ACC 557 Homework 2: Chapter 4, 5, and 6
Strayer University
| Transaction | Debit | Credit | |
| Jun 30 | Service Revenue | 4,300 | |
| Income Summary | 4,300 | ||
| June 30 | Income Summary | 3,500 | |
| Salaries & wages Expense | 1,344 | ||
| Miscellaneous Expense | 256 | ||
| Supplies Expense | 1,900 | ||
| June 30 | Income Summary | 800 | |
| Retained Earnings | 800 | ||
| June 30 | Retained Earnings | 628 | |
| Dividend | 628 |
b) Prepare a post-closing trial balance.
| Transaction | Debit | Credit |
| Cash | 3,712 | |
| Accounts Receivable | 3,904 | |
| Supplies | 480 | |
| Accounts Payable | 1,556 | |
| Unearned Service Revenue | 160 | |
| Salaries & Wages Payable | 448 | |
| Common Stock | 4,000 | |
| Retained Earnings | 1,932 | |
| Total | 8096 | 8096 |
E4-13 Prepare the correcting entries.
| Transaction | Debit | Credit | |
| 1 | Accounts Payable | 360 | |
|---|---|---|---|
| Cash | 360 | ||
| 2 | Supplies | 560 | |
| Equipment | 56 | ||
| Accounts payable | 504 | ||
| 3 | Dividend | 500 | |
| Salaries & Wages Expense | 500 |
E5-4A Prepare separate entries for each transaction on the books of Tuzun Company.
| Date | Transactions | Debit | Credit |
|---|---|---|---|
| Jun 10 | Merchandise Inventory | 8,000 | |
| Accounts payable | 8,000 | ||
| Jun 11 | Merchandise Inventory | 400 | |
| Cash | 400 | ||
| Jun 12 | Accounts payable | 300 | |
| Merchandise Inventory | 300 | ||
| Jun 19 | Accounts payable | 7,700 | |
| Merchandise Inventory | 154 | ||
| Cash | 7,546 |
B) Prepare separate entries for each transaction for Epps Company. The merchandise purchased by Tuzun on June 10 had cost Epps $4,800.
| Date | Transactions | Debit | Credit |
|---|---|---|---|
| Jun 10 | Accounts Receivable | 8,000 | |
| Sales | 8,000 | ||
| Cost of Goods Sold | 4,800 | ||
| Merchandise Inventory | 4,800 | ||
| Jun 12 | Sales Return and Allowances | 300 | |
| Accounts Receivable | 300 | ||
| Merchandise Inventory | 70 | ||
| Cost of Goods Sold | 70 | ||
| Jun 19 | Cash | 7,546 | |
| Sales Discount | 154 | ||
| Accounts Receivable | 7,700 |
E5-7A Prepare the adjusting entry necessary as a result of the physical count.
| Transaction | Debit | Credit |
|---|---|---|
| Cost of Goods sold | 1,100 | |
| Inventory | 1,100 |
B) Prepare closing entries.
| Transactions | Debit | Credit |
|---|---|---|
| Sales | 115,000 | |
| Income Summary | 115,000 | |
| Income Summary | 93,000 | |
| Sales Discounts | 1,200 | |
| Sales return & Allowances | 1,700 | |
| Cost of Goods Sold | 61,100 | |
| Operating expenses | 29,000 | |
| Income Summary | 22,000 | |
| Retained Earnings | 22,000 |
E6-1 Determine the correct inventory amount on December 31.
1. Correct, not included in ending inventory
2. Correct, not included in ending inventory
3. Wrong, needs to be included in inventory
4. Wrong, needs to be included in inventory
5. Wrong, should not be included in inventory
E6-6A) Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO and (2) LIFO.
| Date | Transaction | Units | Per Unit | Total Cost |
|---|---|---|---|---|
| Jun 1 | Beg. Inventory | 200 | 5 | 1,000 |
| Jun 12 | Purchase | 400 | 6 | 2,400 |
| Jun 23 | Purchase | 300 | 7 | 2,100 |
| Total units Available for sale | 900 | 6.11 | 5500 |
B) Which costing method gives the higher ending inventory? Why?
FIFO method gives the higher ending inventory because it remained in ending inventory which is valued with the newest and highest cost.
C) Which method results in the higher cost of goods sold? Why?
LIFO method results in the higher cost of goods sold because it consists of latest price.
