a. 1
Compute the cost of goods sold, ending inventory, and the income tax expense under FIFO cost flow method.
a. 1
Answer to Problem 32P
Computation of cost of goods sold under FIFO cost flow method is as follows:
FIFO | Units | Unit Cost | Cost of Goods Sold |
Beginning Inventory | 220 | $150 | $33,000 |
First Purchase | 150 | $155 | $23,250 |
Second Purchase | 40 | $160 | $6,400 |
Total | 410 | $62,650 |
Table (1)
Computation of ending inventory under FIFO cost flow method is as follows:
FIFO | Units | Unit Cost | Ending Inventory |
Second Purchase | 120 Table (4) | $160 | $19,200 |
Table (2)
Computation of income tax expense under FIFO cost flow method is as follows:
Computation of Income Tax Expense and Net Income | |
Particulars | FIFO |
Sales (1) | $131,200 |
Less: Cost of Goods Sold | ($62,650) |
Gross Margin | $68,550 |
Less: Salaries Expense | ($38,000) |
Income Before Tax | $30,550 |
Less: Income Tax (2) | ($7,638) |
Net Income | $22,912 |
Table (3)
Explanation of Solution
First-in-First-Out: In First-in-First-Out method, the costs of the initially purchased items are considered as cost of goods sold, for the items which are sold first. The value of the ending inventory consists of the recent purchased items.
Cost of goods sold: Cost of goods sold is the accumulate total of all direct cost incurred in manufacturing the goods or the products which has been sold during a period. Cost of goods sold involves direct material, direct labor, and manufacturing
Ending Inventory: It represents the quantity and price of the goods unsold and laying at the store at the end of a particular period.
Working notes:
Calculate total purchase amount:
Inventory Purchases | |||
Particulars | Units | Unit Cost | Total cost |
Beginning Inventory | 220 | $150 | $33,000 |
First Purchase | 150 | $155 | 23,250 |
Second Purchase | 160 | $160 | 25,600 |
Goods available for sale | 530 | $81,850 | |
Less: Cost of goods sold | (410) | ||
Ending inventory | 120 |
Table (4)
(1) Calculate sales amount:
(2) Calculate income tax expense amount:
a. 2
Compute the cost of goods sold and the ending inventory under LIFO cost flow method.
a. 2
Answer to Problem 32P
Compute the cost of goods sold under LIFO cost flow method as follows:
LIFO | Units | Unit Cost | Cost of Goods Sold |
Second Purchase | 160 | $160 | $25,600 |
First Purchase | 150 | $155 | $23,250 |
Beginning Inventory | 100 | $150 | $15,000 |
Total | 410 | $63,850 |
Table (5)
Compute the ending inventory under LIFO cost flow method as follows:
LIFO | Units | Unit Cost | Ending Inventory |
Second Purchase | 120 Table (4) | $150 | $18,000 |
Table (6)
Compute the income tax expense under LIFO cost flow method as follows:
Computation of Income Tax Expense and Net Income | |
Particulars | LIFO |
Sales (1) | $131,200 |
Less: Cost of Goods Sold | ($63,850) |
Gross Margin | $67,350 |
Less: Salaries Expense | ($38,000) |
Income Before Tax | $29,350 |
Less: Income Tax (3) | ($7,338) |
Net Income | $22,012 |
Table (7)
Explanation of Solution
Last-in-Last-Out: In Last-in-First-Out method, the costs of last purchased items are considered as the cost of goods sold, for the items which are sold first. The value of the closing stock consists of the initial purchased items.
(3) Calculate income tax expense amount:
a. 3
Compute the cost of goods sold and the ending inventory under weighted average cost flow method.
a. 3
Answer to Problem 32P
Compute the cost of goods sold and the ending inventory under weighted average cost flow method as follows:
Weighted average | Units | Unit Cost | Total cost |
Cost of goods sold | 410 | $154.43 (4) | $63,318 |
Ending inventory | 120 | $154.43 (4) | 18,532 |
Table (8)
Compute the income tax expense under weighted average cost flow method as follows:
Computation of Income Tax Expense and Net Income | |
Particulars | LIFO |
Sales (1) | $131,200 |
Less: Cost of Goods Sold | $63,318 |
Gross Margin | $67,882 |
Less: Salaries Expense | $38,000 |
Income Before Tax | $29,882 |
Less: Income Tax (5) | ($7,471) |
Net Income | $22,411 |
Table (9)
Explanation of Solution
Weighted-average cost method: Under Weighted average cost method, the company calculates a new average cost after every purchase is made. It is determined by dividing the cost of goods available for sale by the units on hand.
