“Exercises

E4-7.Kay
Magill Company had the following adjusted trial balance.

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Instructions
a)
Prepare
closing entries at June 30, 2015.
b)
Prepare
a post-closing trial balance.

E4-13.Keenan
Company has an inexperienced accountant. During the rst 2 weeks on the job,
the accountant made the following errors in journalizing transactions. All
entries were posted as made.
1.
A
payment on account of $840 to a creditor was debited to Accounts Payable $480
and credited to Cash $480.
2.
The
purchase of supplies on account for $560 was debited to Equipment $56 and
credited to Accounts Payable $56.
3.
A
$500 cash dividend was debited to Salaries and Wages Expense $500 and credited
to Cash $500.

Instructions
Prepare
the correcting entries.

E5-4.On
June 10, Tuzun Company purchased $8,000 of merchandise from Epps Company, FOB
shipping point, terms 2/10, n/30. Tuzun pays the freight costs of $400 on June
11. Damaged goods totaling $300 are returned to Epps for credit on June 12. The
fair value of these goods is $70. On June 19, Tuzun pays Epps Company in full,
less the purchase discount. Both companies use a perpetual inventory system.

Instructions
a) Prepare separate entries for each
transaction on the books of Tuzun Company.
b) Prepare separate entries for each
transaction for Epps Company. The merchandise purchased by Tuzun on June 10 had
cost Epps $4,800.

E5-7.Juan
Morales Company had the following account balances at year-end: Cost of Goods
Sold $60,000, Inventory $15,000, Operating Expenses $29,000, Sales Revenue
$115,000, Sales Discounts $1,200, and Sales Returns and Allowances $1,700. A
physical count of inventory determines that merchandise inventory on hand is
$13,900.

Instructions
a)
Prepare
the adjusting entry necessary as a result of the physical count.
b)
Prepare
closing entries.

E6-1.Tri-State
Bank and Trust is considering giving Josef Company a loan. Before doing so,
management decides that further discussions with Josefs accountant may be
desirable. One area of particular concern is the inventory account, which has a
year-end balance of $297,000. Discussions with the accountant reveal the
following.
1.
Josef
sold goods costing $38,000 to Sorci Company, FOB shipping point, on December
28. The goods are not expected to arrive at Sorci until January 12. The goods
were not included in the physical inventory because they were not in the
warehouse.
2.
The
physical count of the inventory did not include goods costing $95,000 that were
shipped to Josef FOB destination on December 27 and were still in transit at
year-end.
3.
Josef
received goods costing $22,000 on January 2. The goods were shipped FOB
shipping point on December 26 by Solita Co. The goods were not included in the
physical count.
4.
Josef
sold goods costing $35,000 to Natali Co., FOB destination, on December 30. The
goods were received at Natali on January 8. They were not included in Josefs
physical inventory.
5.
Josef
received goods costing $44,000 on January 2 that were shipped FOB destination
on December 29. The shipment was a rush order that was supposed to arrive
December 31. This purchase was included in the ending inventory of $297,000.

Instructions
Determine
the correct inventory amount on December 31.

E6-6.Kaleta Company reports the following
for the month of June.
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Instructions
a) Compute the cost of the ending inventory
and the cost of goods sold under (1) FIFO and (2) LIFO.
b) Which costing method gives the
higher ending inventory? Why?
c) Which method results in the higher
cost of goods sold? Why?

Problems

P4-3A.The
completed nancial statement columns of the worksheet for Fleming Company are
shown on below.
.0/msohtmlclip1/01/clip_image006.png””>

Instructions
a)
Prepare
an income statement, a retained earnings statement, and a classied balance
sheet.
b)
Prepare
the closing entries.
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.

P5-2A.Latona
Hardware Store completed the following merchandising transactions in the month
of May. At the beginning of May, the ledger of Latona showed Cash of $5,000 and
Common Stock of $5,000.