P4-3A Prepare an income statement, a retained earnings statement, and a classified balance sheet.
| Service Revenue | 60,000 | |
|---|---|---|
| Less Expenses | ||
| Maintenance & Repairs expenses | 1,600 | |
| Depreciation expense | 3,100 | |
| Insurance expense | 1,800 | |
| Salaries & wages expense | 30,000 | |
| Utilities expense | 1,400 | |
| Total expenses | 37,900 | |
| Net Income | 22,100 |
| Transaction | Debit | Credit |
|---|---|---|
| Opening Balance of Retained Earnings | 7,500 | |
| Add Net Income | 22,100 | |
| Less Dividend | (11,000) | |
| Closing Balance of Retained Earnings | 18,600 |
| Transactions | Debit | Credit |
|---|---|---|
| Assets | ||
| Cash | 8,900 | |
| Accounts Receivable | 10,800 | |
| Prepaid Insurance | 2,800 | |
| Total Current Assets | 22,500 | |
| Equipment | 24,000 | |
| Less Accumulated Depreciation | (4,500) | 19,500 |
| Total Assets | 42,000 | |
| Liabilities & shareholder’s equity | ||
| Accounts Payable | 9,000 | |
| Salaries & wages Payable | 2,400 | |
| Total Liabilities | 11,400 | |
| Common Stock | 12,000 | |
| Retained Earnings | 18,600 | 30,600 |
| Total Liabilities & Shareholder’s Equity | 42,000 |
B) Prepare the closing entries.
| Transaction | Debit | Credit |
|---|---|---|
| Sales | 60,000 | |
| Income Summary | 60,000 | |
| Income Summary | 37,900 | |
| Maintenance & Repairs expenses | 1,600 | |
| Depreciation expense | 3,100 | |
| Insurance expense | 1,800 | |
| Salaries & wages expense | 30,000 | |
| Utilities expense | 1,400 | |
| Income Summary | 22,100 | |
| Retained Earnings | 22,100 |
C) Post the closing entries and underline and balance the accounts. (Use T-accounts.) Income Summary is account No. 350.
D) Prepare a post-closing trial balance.
| Transaction | Debit | Credit |
|---|---|---|
| Cash | 8,900 | |
| Accounts Receivable | 10,800 | |
| Prepaid Insurance | 2,800 | |
| Equipment | 24,000 | |
| Accumulated Depreciation | 4,500 | |
| Accounts Payable | 9,000 | |
| Salaries & wages Payable | 2,400 | |
| Common Stock | 12,000 | |
| Retained Earnings | 18,600 | |
| Total | 46,500 | 46,500 |
P5-2A Journalize the transactions using a perpetual inventory system.
| Date | Transaction | Reference | Debit | Credit |
|---|---|---|---|---|
| May 1 | Merchandise inventory | 120 | 4200 | |
| Accounts Payable | 201 | 4200 | ||
| May 2 | Accounts Receivable | 112 | 2100 | |
| Sales | 401 | 2100 | ||
| Cost of goods Sold | 505 | 1300 | ||
| Merchandise Inventory | 120 | 1300 | ||
| May 5 | Accounts Payable | 201 | 300 | |
| Merchandise Inventory | 120 | 300 | ||
| May 9 | Cash | 101 | 2079 | |
| Sales discount | 414 | 21 | ||
| Accounts receivable | 112 | 2100 | ||
| May 10 | Accounts Payable | 201 | 3900 | |
| Merchandise Inventory | 120 | 78 | ||
| Cash | 101 | 3822 | ||
| May 11 | Supplies | 126 | 400 | |
| Cash | 101 | 400 | ||
| May 12 | Merchandise Inventory | 120 | 1400 | |
| Cash | 101 | 1400 | ||
| May 15 | Cash | 101 | 150 | |
| Merchandise Inventory | 120 | 150 | ||
| May 17 | Merchandise inventory | 120 | 1300 | |
| Accounts Payable | 201 | 1300 | ||
| May 19 | Merchandise inventory | 120 | 130 | |
| Cash | 101 | 130 | ||
| May 24 | Accounts Receivable | 112 | 3200 | |
| Sales | 401 | 3200 | ||
| Cost of goods Sold | 505 | 2000 | ||
| Merchandise Inventory | 120 | 2000 | ||
| May 25 | Merchandise inventory | 120 | 620 | |
| Cash | 101 | 620 | ||
| May 27 | Accounts Payable | 201 | 1300 | |
| Merchandise Inventory | 120 | 26 | ||
| Cash | 101 | 1274 | ||
| May 29 | Sales return & allowances | 412 | 70 | |
| Cash | 101 | 70 | ||
| Merchandise inventory | 120 | 30 | ||
| Cost of goods Sold | 505 | 30 | ||
| May 31 | Accounts Receivable | 112 | 1000 | |
| Sales | 401 | 1000 | ||
| Cost of goods Sold | 505 | 560 | ||
| Merchandise Inventory | 120 | 560 |
B) Enter the beginning cash and common stock balances and post the transactions. (Use J1 for the journal reference.)
