CATFUTURE is a company and has the following Balance Sheet on December 31st 2020:

	ASSETS		EQUITIES
Machinery	1000	Paid-in Capital	49000
Inventories	4000	Long-Term Loan	1500
Customers	1750	Advances from customers	1000
Bank	44500	Suppliers	1250
Cash	1500
TOTAL ASSETS	52750	TOTAL EQUITIES	52750

During the year 2021 did the following transactions:

1. Purchases of inventories for 3.550 € on credit. Moreover, the invoice of the transportation costs equals 50€. The total amount and the transportation will be paid in 90 days.
2. The supplier gives a quantity discount of 500€. This discount reduces the open account.
3. Sale of merchandise for 8.000 €. Applying the advance collected from customers, collecting 2.000€ by bank transaction and the rest on credit terms.
4. The customer returns defective merchandise for €1,000 (that reduces the open account).
5. On July 1st we received the insurance invoice (500 €). This insurance has coverage for 12 months. It is paid immediately from our bank account.
6. On August 1st Acquisition of Computer Equipment costing 5,000€; this amount will be paid in January 2022.
7. Sale of merchandise for 10.000€. Half of the amount will be collected in 3 months. The other half was immediately collected by check.
8. Wage amounted 3,000€ for 2021. These amount is totally paid, except 500€ that will be paid on the January 5th, 2022.
9. Collection from customers 4.000 € on a bank transfer.
10. On December 1st, CATFUTURE pays 3,000€ (payment by bank account) for renting its office (this amount includes December, January and February rent).
11. The interest expenses of 2021 related to the long-term loan have amounted to € 150. This amount will be paid in March 2022.
12. One customer accepted a note (bill of exchange) for the amount owed by this customer (1,000€). For that reason, we give him a quantity discount of 50€.
13. At the maturity we collect the money for the bill of exchange (last transaction) at the deadline.
14. Another costumer accepted a note bill of exchange for his debt (1.000€)
15. Our business discounts the bill of exchange (note of the previous transaction two months before the deadline) with our bank. The amount is deposited into their checking account minus 9% annual interest and a commission of 0.5 %.
16. At maturity the note is presented to the buyer, but he fails to pay. The bank returns the note to us and charges our checking account with additional expenses of € 200.
17. On March 1st 2020, The company invested its excess in liquidity in a loan granted to another company under the following conditions.

Date of granting - 1/3/2021

Annual interest – 4,5%

Amount granted – 20,000

Due date – 1/3/2022

18. On October 1st 2020, they acquired Vehicles amounting to € 40,000. 50 % of the amount was paid by bank transfer, the rest is payable in one year together with 5 % annual interest.
19. The depreciation of the Machinery, Computer Equipment, and the Vehicles has to be calculated using the Straight-Line Depreciation method considering the next useful life:

* Machinery= 4 years

* Computer Equipment = 5 years

* Vehicles = 6 years

20. Ending balance of inventories: 4.500 €

REQUIRED:

1. Taking into account that the company uses the periodic inventory system, prepare the Journal entries of the above transactions, taking care, specially, to the ending process.
2. Elaborate the trial balance, Income Statement and the Balance Sheet on December 31, 2021 following the official structure.

Answer rating: 100% (QA)

ANS WER During the year 2021 the company made purchases of inventor... View the full answer