(4) Determine average unit cost:
(5) Calculate income tax expense amount:
b.
Show the 2018’s income statement, balance sheet and statement of
b.
Explanation of Solution
Financial statement: The financial statement records and shows all the financial status of the business. The financial statement consists of the balance sheet, income statement, statement of
Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.
Prepare the 2018’s income statement of Company W under each cost flow method as follows:
Company W | |||
Income Statements | |||
For Year Ended December 31, 2018 | |||
Particulars | FIFO | LIFO | Weighted average |
Sales | $131,200 | $131,200 | $131,200 |
Less: Cost of Goods Sold | ($62,650) | ($63,850) | ($63,318) |
Gross Margin | $68,550 | $67,350 | $67,882 |
Less: Salaries Expense | ($38,000) | ($38,000) | ($38,000) |
Income Before Tax | $30,550 | $29,350 | $29,882 |
Less: Income Tax Expense | ($7,638) | ($7,338) | ($7,471) |
Net Income | $22,912 | $22,012 | $22,411 |
Table (13)
Balance sheet: A balance sheet is a financial statement consists of the assets, liabilities, and the
Prepare the 2018’s Balance sheet of Company W under each cost flow method as follows:
Company W | |||
Balance sheet | |||
For Year Ended December 31, 2018 | |||
Particulars | FIFO | LIFO | Weighted average |
Assets: | |||
Cash | $116,812 | $117,112 | $116,979 |
Inventory | $19,200 | $18,000 | $18,532 |
Total Assets | $136,012 | $135,112 | $135,511 |
Stockholders’ Equity | |||
Common Stock | $50,000 | $50,000 | $50,000 |
Retained Earnings | $86,012 | $85,112 | $85,511 |
Total Stockholders’ Equity | $136,012 | $135,112 | $135,511 |
Table (14)
Statement of cash flows: Statement of cash flows reports all the cash transactions which are responsible for inflow and outflow of cash and result of these transactions is reported as ending balance of cash at the end of reported period. Statement of cash flows includes the changes in cash balance due to operating, investing, and financing activities.
Prepare the 2018’s statement of cash flows of Company W under each cost flow method:
Company W | |||
Statement of cash flows | |||
For Year Ended December 31, 2018 | |||
Particulars | FIFO | LIFO | Weighted average |
Cash Flows From Operating Activities: | |||
$131,200 | $131,200 | $131,200 | |
Less: | $48,850 | $48,850 | $48,850 |
Cash Outflow for Salaries Expense | ($38,000) | ($38,000) | ($38,000) |
Cash Outflow for Income Tax expense | ($7,638) | ($7,338) | ($7,471) |
Net Cash Flow from Operating Activities | $36,712 | $37,012 | $36,879 |
Cash Flows From Investing Activities: | $0 | $0 | $0 |
Cash Flows From Financing Activities: | $0 | $0 | $0 |
Net Change in Cash | $36,712 | $37,012 | $36,879 |
Add: Beginning Cash Balance | $80,100 | $80,100 | $80,100 |
Ending Cash Balance | $116,812 | $117,112 | $116,979 |
Table (15)
Working Note:
Record the events in an
Event | Assets | = | Stockholders’ Equity | |||
Cash | + | Inventory | = | Common Stock | Retained Earnings | |
FIFO Cost Flow | ||||||
Beginning Balance | $80,100 | + | $33,000 | = | $50,000 | $63,100 |
1. First Purchase | (23,250) | + | 23,250 | = | ||
2. Second Purchase | (25,600) | + | 25,600 | = | ||
3a. Sale of Inventory | 131,200 | + | = | 131,200 | ||
3b. Cost of Goods Sold | + | (62,650) | = | (62,650) | ||
4. Paid Salary Expense | (38,000) | + | = | (38,000) | ||
5. Paid Income Tax expense | (7,638) | + | = | (7,638) | ||
Totals | $116,812 | + | $19,200 | = | $50,000 | $86,012 |
LIFO Cost Flow | ||||||
Beginning Balance | $80,100 | + | $33,000 | = | $50,000 | $63,100 |
1. First Purchase | (23,250) | + | 23,250 | = | ||
2. Second Purchase | (25,600) | + | 25,600 | = | ||
3a. Sale of Inventory | 131,200 | + | = | 131,200 | ||
3b. Cost of Goods Sold | + | (63,850) | = | (63,850) | ||
4. Paid Operating Expenses | (38,000) | + | = | (38,000) | ||
5. Paid Income Tax expense | (7,338) | + | = | (7,338) | ||
Totals | $117,112 | + | $18,000 | = | $50,000 | $85,112 |
Weighted Average | ||||||
Beginning Balance | $80,100 | + | $33,000 | = | $50,000 | $63,100 |
1. First Purchase | (23,250) | + | 23,250 | = | ||
2. Second Purchase | (25,600) | + | 25,600 | = | ||
3a. Sale of Inventory | 131,200 | + | = | 131,200 | ||
3b. Cost of Goods Sold | + | (63,318) | = | (63,318) | ||