| Cash | 101 | ||||
| Date | Transactions | Reference | Debit | Credit | Balance |
|---|---|---|---|---|---|
| May 1 | Balance | 5000 | |||
| May 9 | J1 | 2079 | 2921 | ||
| May 10 | J1 | 3822 | 6743 | ||
| May 11 | J1 | 400 | 7143 | ||
| May 12 | J1 | 1400 | 8543 | ||
| May 15 | J1 | 150 | 8393 | ||
| May 19 | J1 | 130 | 8523 | ||
| May 25 | J1 | 620 | 9143 | ||
| May 27 | J1 | 1274 | 10417 | ||
| May 29 | J1 | 70 | 10487 | ||
| Accounts Receivable | 112 | ||||
| Date | Transactions | Reference | Debit | Credit | Balance |
|---|---|---|---|---|---|
| May 2 | J1 | 2100 | 2100 | ||
| May 9 | J1 | 2100 | 0 | ||
| May 24 | J1 | 3200 | 3200 | ||
| May 31 | J1 | 1000 | 4200 | ||
| Merchandise Inventory | 120 | ||||
| Date | Transactions | Reference | Debit | Credit | Balance |
|---|---|---|---|---|---|
| May 1 | J1 | 4200 | 4200 | ||
| May 2 | J1 | 1300 | 2900 | ||
| May 5 | J1 | 300 | 2600 | ||
| May 10 | J1 | 78 | 2522 | ||
| May 12 | J1 | 1400 | 3922 | ||
| May 15 | J1 | 150 | 3772 | ||
| May 17 | J1 | 1300 | 5072 | ||
| May 19 | J1 | 130 | 5202 | ||
| May 24 | J1 | 2000 | 3202 | ||
| May 25 | J1 | 620 | 3822 | ||
| May 27 | J1 | 26 | 3796 | ||
| May 29 | J1 | 30 | 3826 | ||
| May 31 | J1 | 560 | 3266 | ||
| Accounts payable | 201 | ||||
| Date | Transactions | Reference | Debit | Credit | Balance |
|---|---|---|---|---|---|
| May 1 | J1 | 4200 | 4200 | ||
| May 5 | J1 | 300 | 3900 | ||
| May 10 | J1 | 3900 | 0 | ||
| May 17 | J1 | 1300 | 1300 | ||
| May 27 | J1 | 1300 | 0 | ||
| Capital | 301 | ||||
| Date | Transaction | Reference | Debit | Credit | Balance |
|---|---|---|---|---|---|
| May 1 | Balance | J1 | 5000 | 5000 | |
| Sales | 401 | ||||
| Date | Transactions | Reference | Debit | Credit | Balance |
|---|---|---|---|---|---|
| May 2 | J1 | 2100 | 2100 | ||
| May 24 | J1 | 3200 | 5300 | ||
| May 31 | J1 | 1000 | 6300 | ||
| Sales return & allowance | 412 | ||||
| Date | Transaction | Reference | Debit | Credit | Balance |
|---|---|---|---|---|---|
| May 29 | J1 | 70 | 70 | ||
| Sales Discount | 414 | ||||
| Date | Transaction | Reference | Debit | Credit | Balance |
|---|---|---|---|---|---|
| May 9 | J1 | 21 | 21 | ||
| Cost of Goods Sold | 505 | ||||
| Date | Transactions | Reference | Debit | Credit | Balance |
|---|---|---|---|---|---|
| May 2 | J1 | 1300 | 1300 | ||
| May 24 | J1 | 2000 | 3300 | ||
| May 29 | J1 | 30 | 3270 | ||
| May 31 | J1 | 560 | 3830 | ||
C) Prepare an income statement through gross profit for the month of May 2015.
| Sales | 60,000 | |
|---|---|---|
| Less sales return & allowances | (70) | |
| Sales Discount | (21) | |
| Net Sales | 59,909 | |
| Less Cost of Goods Sold | (3830) | |
| Gross Profit | 56,079 |
P6-3A Determine the cost of goods available for sale.
| Date | Transactions | Units | Per Unit | Total Cost |
|---|---|---|---|---|
| Jan 1 | Beginning Inventory | 150 | 20 | 3,000 |
| Mar 15 | Purchase | 400 | 23 | 9,200 |
| Jul 20 | Purchase | 250 | 24 | 6,000 |
| Sep 4 | Purchase | 350 | 26 | 9,100 |
| Dec 2 | Purchase | 100 | 29 | 2,900 |
| Total units Available for sale | 1250 | 24.16 | 30200 |
b)Determine (1) the ending inventory, and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods.
| Transactions | FIFO | LIFO | Average cost |
|---|---|---|---|
| Ending Inventory | 6,800 | 5,300 | 6,040 |
| Cost of Goods Sold | 23,400 | 24,900 | 24,160 |
c)Which cost flow method results in (1) the highest inventory amount for the balance sheet, and (2) the highest cost of goods sold for the income statement?
FIFO method results in higher Inventory amount for the Balance sheet and LIFO method shows the highest cost of goods sold for the income statement.
Place an Order
Plagiarism Free!
Create an Account
Create an account at Top Tutor Online
- Allows you to track orders.
- Receive personal messages.
- Send messages to a tutor.
Post a Question/ Assignment
Post your specific assignment
- Tutors will be notified of your assignment.
- Review your question and include all the details.
- A payment Link will be sent to you.
Wait for your Answer!
Make payment and wait for your answer
- Make payment in accordance with the number of pages to be written.
- Wait for your Answer as a professional works on your paper.
- You will be notified when your Answer is ready.