During the past several months, you have decided to make some changes in your li
ID: 2500003 • Letter: D
Question
During the past several months, you have decided to make some changes in your life. You have always wanted to open your own small business and have decided you finally will. You have decided you will open your own merchandising business on January 1, 2016.
During your planning for this Grand Opening, you made the following decisions for your business.
You will fund the opening of your business with a transfer from your personal bank account to the business bank account in the amount of $20,000 on Jan 1.
You have already signed a lease for a building for a monthly rent of $1000 and your first rental payment is due on Jan 1.
You will use a Perpetual inventory system and the LIFO method to account for your inventory.
You will sell your product to all customers on account. Your terms for all customers are 2/10, n/30.
To start out, you don’t plan on hiring any employees.
Assignment
LIFO Worksheet
Explanation / Answer
LIFO perpetual inventory card:
Cost of goods sold (COGS) and ending inventory:
LIFO perpetual inventory card can help compute cost of goods sold and ending inventory.
c. Closing cash balance = $ 20000-1000-10000-1000+2940- 4000-250-100+1500-100-150-200 = $ 7640
d. Net profit = $ 3000+1500+4500-1000-2000-250-60-1100-250-100-3300-100-150-200-83.33 = $ 406.67
closing office equipment = $ 10000-83.33 = $ 9916.67
closing office supplies = $ 1000-250 = $750
Account payable = $ 4000+4000-4000 = $ 4000
Account receivable = $ 3000+1500-3000-1500+4500 = $4500
closing capital balance= $ 20000
Therefore, Total of liabilities = $ 406.67+20000+4000 = $ 24406.67
Total of Assets = $ 1600+7640+9916.67+750+4500 = $ 24406.67
Date Purchases Sales Balance Jan 01 Beginning inventory $4000 Jan 02 $2000 $2000 Jan 12 $4000 $6000 Jan 16 $1100 $4900 Jan 30 $3300 $1600Related Questions
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