Instructions: You have just landed at tem completed the books through the end of

Question

Instructions: You have just landed at tem completed the books through the end of November, went out on maternity leave during the first week of December The task you have been given is to take the ending Trial Balance for November and adjust assignment at a small retail company in area. The accountant, who had December transactions epare the December financials, and close the books. e manager of the c 11 months The has indicated that sal rent and depreciation for December are the same as the s are paid at the end of the month). Additional transaction information follows: December Advertising$900 December Utilities $700 December Communications $500 The determine which of the two methods is used. Then, use that same method to value endin Compute December Sales and Cost of Goods Sold, as well, and use LIFO for inve but it could be FIFO. Given the November transactions for December er is sure that t the I entries. Assume all are on credit. Also assume 80% of Sales are credit sales and the rest are for cash. November December 12 01 12 04 12 10 12 13 12 18 12 20 12 21 12 24 in with 1,350 units 11- 01 11- 03 11-05 11 10 11-15 11 -19 11-23 11 29 in with 500 units $22.00 each sold 250 units @ $35.00 each sold 350 units @ $38.00 each 500 units $23.00 each 500 units $29.00 each sold 250 units @ $36.00 each sold 600 units @ $40.00 each 450 units $26.00 each 600 units$31.00 each 300 units$28.00 each sold 600 units @ $41.00 each sold 200 units $37.00 each 400 units $30.00 each 300 units$30.00 each sold 550 units @ $42.00 each During December, supplies p at the end of the year. ased totaled $1,100. A I count showed that there were $1,850 remainin are the en It was discovered that the insurance was renewed on December 1 will cost $6,720 for the next 12 months. are the nece entries. Collected $18,500 in cash from s sales on credit. Those customers received $350.00 in discounts.

Explanation / Answer

End of Period Worksheet For the Year Ended December 31, 2017 Unadjusted   Adjusted   Account Title Trial Balance   Adjustments   Trial Balance   Income Statement Balance Sheet DR   CR   DR   CR   DR   CR   DR CR DR CR Cash 27,200 35500 37050     25,650     25,650 Accounts Receivable 8,720 68000 18850     57,870     57,870 Inventory 36000 45100 58250     22,850     22,850 Supplies 2,200 1100 1450       1,850       1,850 Prepaid Insurance 0 6160       6,160       6,160 land 50,000     50,000     50,000 Equipment 75,000     75,000     75,000 Accumulated Depreciation - Equipment 71000 1000     72,000            -       72,000 Accounts Payable 30,200 22500 45100     52,800            -       52,800 Salaries & Wages Payable            -              -   Interest Payable            -              -   Utilities Payable            -              -   Note Payable (final payment due 2020)            -              -   paid in capital 70,000     70,000            -       70,000 Retained Earnings 18,900     18,900     29,580 Dividends     15,000 Sales 259,710     85,000 344,710 344,710 Sales Returns and Allowances 11,000     11,000     11,000 Sales Discounts 23,650 350 500     23,500     23,500 Cost of Goods Sold 118,800 58250 177,050 177,050 Salaries & Wages Expense 32,230 2930     35,160     35,160 Depreciation Expense - Equipment 11000 1000     12,000     12,000 Advertising expenses 9020 900       9,920       9,920 Insurance Expense 5500 560       6,060       6,060 Rent Expense 24200 2200     26,400     26,400 Supplies Expense 3740 1450       5,190       5,190 Utilities Expense 6,930 700       7,630       7,630 communication expesnes 4620 500       5,120       5,120 449,810 449,810 247,200 247,200 558,410 558,410 319,030 344,710 239,380 239,380 Net Income     25,680 0 1 Accountant claiming LIFO system of inventory being used however inventory valued as per FIFO system as per following calculation of November in/out and opening value of december derived FIFO SYSTEM LIFO SYSTEM IN/(OUT) RATE AMOUNT IN/(OUT) RATE AMOUNT 1-Nov 500 22 11000 500 22 11000 3-Nov -250 22 -5500 -250 22 -5500 5-Nov 500 23 11500 500 23 11500 10-Nov -250 22 -5500 -250 23 -5750 15-Nov 450 26 11700 450 26 11700 19-Nov 300 28 8400 300 28 8400 23-Nov -200 23 -4600 -200 28 -5600 29-Nov 300 30 9000 300 30 9000 1350 36000 1350 34750 CLOSING VALUE BY FIFO CLOSING VALUE BY LIFO therefore this is clear that FIFO system is being used and we will use for the december same for inventory FIFO SYSTEM IN/(OUT) RATE AMOUNT 1-Nov 500 22 11000 1-Dec 1350 36000 3-Nov -250 22 -5500 4-Dec -300 23 -6900 5-Nov 500 23 11500 4-Dec -50 26 -1300 10-Nov -250 22 -5500 10-Dec 500 29 14500 15-Nov 450 26 11700 13-Dec -400 26 -10400 19-Nov 300 28 8400 13-Dec -200 28 -5600 23-Nov -200 23 -4600 18-Dec 600 31 18600 29-Nov 300 30 9000 20-Dec -100 28 -2800 1350 36000 20-Dec -300 30 -9000 CLOSING VALUE BY FIFO 20-Dec -200 29 -5800 21-Dec 400 30 12000 24-Dec -300 29 -8700 24-Dec -250 31 -7750 750 22850 December sales units 350*38+600*40+600*41+550*42 85000 Credit Sales 80% 68000 Cash Sales 17000 Cost of Goods Sold Opening 1350 36000 Purchase 1500 45100 Entire is Credit Purchase Closing -750 -22850 COGS 2100 58250 2 Journal Entries Dr Cr Cash 17000 Receivable 68000 To Sales 85000 Cash 18500 Discount Allowed 350 To Receivables 18850 Purchase 45100 To Payables 45100 Payable 22500 To Cash 22000 To Discount 500 Salaries & Wages Exp 2930 Advertising expenses 900 Insurance Expense 6720 Rent Expense 2200 Utilities Expense 700 communication exp 500 To Cash 13950 Prepaid Insurance 6160 To Insurance Expenses 6160 (11 month Booked as Prepaid) Supplies 1100 opening supply 2200 To cash 1100 purchase 1100 closing supply -1850 Net Supply Used 1450 Depreciation Expense 1000 To Accumulated Expenses 1000 Cash Statement Opeining Balance 27200 IN Sales 17000 Receivable 18500 Net In 35500 62700 Out Payable -22000 Expenses -13950 supplies -1100 Net Out -37050 Cash at the end 25650 3 Revenue Statement as per table in point 1 profit figure will be 25680 Balance Sheet as per Table and following closing entries 4 closing entries Sales Dr 344710 To Profit & Loss Account 344710 Profit & Loss Account Dr 319030 To Sales Returns and Allowances 11000 To Sales Discounts 23500 To Cost of Goods Sold 177050 To Salaries & Wages Expense 35160 To Depreciation Expense - Equipment 12000 To Advertising expenses 9920 To Insurance Expense 6060 To Rent Expense 26400 To Supplies Expense 5190 To Utilities Expense 7630 To communication expesnes 5120 Profit & loss Dr 15000 To Dividend Payable 15000 Profit & Loss Dr 10680 To Retained Earnings 10680

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