ACC 557 Homework 2 Chapter 4, 5 and 6
ACC 557 Homework 2 Chapter 4, 5
and 6
Due Week 4 and worth
105 points
Directions: Answer the
following questions on a separate Microsoft Word or Excel document. Explain how
you reached the answer or show your work if a mathematical calculation is
needed, or both. Submit your assignment using the assignment link in Blackboard.
Exercises
E4-7. Kay Magill Company had the following
adjusted trial balance.
Instructions
1.
Prepare closing
entries at June 30, 2015.
2.
Prepare a post-closing
trial balance.
E4-13. Keenan Company has an inexperienced
accountant. During the first 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
1.
Prepare separate
entries for each transaction on the books of Tuzun Company.
2.
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
1.
Prepare the adjusting
entry necessary as a result of the physical count.
2.
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 Josef’s 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 Josef’s 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.
Instructions
1.
Compute the cost of
the ending inventory and the cost of goods sold under (1) FIFO and (2) LIFO.
2.
Which costing method
gives the higher ending inventory? Why?
3.
Which method results
in the higher cost of goods sold? Why?
Problems
P4-3A.The completed financial statement columns of
the worksheet for Fleming Company are shown on below.
Instructions
1.
Prepare an income
statement, a retained earnings statement, and a classified balance sheet.
2.
Prepare the closing
entries.
3.
Post the closing
entries and underline and balance the accounts. (Use T-accounts.) Income
Summary is account No. 350.
4.
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 Gray’s
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
Gray’s 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 Gray’s
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 Hardware’s
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
1.
Journalize the
transactions using a perpetual inventory system.
2.
Enter the beginning
cash and common stock balances and post the transactions. (Use J1 for the
journal reference.)
3.
Prepare an income
statement through gross profit 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
1.
Determine the cost of
goods available for sale.
2.
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.
3.
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?
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