Topic: Transactions and the business equation Level of difficulty: Low Albinoni Company is a retailer. During one accounting period, it carried out the following transactions (all expressed in CU,...

Topic: Transactions and the business equation Level of difficulty: Low Albinoni Company is a retailer. 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 for the amount of 80, and of cash for 30 CU. 2 A loan was received from the banker: 200 CU. 3 Miscellaneous business taxes: 40 (paid cash during the period). 4 Purchase of merchandise for resale: 50 (on account). 5 Legal fees: ten (cash outflow during the period). 6 Personnel expenses for the period: salaries and social charges: 30 (paid cash during the period). 7 Sale of merchandise to customers: 80 (on account) and 20 (cash sales). The merchandise that was sold had been purchased for 40 CU. 8 Payment to the merchandise suppliers: 30 CU. 9 Cash received from customers: 70 CU. 10 The assets brought as a capital contribution when the business was created are expected to have a useful life of four years. The loss of value of the asset is expected to be the same each year for four years. 11 The value of the merchandise on hand at the end of the year (ending inventory) is ten CU. Required Show the impact of each event on the balance sheet equation. You have the following choice: 1 To record the purchases of merchandise as inventory (‘perpetual inventory system’) or 2 To record theses purchases as expenses (‘periodic inventory system’). Please mention clearly your choice. Use the format presented in Appendix 1.