in-trade) on account and in one single purchase, and also assume they recorded all of the cost of goods sales in a single entry. Prepare the journal entries H&M would have used to record the purchases and the cost of goods sold.
b. Assume the tax liabilities in current liabilities on the balance sheet arise only from the tax expense on the income statement. Using only the information on the income statement, prepare the journal entry that H&M would have used to record income tax expense for fiscal 2009 (assuming it was not paid at that time). Prepare the journal entry to record the amount that H&M paid for income taxes during the 2009 fiscal year, based on the information in the balance sheet.
c. Identify one account in each of the following sections of the balance sheet that would have required an adjusting entry. Briefly explain what the entry would have been (you do not need to prepare it or attempt to quantify it) and why the adjustment is necessary.
i. Fixed assets
ii. Current assets
iii. Current liabilities
d. Prepare the closing entries that H&M would have used at the end of the year.