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Directions: Answer the following questions on a separate
Microsoft Word or Excel document. Explain how you reached the answer or show
your work if a mathematical calculation is needed, or both. Submit your
assignment using the assignment link in Blackboard.
Exercises
E4-7. Kay Magill Company had the following
adjusted trial balance.
Instructions
a)
Prepare closing entries at June 30,
2015.
b)
Prepare a post-closing trial
balance.
E4-13. Keenan Company has an inexperienced
accountant. During the first 2 weeks on the job, the accountant made the
following errors in journalizing transactions. All entries were posted as made.
1.
A payment on account of $840 to a
creditor was debited to Accounts Payable $480 and credited to Cash $480.
2.
The purchase of supplies on account
for $560 was debited to Equipment $56 and credited to Accounts Payable $56.
3.
A $500 cash dividend was debited to
Salaries and Wages Expense $500 and credited to Cash $500.
Instructions
Prepare the correcting entries.
E5-4. On June 10, Tuzun Company purchased
$8,000 of merchandise from Epps Company, FOB shipping point, terms 2/10, n/30.
Tuzun pays the freight costs of $400 on June 11. Damaged goods totaling $300
are returned to Epps for credit on June 12. The fair value of these goods is
$70. On June 19, Tuzun pays Epps Company in full, less the purchase discount.
Both companies use a perpetual inventory system.
Instructions
a) Prepare separate entries for each
transaction on the books of Tuzun Company.
b) Prepare separate entries for each
transaction for Epps Company. The merchandise purchased by Tuzun on June 10 had
cost Epps $4,800.
E5-7.Juan
Morales Company had the following account balances at year-end: Cost of Goods
Sold $60,000, Inventory $15,000, Operating Expenses $29,000, Sales Revenue
$115,000, Sales Discounts $1,200, and Sales Returns and Allowances $1,700. A
physical count of inventory determines that merchandise inventory on hand is
$13,900.
Instructions
a)
Prepare the adjusting entry
necessary as a result of the physical count.
b)
Prepare closing entries.
E6-1. Tri-State Bank and Trust is
considering giving Josef Company a loan. Before doing so, management decides
that further discussions with Josef’s accountant may be desirable. One area of
particular concern is the inventory account, which has a year-end balance of
$297,000. Discussions with the accountant reveal the following.
1.
Josef sold goods costing $38,000 to
Sorci Company, FOB shipping point, on December 28. The goods are not expected
to arrive at Sorci until January 12. The goods were not included in the
physical inventory because they were not in the warehouse.
2.
The physical count of the inventory
did not include goods costing $95,000 that were shipped to Josef FOB
destination on December 27 and were still in transit at year-end.
3.
Josef received goods costing $22,000
on January 2. The goods were shipped FOB shipping point on December 26 by
Solita Co. The goods were not included in the physical count.
4.
Josef sold goods costing $35,000 to
Natali Co., FOB destination, on December 30. The goods were received at Natali
on January 8. They were not included in Josef’s physical inventory.
5.
Josef received goods costing $44,000
on January 2 that were shipped FOB destination on December 29. The shipment was
a rush order that was supposed to arrive December 31. This purchase was
included in the ending inventory of $297,000.
Instructions
Determine the correct inventory
amount on December 31.
E6-6. Kaleta Company reports the following
for the month of June.
Instructions
a) Compute the cost of the ending
inventory and the cost of goods sold under (1) FIFO and (2) LIFO.
b) Which costing method gives the
higher ending inventory? Why?
c) Which method results in the higher
cost of goods sold? Why?
Problems
P4-3A.The
completed financial statement columns of the worksheet for Fleming Company are
shown on below.
Instructions
a)
Prepare an income statement, a
retained earnings statement, and a classified balance sheet.
b)
Prepare the closing entries.
c)
Post the closing entries and
underline and balance the accounts. (Use T-accounts.) Income Summary is account
No. 350.
d)
Prepare a post-closing trial
balance.
P5-2A.Latona
Hardware Store completed the following merchandising transactions in the month
of May. At the beginning of May, the ledger of Latona showed Cash of $5,000 and
Common Stock of $5,000.
May 1 Purchased merchandise on account from Gray’s
Wholesale Supply $4,200, terms 2/10, n/30.
2
Sold merchandise on account $2,100, terms 1/10, n/30. The cost of the
merchandise sold was $1,300.
5 Received credit from Gray’s
Wholesale Supply for merchandise returned $300.
9
Received collections in full, less discounts, from customers billed on
sales of $2,100 on May 2.
10 Paid Gray’s Wholesale Supply in
full, less discount.
11 Purchased supplies for cash $400.
12 Purchased merchandise for cash
$1,400.
15
Received refund for poor quality merchandise from supplier on cash
purchase $150.
17
Purchased merchandise from Amland Distributors $1,300, FOB shipping
point, terms 2/10, n/30.
19 Paid freight on May 17 purchase
$130.
24 Sold merchandise for cash $3,200.
The merchandise sold had a cost of $2,000.
25
Purchased merchandise from Horvath, Inc. $620, FOB destination, terms
2/10, n/30.
27 Paid Amland Distributors in full,
less discount.
29
Made refunds to cash customers for defective merchandise $70. The
returned merchandise had a fair value of $30.
31
Sold merchandise on account $1,000 terms n/30. The cost of the
merchandise sold was $560.
Latona Hardware’s chart of accounts includes the following:
No. 101 Cash, No. 112 Accounts Receivable, No. 120 Inventory, No. 126 Supplies,
No. 201 Accounts Payable, No. 311 Common Stock, No. 401 Sales Revenue, No. 412
Sales Returns and Allowances, No. 414 Sales Discounts, and No. 505 Cost of
Goods Sold.
Instructions
a) Journalize the transactions using a
perpetual inventory system.
b) Enter the beginning cash and common
stock balances and post the transactions. (Use J1 for the journal reference.)
Prepare an income statement through
gross profit for the month of May 2015.
P6-3A.Ziad
Company had a beginning inventory on January 1 of 150 units of Product 4-18-15
at a cost of $20 per unit. During the year, the following purchases were made.
Mar. 15
400 units at $23 Sept. 4 350 units
at $26
July 20 250 units at $24 Dec. 2 100 units at
$29
1,000 units were sold. Ziad Company uses a periodic
inventory system.
Instructions
a)
Determine the cost of goods
available for sale.
b)
Determine (1) the ending inventory,
and (2) the cost of goods sold under each of the assumed cost flow methods
(FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold
under the FIFO and LIFO methods.
c)
Which cost flow method results in (1)
the highest inventory amount for the balance sheet, and (2) the highest cost of
goods sold for the income statement?
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