Cash Beginning inventory Common stock Retained earnings $17, 600 17,630 (205 units 586) 15,600 19,630 The following five transactions occurred in Year 2 1. First purchase (cash) 120 units @ s88 2 Second purchase (cash) 195 units @ $96 3. Sales (all cash) 355 units $200 4. Paid $15,300 cash for salaries expense 5 Paid cash for income tax at the rate of 25 percent of income before taxes Required o. Compute the cost of goods sold and ending inventory, assuming (1) FIFO cost flow, (2) LIFO cost flow, and (3) weighted-average cost flow b. Use a vertical model to show the Year 2 income statement, balance sheet and statement of cash flows under FIFO, LIFO, and weighted average (Hint Record the events under an accounting equation before preparing the statements)

Cash Beginning inventory Common stock Retained earnings $17, 600 17,630 (205 units 586) 15,600 19,630 The following five transactions occurred in Year 2 1. First purchase (cash) 120 units @ s88 2 Second purchase (cash) 195 units @ $96 3. Sales (all cash) 355 units $200 4. Paid $15,300 cash for salaries expense 5 Paid cash for income tax at the rate of 25 percent of income before taxes Required o. Compute the cost of goods sold and ending inventory, assuming (1) FIFO cost flow, (2) LIFO cost flow, and (3) weighted-average cost flow b. Use a vertical model to show the Year 2 income statement, balance sheet and statement of cash flows under FIFO, LIFO, and weighted average (Hint Record the events under an accounting equation before preparing the statements)

Name: Cash$17,60017,630 (205 units @ $86)Beginning inventoryCommon stockRet
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Description: Cash$17,60017,630 (205 units @ $86)Beginning inventoryCommon stockRetained earnings15,60019,630The following five transactions occurred in Year 2:1. First purchase (cash) 120 units @ s882 Second purchase (cash) 195 units o $963. Sales (all cash) 355

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter5: Inventories And Cost Of Goods Sold

Section: Chapter Questions

Problem 5.13AMCP

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On January 1, Pope Enterprises inventory was 625,000. Pope made 950,000 of net purchases during the year. On its year-end income statement, Pope reported cost of goods sold of 1,025,000. Calculate Popes December 31 ending inventory.
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Reid Company uses the periodic inventory system. On January 1, it had an inventory balance of 250,000. During the year, it made 613,000 of net purchases. At the end of the year, a physical inventory showed it had ending inventory of 140,000. Calculate Reid Companys cost of goods sold for the year.
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RE7-8 Johnson Company uses a perpetual inventory system. On October 23, Johnson purchased 100,000 of inventory on credit with payment terms of 1/15, net 45. Using the net price method, prepare journal entries to record Johnsons purchases on October 23 and the subsequent payment on October 31. Using the information from RE7-8, prepare journal entries to record Johnsons purchase on October 23 and the subsequent payment on November 30.
Analyzing the Accounts Casey Company uses a perpetual inventory system and engaged in the following transactions: a. Made credit sales of $825,000. The cost of the merchandise sold was $560,000. b. Collected accounts receivable in the amount of $752,600. c. Purchased goods on credit in the amount of $574,300. d. Paid accounts payable in the amount of $536,200. Required: Prepare the journal entries necessary to record the transactions. Indicate whether each transaction increased cash, decreased cash, or had no effect on cash.
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Appendix Periodic inventory accounts, multiple-step income statement, closing entries On December 31, 2018, the balances of the accounts appearing in the ledger of Wyman Company are as follows: Cash 13,500 Dividends 25,000 Accounts Receivable 72,000 Sales 3,280,000 Inventory, January 1, 2018 257,000 Purchases 2,650,000 Estimated Returns Inventory, January 1,2018 35,000 Purchases Returns and Allowances 93,000 Purchases Discounts 37,000 Office Supplies 3,000 Freight In 48,000 Prepaid Insurance 4,500 Sales Salaries Expense 300,000 Land 150,000 Advertising Expense 45,000 Store Equipment 270,000 Delivery Expense 9,000 Accumulated Depreciation Store Equipment 55,900 Depreciation Expense Store Equipment 6,000 Office Equipment 78,500 Miscellaneous Selling Expense 12,000 Accumulated Depreciation Office Equipment 16,000 Office Salaries Expense 175,000 Rent Expense 28,000 Accounts Payable 77,800 Insurance Expense 3,000 Salaries Payable 3,000 Office Supplies Expense 2,000 Customer Refunds Payable 50,000 Depreciation Expense Office Equipment 1,500 Unearned Rent 8,300 Notes Payable 50,000 Miscellaneous Administrative Expense 3,500 Common Stock 150,000 Rent Revenue 7,000 Retained Earnings 365,600 Interest Expense 2,000 Instructions 1. Does Wyman Company use a periodic or perpetual inventory system? Explain. 2. Prepare a multiple-step income statement for Wyman Company for the year ended December 31, 2018. The inventory as of December 31, 2018, was 305,000. The estimated cost of customer returns inventory for December 31, 2018, is estimated to increase to 40,000. 3. Prepare the closing entries for Wyman Company as of December 31, 2018. 4. What would be the net income if the perpetual inventory system had been used?
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Bloom Company had beginning unadjusted retained earnings of 400,000 in the current year. At the beginning of the current year, Bloom changed its inventory method from LIFO to FIFO, and the cumulative effect (net of taxes) of this change was 28,000. In addition, Bloom earned net income of 150,000 and paid dividends of 30,000 in the current year. Prepare Blooms retained earnings statement for the current year.