May
1
Purchased merchandise on account from Grays Wholesale Supply $4,200,
terms 2/10, n/30.
2 Sold merchandise on
account $2,100, terms 1/10, n/30. The cost of the merchandise sold was $1,300.
5 Received credit from Grays Wholesale Supply for
merchandise returned $300.
9 Received
collections in full, less discounts, from customers billed on sales of $2,100
on May 2.
10 Paid Grays Wholesale Supply in full, less discount.
11 Purchased supplies for cash $400.
12 Purchased merchandise for cash $1,400.
15 Received refund
for poor quality merchandise from supplier on cash purchase $150.
17 Purchased
merchandise from Amland Distributors $1,300, FOB shipping point, terms 2/10, n/30.
19 Paid freight on May 17 purchase $130.
24 Sold merchandise for cash $3,200. The merchandise sold
had a cost of $2,000.
25 Purchased
merchandise from Horvath, Inc. $620, FOB destination, terms 2/10, n/30.
27 Paid Amland Distributors in full, less discount.
29 Made refunds to
cash customers for defective merchandise $70. The returned merchandise had a
fair value of $30.
31 Sold merchandise
on account $1,000 terms n/30. The cost of the merchandise sold was $560.

Latona
Hardwares chart of accounts includes the following: No. 101 Cash, No. 112
Accounts Receivable, No. 120 Inventory, No. 126 Supplies, No. 201 Accounts
Payable, No. 311 Common Stock, No. 401 Sales Revenue, No. 412 Sales Returns and
Allowances, No. 414 Sales Discounts, and No. 505 Cost of Goods Sold.

Instructions
a) Journalize the transactions using a
perpetual inventory system.
b) Enter the beginning cash and common
stock balances and post the transactions. (Use J1 for the journal reference.)
c) Prepare an income statement through
gross prot for the month of May 2015.

P6-3A.Ziad
Company had a beginning inventory on January 1 of 150 units of Product 4-18-15
at a cost of $20 per unit. During the year, the following purchases were made.

Mar. 15 400 units at $23 Sept.
4 350 units at $26
July 20 250 units at
$24 Dec. 2 100 units at $29

1,000
units were sold. Ziad Company uses a periodic inventory system.