4. Paid Operating Expenses | (38,000) | + | = | (38,000) | ||
5. Paid Income Tax | (7,471) | + | = | (7,471) | ||
Totals | $116,979 | + | $18,532 | = | $50,000 | $85,511 |
Table (16)
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Chapter 5 Solutions
SURVEY OF ACCOUNTING >C<
- The following transactions were completed by Hammond Auto Supply during January, which is the first month of this fiscal year. Terms of sale are 2/10, n/30. The balances of the accounts as of January 1 have been recorded in the general ledger in your Working Papers or in CengageNow. Hammond Auto Supply does not track cash sales by customer. Jan. 2Issued Ck. No. 6981 to JSS Management Company for monthly rent, 775. 2J. Hammond, the owner, invested an additional 3,500 in the business. 4Bought merchandise on account from Valencia and Company, invoice no. A691, 2,930; terms 2/10, n/30; dated January 2. 4Received check from Vega Appliance for 980 in payment of 1,000 invoice less discount. 4Sold merchandise on account to L. Paul, invoice no. 6483, 850. 6Received check from Petty, Inc., 637, in payment of 650 invoice less discount. 7Issued Ck. No. 6982, 588, to Fischer and Son, in payment of invoice no. C1272 for 600 less discount. 7Bought supplies on account from Doyle Office Supply, invoice no. 1906B, 108; terms net 30 days. 7Sold merchandise on account to Ellison and Clay, invoice no. 6484, 787. 9Issued credit memo no. 43 to L. Paul, 54, for merchandise returned. 11Cash sales for January 1 through January 10, 4,863.20. 11Issued Ck. No. 6983, 2,871.40, to Valencia and Company, in payment of 2,930 invoice less discount. 14Sold merchandise on account to Vega Appliance, invoice no. 6485, 2,050. Jan. 18Bought merchandise on account from Costa Products, invoice no. 7281D, 4,854; terms 2/10, n/60; dated January 16; FOB shipping point, freight prepaid and added to the invoice, 147 (total 5,001). 21Issued Ck. No. 6984, 194, to M. Miller for miscellaneous expenses not recorded previously. 21Cash sales for January 11 through January 20, 4,591. 23Issued Ck. No. 6985 to Forbes Freight, 96, for freight charges on merchandise purchased on January 4. 23Received credit memo no. 163, 376, from Costa Products for merchandise returned. 29Sold merchandise on account to Bruce Supply, invoice no. 6486, 1,835. 31Cash sales for January 21 through January 31, 4,428. 31Issued Ck. No. 6986, 53, to M. Miller for miscellaneous expenses not recorded previously. 31Recorded payroll entry from the payroll register: total salaries, 6,200; employees federal income tax withheld, 872; FICA Social Security tax withheld, 384.40, FICA Medicare tax withheld, 89.90. 31Recorded the payroll taxes: Social Security tax, 384.40, FICA Medicare tax, 89.90; state unemployment tax, 334.80; federal unemployment tax, 37.20. 31Issued Ck. No. 6987, 4,853.70, for salaries for the month. 31J. Hammond, the owner, withdrew 1,000 for personal use, Ck. No. 6988. Required 1. Record the transactions for January using a sales journal, page 73; a purchases journal, page 56; a cash receipts journal, page 38; a cash payments journal, page 45; and a general journal, page 100. Assume the periodic inventory method is used. 2. Post daily all entries involving customer accounts to the accounts receivable ledger. 3. Post daily all entries involving creditor accounts to the accounts payable ledger. 4. Post daily those entries involving the Other Accounts columns and the general journal to the general ledger. Write the owners name in the Capital and Drawing accounts. 5. Add the columns of the special journals and prove the equality of the debit and credit totals. 6. Post the appropriate totals of the special journals to the general ledger. 7. Prepare a trial balance. 8. Prepare a schedule of accounts receivable and a schedule of accounts payable. Do the totals equal the balances of the related controlling accounts?arrow_forwardThe following transactions were completed by Hammond Auto Supply during January, which is the first month of this fiscal year. Terms of sale are 2/10, n/30. The balances of the accounts as of January 1 have been recorded in the general ledger in your Working Papers or in CengageNow. Hammond Auto Supply does not track cash sales by customer. Jan. 2Issued Ck. No. 6981 to JSS Management Company for monthly rent, 775. 