Assignment:
1. The submitted project is required to be typed on Word or Excel.
2. This project is an individual assignment. This project is worth 9% of your grade.
3. In this project, you have three main deliverables:
4. Financial statements including
1. income statement
2. balance sheet
3. statement of changes in stockholders' equity
4. all related notes. In the notes to the financial statement include notes on: significant accounting policies, revenue recognition, inventory, equipment, and any other notes you deem necessary.
You do not need to prepare a statement of cash flows
1. A memo to the owners of Cherry & White Bike Company explaining and justifying the following accounting choices:
1. Accounting for inventory: inventory cost flow methods.
1. Determine possible alternatives and select a cost flow method for accounting for the racing bike inventory.
2. Explain why you select the alternative that you use in the financial statements.
3. Present an analysis of the alternatives.
4. Show and discuss financial statements effects of the alternative methods and estimates such as change in net income, assets, or liabilities.
5. Examine the effects of the alternatives on the relevant common financial statement ratios of profitability, liquidity, and solvency.
Assume that C&W also used the method you selected or their standard bikes and children's bikes.
1. Accounting for equipment: purchase price and subsequent measurement.
1. Determine possible alternatives.
2. Explain why you select the alternative that you use in the financial statements.
3. Present an analysis of the alternatives.
4. Show and discuss financial statements effects of the alternative methods and estimates such as change in net income, assets, or liabilities.
5. Examine the effects of the alternatives on the relevant common financial statement ratios of profitability, liquidity, and solvency.
You may consider looking at the Accounting Standards Codification (ASC) for guidance on accounting and alternatives.
1. Prepare the journal entries for all transactions in the general journal.