ACC 557 Homework 2 Chapters 4 5 and 6

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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.




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