2J. Hammond, the owner, invested an additional 3,500 in the business. 4Bought merchandise on account from Valencia and Company, invoice no. A691, 2,930; terms 2/10, n/30; dated January 2. 4Received check from Vega Appliance for 980 in payment of 1,000 invoice less discount. 4Sold merchandise on account to L. Paul, invoice no. 6483, 850. 6Received check from Petty, Inc., 637, in payment of 650 invoice less discount. 7Issued Ck. No. 6982, 588, to Fischer and Son, in payment of invoice no. C1272 for 600 less discount. 7Bought supplies on account from Doyle Office Supply, invoice no. 1906B, 108; terms net 30 days. 7Sold merchandise on account to Ellison and Clay, invoice no. 6484, 787. 9Issued credit memo no. 43 to L. Paul, 54, for merchandise returned. 11Cash sales for January 1 through January 10, 4,863.20. 11Issued Ck. No. 6983, 2,871.40, to Valencia and Company, in payment of 2,930 invoice less discount. 14Sold merchandise on account to Vega Appliance, invoice no. 6485, 2,050. Jan. 18Bought merchandise on account from Costa Products, invoice no. 7281D, 4,854; terms 2/10, n/60; dated January 16; FOB shipping point, freight prepaid and added to the invoice, 147 (total 5,001). 21Issued Ck. No. 6984, 194, to M. Miller for miscellaneous expenses not recorded previously. 21Cash sales for January 11 through January 20, 4,591. 23Issued Ck. No. 6985 to Forbes Freight, 96, for freight charges on merchandise purchased on January 4. 23Received credit memo no. 163, 376, from Costa Products for merchandise returned. 29Sold merchandise on account to Bruce Supply, invoice no. 6486, 1,835. 31Cash sales for January 21 through January 31, 4,428. 31Issued Ck. No. 6986, 53, to M. Miller for miscellaneous expenses not recorded previously. 31Recorded payroll entry from the payroll register: total salaries, 6,200; employees federal income tax withheld, 872; FICA Social Security tax withheld, 384.40, FICA Medicare tax withheld, 89.90. 31Recorded the payroll taxes: Social Security tax, 384.40, FICA Medicare tax, 89.90; state unemployment tax, 334.80; federal unemployment tax, 37.20. 31Issued Ck. No. 6987, 4,853.70, for salaries for the month. 31J. Hammond, the owner, withdrew 1,000 for personal use, Ck. No. 6988. Required 1. Record the transactions in the general journal for January. If you are using Working Papers, start with page 1 in the journal. Assume the periodic inventory method is used. The chart of accounts is as follows: 2. Post daily all entries involving customer accounts to the accounts receivable ledger. 3. Post daily all entries involving creditor accounts to the accounts payable ledger. 4. Post daily the general journal entries to the general ledger. Write the owners name in the Capital and Drawing accounts. 5. Prepare a trial balance. 6. Prepare a schedule of accounts receivable and a schedule of accounts payable. Do the totals equal the balances of the related controlling accounts?arrow_forwardKrespy Corp. has a cash balance of $7,500 before the following transactions occur: A. received customer payments of $965 B. supplies purchased on account $435 C. services worth $850 performed, 25% is paid in cash the rest will be billed D. corporation pays $275 for an ad in the newspaper E. bill is received for electricity used $235. F. dividends of $2,500 are distributed What is the balance in cash after these transactions are journalized and posted?arrow_forward
- Analyzing the Accounts The controller for Summit Sales Inc. provides the following information on transactions that occurred during the year: a. Purchased supplies on credit, $18,600 b. Paid $14,800 cash toward the purchase in Transaction a c. Provided services to customers on credit1 $46,925 d. Collected $39,650 cash from accounts receivable e. Recorded depreciation expense, $8,175 f. Employee salaries accrued, $15,650 g. Paid $15,650 cash to employees for salaries earned h. Accrued interest expense on long-term debt, $1,950 i. Paid a total of $25,000 on long-term debt, which includes $1.950 interest from Transaction h j. Paid $2,220 cash for l years insurance coverage in advance k. Recognized insurance expense, $1,340, that was paid in a previous period l. Sold equipment with a book value of $7,500 for $7,500 cash m. Declared cash dividend, $12,000 