Instructions
a)
Determine
the cost of goods available for sale.
b)
Determine
(1) the ending inventory, and (2) the cost of goods sold under each of the
assumed cost ow methods (FIFO, LIFO, and average-cost). Prove the accuracy of
the cost of goods sold under the FIFO and LIFO methods.
c)
Which
cost ow method results in (1) the highest inventory amount for the balance
sheet, and (2) the highest cost of goods sold for the income statement?
ExercisesE4-7.Kay
Magill Company had the following adjusted trial balance. .0/msohtmlclip1/01/clip_image002.png””>Instructionsa)
Prepare
closing entries at June 30, 2015.b)
Prepare
a post-closing trial balance.E4-13.Keenan
Company has an inexperienced accountant. During the rst 2 weeks on the job,
the accountant made the following errors in journalizing transactions. All
entries were posted as made.1.
A
payment on account of $840 to a creditor was debited to Accounts Payable $480
and credited to Cash $480.2.
The
purchase of supplies on account for $560 was debited to Equipment $56 and
credited to Accounts Payable $56.3.
A
$500 cash dividend was debited to Salaries and Wages Expense $500 and credited
to Cash $500.InstructionsPrepare
the correcting entries.E5-4.On
June 10, Tuzun Company purchased $8,000 of merchandise from Epps Company, FOB
shipping point, terms 2/10, n/30. Tuzun pays the freight costs of $400 on June
11. Damaged goods totaling $300 are returned to Epps for credit on June 12. The
fair value of these goods is $70. On June 19, Tuzun pays Epps Company in full,
less the purchase discount. Both companies use a perpetual inventory system.Instructionsa) Prepare separate entries for each
transaction on the books of Tuzun Company.b) Prepare separate entries for each
transaction for Epps Company. The merchandise purchased by Tuzun on June 10 had
cost Epps $4,800.E5-7.Juan
Morales Company had the following account balances at year-end: Cost of Goods
Sold $60,000, Inventory $15,000, Operating Expenses $29,000, Sales Revenue
$115,000, Sales Discounts $1,200, and Sales Returns and Allowances $1,700. A
physical count of inventory determines that merchandise inventory on hand is
$13,900.Instructionsa)
Prepare
the adjusting entry necessary as a result of the physical count.b)
Prepare
closing entries.E6-1.Tri-State
Bank and Trust is considering giving Josef Company a loan. Before doing so,
management decides that further discussions with Josefs accountant may be
desirable. One area of particular concern is the inventory account, which has a
year-end balance of $297,000. Discussions with the accountant reveal the
following.1.
Josef
sold goods costing $38,000 to Sorci Company, FOB shipping point, on December
28. The goods are not expected to arrive at Sorci until January 12. The goods
were not included in the physical inventory because they were not in the
warehouse.2.
The
physical count of the inventory did not include goods costing $95,000 that were
shipped to Josef FOB destination on December 27 and were still in transit at
year-end.3.
Josef
received goods costing $22,000 on January 2. The goods were shipped FOB
shipping point on December 26 by Solita Co. The goods were not included in the
physical count.4.
Josef
sold goods costing $35,000 to Natali Co., FOB destination, on December 30. The
goods were received at Natali on January 8. They were not included in Josefs
physical inventory.5.
Josef
received goods costing $44,000 on January 2 that were shipped FOB destination
on December 29. The shipment was a rush order that was supposed to arrive
December 31. This purchase was included in the ending inventory of $297,000.InstructionsDetermine
the correct inventory amount on December 31.
E6-6.Kaleta Company reports the following
for the month of June..0/msohtmlclip1/01/clip_image004.png””>Instructionsa) Compute the cost of the ending inventory
and the cost of goods sold under (1) FIFO and (2) LIFO.b) Which costing method gives the
higher ending inventory? Why?c) Which method results in the higher
cost of goods sold? Why?ProblemsP4-3A.The
completed nancial statement columns of the worksheet for Fleming Company are
shown on below..0/msohtmlclip1/01/clip_image006.png””>Instructionsa)
Prepare
an income statement, a retained earnings statement, and a classied balance
sheet.b)
Prepare
the closing entries.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.P5-2A.Latona
Hardware Store completed the following merchandising transactions in the month
of May. At the beginning of May, the ledger of Latona showed Cash of $5,000 and
Common Stock of $5,000.May
1
Purchased merchandise on account from Grays Wholesale Supply $4,200,
terms 2/10, n/30.2 Sold merchandise on
account $2,100, terms 1/10, n/30. The cost of the merchandise sold was $1,300.5 Received credit from Grays Wholesale Supply for
merchandise returned $300.9 Received
collections in full, less discounts, from customers billed on sales of $2,100
on May 2.10 Paid Grays Wholesale Supply in full, less discount.11 Purchased supplies for cash $400.12 Purchased merchandise for cash $1,400.15 Received refund
for poor quality merchandise from supplier on cash purchase $150.17 Purchased
merchandise from Amland Distributors $1,300, FOB shipping point, terms 2/10, n/30.19 Paid freight on May 17 purchase $130.24 Sold merchandise for cash $3,200. The merchandise sold
had a cost of $2,000.25 Purchased
merchandise from Horvath, Inc. $620, FOB destination, terms 2/10, n/30.27 Paid Amland Distributors in full, less discount.29 Made refunds to
cash customers for defective merchandise $70. The returned merchandise had a
fair value of $30.31 Sold merchandise
on account $1,000 terms n/30. The cost of the merchandise sold was $560.Latona
Hardwares chart of accounts includes the following: No. 101 Cash, No. 112
Accounts Receivable, No. 120 Inventory, No. 126 Supplies, No. 201 Accounts
Payable, No. 311 Common Stock, No. 401 Sales Revenue, No. 412 Sales Returns and
Allowances, No. 414 Sales Discounts, and No. 505 Cost of Goods Sold.Instructionsa) Journalize the transactions using a
perpetual inventory system.b) Enter the beginning cash and common
stock balances and post the transactions. (Use J1 for the journal reference.)c) Prepare an income statement through
gross prot for the month of May 2015.
P6-3A.Ziad
Company had a beginning inventory on January 1 of 150 units of Product 4-18-15
at a cost of $20 per unit. During the year, the following purchases were made.Mar. 15 400 units at $23 Sept.
4 350 units at $26July 20 250 units at
$24 Dec. 2 100 units at $291,000
units were sold. Ziad Company uses a periodic inventory system.Instructionsa)
Determine
the cost of goods available for sale.b)
Determine
(1) the ending inventory, and (2) the cost of goods sold under each of the
assumed cost ow methods (FIFO, LIFO, and average-cost). Prove the accuracy of
the cost of goods sold under the FIFO and LIFO methods.c)
Which
cost ow method results in (1) the highest inventory amount for the balance
sheet, and (2) the highest cost of goods sold for the income statement?”