Busoni Company is a wholesaler. During one accounting period, it carried out the following transactions (all expressed in CU, except where clearly marked):

1 Creation of the business and provision by shareholders of a piece of equipment in the amount of 100 CU, and of cash for 40 CU

2 Merchandise for resale was purchased: 60 (on account).

3 A debt was received from the banker: 100 CU.

4 Personnel expenses were incurred for the period: salaries and social charges: 35 (paid cash).

5 Merchandise was sold to customers: 50 (on account) and 40 (paid cash). The merchandise that was sold had been purchased for 38 CU.

6 Cash was received from customers: 42 CU.

7 Merchandise suppliers were given a partial payment: 55 CU.

8 The assets brought as a capital contribution when the business was created are expected to have a useful life of five years. The loss of value of the asset is expected to be the same each year.

9 The value of the merchandise on hand at the end of the year (ending inventory) is 22 CU.

Required

Show the impact of each event on the financial statements with T-Accounts. You have the following choice:

1 To record the purchases of merchandise as inventory first (‘perpetual inventory system’) or

2 To record these purchases as expenses first (‘periodic inventory system’). Please mention clearly the choice you made between options (1) and (2). Use the following structure.

Transcribed Image Text:

Statement of financial position Income statement Assets (orresources) Equity and liabiltes Expenses Revenues