n. Paid cash dividend declared in Transaction m o. Purchased new equipment for $28,300 cash. p. Issued common stock for $60,000 cash q. Used $10,700 of supplies to produce revenues Summit Sales uses the indirect method to prepare its statement of cash flows. Required: 1. Construct a table similar to the one shown at the top of the next page. Analyze each transaction and indicate its effect on the fundamental accounting equation. If the transaction increases a financial statement element, write the amount of the increase preceded by a plus sign (+) in the appropriate column. If the transaction decreases a financial statement element, write the amount of the decrease preceded by a minus sign (-) in the appropriate column. 2. Indicate whether each transaction results in a cash inflow or a cash outflow in the Effect on Cash Flows column. If the transaction has no effect on cash flow, then indicate this by placing none in the Effect on Cash Flows column. 3. For each transaction that affected cash flows, indicate whether the cash flow would be classified as a cash flow from operating activities, cash flow from investing activities, or cash flow from financing activities. If there is no effect on cash flows, indicate this as a non-cash activity.arrow_forwardIf a customer owed your company $100 on the first day of the month, then purchased $200 of goods on credit on the fifth and paid you $50 on fifteenth, the customers ending balance for the month would show a (debit or credit) of how much?arrow_forwardOn January 1, Incredible Infants sold goods to Babies Inc. for $1,540, terms 30 days, and received payment on January 18. Which journal would the company use to record this transaction on the 18th? A. sales journal B. purchases journal C. cash receipts journal D. cash disbursements journal E. general journalarrow_forward
- The transactions completed by AM Express Company during March 2016, the first month of the fiscal year, were as follows: Instructions 1. Enter the following account balances in the general ledger as of March 1: 2. Journalize the transactions for March 2016, using the following journals similar to those illustrated in this chapter: single-column revenue journal (p. 35), cash receipts journal (p. 31), purchases journal (p. 37, with columns for Accounts Payable, Maintenance Supplies, Office Supplies, and Other Accounts), cash payments journal (p. 34), and two-column general journal (p. 1). Assume that the daily postings to the individual accounts in the accounts payable subsidiary ledger and the accounts receivable subsidiary ledger have been made. 3. Post the appropriate individual entries to the general ledger. 4. Total each of the columns of the special journals, and post the appropriate totals to the general ledger; insert the account balances. 5. Prepare a trial balance.arrow_forwardThe transactions completed by Revere Courier Company during December 2016, the first month of the fiscal year, were as follows: Instructions 1. Enter the following account balances in the general ledger as of December 1: 2. Journalize the transactions for December 2016, using the following journals similar to those illustrated in this chapter: cash receipts journal (p. 31), purchases journal (p. 37, with columns for Accounts Payable, Maintenance Supplies, Office Supplies, and Other Accounts), single-column revenue journal (p. 35), cash payments journal (p. 34), and two-column general journal (p. 1). Assume that the daily postings to the individual accounts in the accounts payable subsidiary ledger and the accounts receivable subsidiary ledger have been made. 3. Post the appropriate individual entries to the general ledger. 4. Total each of the columns of the special journals, and post the appropriate totals to the general ledger; insert the account balances. 5. Prepare a trial balance.arrow_forwardThe following transactions were completed by Yang Restaurant Equipment during January, the first month of this fiscal year. Terms of sale are 2/10, n/30. The balances of the accounts as of January 1 have been recorded in the general ledger in your Working Papers or in CengageNow. Yang Restaurant Equipment does not track cash sales by customer. Jan. 2Issued Ck. No. 6981 to Tri-County Management Company for monthly rent, 850. 