ACCT $203-$ Project $\backslash$#$2-$ Instructions $($Group Copy$)$

Project Number: $252$

Canvas Group Number:

On January $1,2022,$ Vitello Co$.$ was formed with a fiscal year end of December $31,2022.$ On that same day, Vitello Co$.$ issued $1,500$ shares of $\backslash (\backslash$$ $4\backslash )$ par common stock for $\backslash (\backslash$$ $90\backslash )$ per share. Also on January $1,$ the company purchased a delivery truck for $\backslash (\backslash$$ $60000\backslash )$ by signing a $5-$year, $\backslash (6\backslash \%\backslash )$ annual interest rate note payable with a face value of $\backslash (\backslash$$ $60000\backslash ).$ Interest is paid with cash on the last day of every calendar year. The truck has an estimated useful life of $10$ years and no salvage value.

On January $2,$ the company purchased $480$ items of inventory from the manufacturer for $\backslash (\backslash$$ $215\backslash )$ each and paid in cash. On January $3$ the manufacturer contacted the company and offered to sell an additional $50$ items of inventory for $\backslash (\backslash$$ $180\backslash )$ each. Vitello Co$.$ accepted the offer and paid cash for the additional inventory. The company uses LIFO inventory valuation. The company also offers a $2-$year warranty on all inventory sold. It expects that $\backslash (10\backslash \%\backslash )$ of the inventory will have a problem and that on average each item would cost $\backslash (\backslash$$ $90\backslash )$ to fix.

During $2022,$ the company sold $310$ items of inventory on account for $\backslash (\backslash$$ $360\backslash )$ each. The company records bad debt expense equal to $\backslash (1\backslash \%\backslash )$ of credit sales.

During $2022,$ the company collects $\backslash (\backslash$$ $89280\backslash )$ cash from the credit sales. The company also learns that Saban Inc., which purchased two items of inventory, has declared bankruptcy and will not pay for its purchase. Vitello Co$.$ decides to write off the accounts receivable related to these two inventory items.

On November $1,$ Nico's Club, a customer, requests that $4$ of their inventory be repaired. The repairs were covered under warranty and the repairs cost $\backslash (\backslash$$ $75\backslash )$ for each item.

On the December $31,2022,$ Vitello Co$.$ records the cash payment for interest incurred on the note payable and records depreciation expense using the straight$-$line method.

On January $31,2023,$ Vitello Co$.$ sold $100$ items of inventory on account for $\backslash (\backslash$$ $380\backslash )$ each.

Requirements

$1)$ Prepare journal entries and adjusting entries

$2)$ Post the journal entries to $\backslash ($ T $\backslash )$ accounts

$3)$ Prepare the adjusted trial balance $($Hint: The adjusted trial balance should balance.$)$

$4)$ Prepare an Income Statement, Statement of Retained Earnings, Balance Sheet, and the operating section of the Statement of Cash Flows as of and for the year ended December $31,2022$

$5)$ Use your completed financial statements to identify the values for each of the following items: Net Income, Gross Margin, Cash, Total Assets, Cash from Operations. Be sure to include answers to these questions on your group answer sheet.

$6)$ Upload your completed spreadsheet to Canvas