This problem continues the Crystal Clear Cleaning problem begun in Chapter 2 and continued through Chapter 5. P6-39 Accounting for inventory using the perpetual inventory system-FIFO Consider the December transactions for Crystal Clear Cleaning that were presented in Chapter 5. (Cost data have been removed from the sale transactions.) Crystal Clear uses the perpetual inventory system. Dec 2 Purchased 475 units of inventory for $2.,850 on account from Sparke, Co on tems, 3/10, 20 Purchaned 600 units of inventory from Borax on account with terms 2/10, 30 The total invoice was for $4,500, which induded a $150 freight charge Retumed 75 units of inventory to Sparke from the December 2 purchase. Paid Borax 11 Sold 285 units of goods to Hacpy Maids for $3,990 on account with terms 3/10, 30 12 Paid Sparkde 15 Received 22 units with a retail price of $308 of goods back from customer Happy Maids. The goods cost Crystal Clear $132. Received payment from Happy Maids, setting the amount due in ful Sold 265 units of goods to Bridget, Inc. for cash of S3,975. Paid cash for utilities of $415 21 28 29 30 Paid cash for Sales Commission Experse of $550. Recorded the folowing adjusting entries a Physical count of inventory on December 31 showed 428 units of goods on hand 31 b. Depreciation, S270 C Accrued salaries expense of $725 d. Prepared all other adjustments necessary for December (Hint You will need to review the adjustment information in Chapter 3 to determine the remaining adjustments). Assume the cleaning supples left at December 31 are $30 Requirements 1. Prepare perpetual inventory reconds for December for Crystal Clear Cleaning using the FIFO inventory costing method. (Note: You must calculate the cost of goods sold on the 11th, 28th, and 31st.) 2. Journalize the transactions for December 11th, 28ch, and 31st (adjusting entry a only) using the perpetual inventory recond created in Requirement 1.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
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