2L. Yang, the owner, invested an additional 4,500 in the business. 4Bought merchandise on account from Valentine and Company, invoice no. A694, 2,830; terms 2/10, n/30; dated January 2. 4Received check from Velez Appliance for 980 in payment of invoice for 1,000 less discount. 4Sold merchandise on account to L. Parrish, invoice no. 6483, 755. 6Received check from Peck, Inc., 637, in payment of 650 invoice less discount. 7Issued Ck. No. 6982, 588, to Frost and Son, in payment of invoice no. C127 for 600 less discount. 7Bought supplies on account from Dudley Office Supply, invoice no. 190B, 93.54; terms net 30 days. 7Sold merchandise on account to Ewing and Charles, invoice no. 6484, 1,115. 9Issued credit memo no. 43 to L. Parrish, 47, for merchandise returned. 11Cash sales for January 1 through January 10, 4,454.87. 11Issued Ck. No. 6983, 2,773.40, to Valentine and Company, in payment of 2,830 invoice less discount. 14Sold merchandise on account to Velez Appliance, invoice no. 6485, 2,100. 14Received check from L. Parrish, 693.84, in payment of 755 invoice, less return of 47 and less discount. Jan. 19Bought merchandise on account from Crawford Products, invoice no. 7281, 3,700; terms 2/10, n/60; dated January 16; FOB shipping point, freight prepaid and added to invoice, 142 (total 3,842). 21Issued Ck. No. 6984, 245, to A. Bautista for miscellaneous expenses not recorded previously. 21Cash sales for January 11 through January 20, 3,689. 23Received credit memo no. 163, 87, from Crawford Products for merchandise returned. 29Sold merchandise on account to Bradford Supply, invoice no. 6486, 1,697.20. 29Issued Ck. No. 6985 to Western Freight, 64, for freight charges on merchandise purchased January 4. 31Cash sales for January 21 through January 31, 3,862. 31Issued Ck. No. 6986, 65, to M. Pineda for miscellaneous expenses not recorded previously. 31Recorded payroll entry from the payroll register: total salaries, 5,899.95; employees federal income tax withheld, 795; FICA Social Security tax withheld, 365.80, FICA Medicare tax withheld, 85.50. 31Recorded the payroll taxes: FICA Social Security tax, 365.80; FICA Medicare tax, 85.50; state unemployment tax, 318.60; federal unemployment tax, 35.40. 31Issued Ck. No. 6987, 4,653.65, for salaries for the month. 31L. Yang, the owner, withdrew 1,000 for personal use, Ck. No. 6988. Required 1. Record the transactions in the general journal for January. If you are using Working Papers, start with page 1 in the journal. Assume the periodic inventory method is used. The chart of accounts is as follows: 2. Post daily all entries involving customer accounts to the accounts receivable ledger. 3. Post daily all entries involving creditor accounts to the accounts payable ledger. 4. Post daily the general journal entries to the general ledger. Write the owners name in the Capital and Drawing accounts. 5. Prepare a trial balance. 6. Prepare a schedule of accounts receivable and a schedule of accounts payable. Do the totals equal the balances of the related controlling accounts?arrow_forward
- The following transactions were completed by Yang Restaurant Equipment during January, the first month of this fiscal year. Terms of sale are 2/10, n/30. The balances of the accounts as of January 1 have been recorded in the general ledger in your Working Papers or in CengageNow. Yang Restaurant Equipment does not track cash sales by customer. Jan. 2Issued Ck. No. 6981 to Tri-County Management Company for monthly rent, 850. 2L. Yang, the owner, invested an additional 4,500 in the business. 4Bought merchandise on account from Valentine and Company, invoice no. A694, 2,830; terms 2/10, n/30; dated January 2. 4Received check from Velez Appliance for 980 in payment of invoice for 1,000 less discount. 4Sold merchandise on account to L. Parrish, invoice no. 6483, 755. 6Received check from Peck, Inc., 637, in payment of 650 invoice less discount. 7Issued Ck. No. 6982, 588, to Frost and Son, in payment of invoice no. C127 for 600 less discount. 7Bought supplies on account from Dudley Office Supply, invoice no. 190B, 93.54; terms net 30 days. 7Sold merchandise on account to Ewing and Charles, invoice no. 6484, 1,115. 9Issued credit memo no. 43 to L. Parrish, 47, for merchandise returned. 