| Instructions: |
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| You have just landed at temporary assignment at a small retail company in your area. The accountant, who had |
| completed the books through the end of November, went out on maternity leave during the first week of December. |
| The task you have been given is to take the ending Trial Balance for November, prepare December transactions, |
| prepare the December financials, and close the books. |
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| The manager of the company has indicated that salaries, rent and depreciation for December are the same as the |
| 11 months preceding (employees are paid at the end of the month). Additional transaction information follows: |
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| December Advertising = $900 |
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December Utilities = $700 |
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| December Communications = $500 |
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| The manager is pretty sure that they use LIFO for inventory, but it could be FIFO. Given the November transactions, |
| determine which of the two methods is used. Then, use that same method to value ending inventory for December. |
| Compute December Sales and Cost of Goods Sold, as well, and prepare the journal entries. Assume all inventory |
| purchases are on credit. Also assume 80% of Sales are credit sales and the rest are for cash. |
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| November |
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December |
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| 11 - 01 |
begin with 500 units @ $22.00 each |
12 - 01 |
begin with 1,350 units @ $36,000 |
| 11 - 03 |
sold 250 units @ $35.00 each |
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12 - 04 |
sold 350 units @ $38.00 each |
| 11 - 05 |
purch 500 units @ $23.00 each |
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12 - 10 |
purch 500 units @ $29.00 each |
| 11 - 10 |
sold 250 units @ $36.00 each |
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12 - 13 |
sold 600 units @ $40.00 each |
| 11 - 15 |
purch 450 units @ $26.00 each |
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12 - 18 |
purch 600 units @ $31.00 each |
| 11 - 19 |
purch 300 units @ $28.00 each |
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12 - 20 |
sold 600 units @ $41.00 each |
| 11 - 23 |
sold 200 units @ $37.00 each |
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12 - 21 |
purch 400 units @ $30.00 each |
| 11 - 29 |
purch 300 units @ $30.00 each |
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12 - 24 |
sold 550 units @ $42.00 each |
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| During December, supplies purchased totaled $1,100. A physical count showed that there were $1,850 remaining |
| at the end of the year. Prepare the necessary adjusting entry. |
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| It was discovered that the insurance policy was renewed on December 1st; coverage will cost $6,720 for the next |
| 12 months. Prepare the necessary entries. |
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| Collected $18,500 in cash from previous sales on credit. Those customers received $350.00 in discounts. |
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