11Cash sales for January 1 through January 10, 4,454.87. 11Issued Ck. No. 6983, 2,773.40, to Valentine and Company, in payment of 2,830 invoice less discount. 14Sold merchandise on account to Velez Appliance, invoice no. 6485, 2,100. 14Received check from L. Parrish, 693.84, in payment of 755 invoice, less return of 47 and less discount. Jan. 19Bought merchandise on account from Crawford Products, invoice no. 7281, 3,700; terms 2/10, n/60; dated January 16; FOB shipping point, freight prepaid and added to invoice, 142 (total 3,842). 21Issued Ck. No. 6984, 245, to A. Bautista for miscellaneous expenses not recorded previously. 21Cash sales for January 11 through January 20, 3,689. 23Received credit memo no. 163, 87, from Crawford Products for merchandise returned. 29Sold merchandise on account to Bradford Supply, invoice no. 6486, 1,697.20. 29Issued Ck. No. 6985 to Western Freight, 64, for freight charges on merchandise purchased January 4. 31Cash sales for January 21 through January 31, 3,862. 31Issued Ck. No. 6986, 65, to M. Pineda for miscellaneous expenses not recorded previously. 31Recorded payroll entry from the payroll register: total salaries, 5,899.95; employees federal income tax withheld, 795; FICA Social Security tax withheld, 365.80, FICA Medicare tax withheld, 85.50. 31Recorded the payroll taxes: FICA Social Security tax, 365.80; FICA Medicare tax, 85.50; state unemployment tax, 318.60; federal unemployment tax, 35.40. 31Issued Ck. No. 6987, 4,653.65, for salaries for the month. 31L. Yang, the owner, withdrew 1,000 for personal use, Ck. No. 6988. Required 1. Record the transactions for January using a sales journal, page 91; a purchases journal, page 74; a cash receipts journal, page 56; a cash payments journal, page 63; and a general journal, page 119. Assume the periodic inventory method is used. 2. Post daily all entries involving customer accounts to the accounts receivable ledger. 3. Post daily all entries involving creditor accounts to the accounts payable ledger. 4. Post daily those entries involving the Other Accounts columns and the general journal to the general ledger. Write the owners name in the Capital and Drawing accounts. 5. Add the columns of the special journals and prove the equality of the debit and credit totals. 6. Post the appropriate totals of the special journals to the general ledger. 7. Prepare a trial balance. 8. Prepare a schedule of accounts receivable and a schedule of accounts payable. Do the totals equal the balances of the related controlling accounts?arrow_forwardMillennial Manufacturing has net credit sales for 2018 in the amount of $1,433,630, beginning accounts receivable balance of $585,900, and an ending accounts receivable balance of $621,450. Compute the accounts receivable turnover ratio and the number of days sales in receivables ratio for 2018 (round answers to two decimal places). What do the outcomes tell a potential investor about Millennial Manufacturing if industry average is 2.6 times and number of days sales ratio is 180 days?arrow_forwardTransaction Analysis Pollys Cards $ Gifts Shop had the following transactions during the year: Pollys purchased inventory on account from a supplier for $8,000. Assume that Pollys uses a periodic inventory system. On May 1, land was purchased for $44,500. A 20% down payment was made, and an 18-month, 8% note was signed for the remainder. Pollys returned $450 worth of inventory purchased in (a), which was found broken when the inventory was received. Pollys paid the balance due on the purchase of inventory. On June 1, Polly signed a one-year, $15,000 note to First State Bank and received $13,800. Pollys sold 200 gift certificates for $25 each for cash. Sales of gift certificates are recorded as a liability. At year-end, 35% of the gift certificates had been redeemed. Sales for the year were $120,000, of which 90% were for cash. State sales tax of 6% applied to all sales must be remitted to the state by January 31. Required Record all necessary journal entries relating to these transactions. Assume that Pollys accounting year ends on December 31. Prepare any necessary adjusting journal entries. What is the total of the current liabilities at the end of the year?arrow_forward
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