Exercise 6-1 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 $300,170. Discussions with the accountant reveal the following. 1. Josef sold goods costing $32,620 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 $90,030 that were shipped to Josef FOB destination on December 27 and were still in transit at year-end. 3. Josef received goods costing $23,150 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 $47,760 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 $46,410 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 $300,170. Determine the correct inventory amount on December 31. $ The correct inventory amount Exercise 6-7 Lisa Company had 241 units in beginning inventory at a total cost of $28,438. The company purchased 482 units at a total cost of $73,746. At the end of the year, Lisa had 193 units in ending inventory. (a) Compute the cost of the ending inventory and the cost of goods sold under FIFO, LIFO, and average-cost. (Round average-cost per unit and final answers to 0 decimal places, e.g. 1,250.) FIFO The cost of the ending inventory The cost of goods sold $ LIFO $ Average-cost $ $ $ $ Brief Exercise 5-1 Presented below are the components in Gates Company’s income statement. Determine the missing amounts. Sales Revenue (a) $76,120 (b) $112,920 Cost of Goods Sold Gross Profit $ $73,680 $34,460 $ Operating Expenses Net Income $ $ $12,300 $24,560 $ (c) $78,140 $87,110 $ $42,960 Exercise 5-14 Financial information is presented below for three different companies. Determine the missing amounts. Allen Cosmetics Sales revenue $93,060 Sales returns and allowances Bast Grocery $ (e) (a) Net sales 86,980 Cost of goods sold 56,480 Gross profit 5,550 13,440 (i) (f) (j) 39,680 19,340 25,230 (g) (c) 3,400 Net income $134,750 96,820 (b) Operating expenses Income from operations Other expenses and losses Corr Wholesalers 18,120 (h) (k) 7,650 (d) (l) 12,970 4,560 Exercise 4-8 Plevin Company ended its fiscal year on July 31, 2014. The company’s adjusted trial balance as of the end of its fiscal year is as shown below. PLEVIN COMPANY Adjusted Trial Balance July 31, 2014 No. Account Titles 101 Cash 112 Accounts Receivable 157 Equipment 158 Accumulated Depreciation— Equip. 201 Accounts Payable 208 Unearned Rent Revenue 301 Owner’s Capital 306 Owner’s Drawings 400 Service Revenue 429 Rent Revenue 711 Depreciation Expense 726 Salaries and Wages Expense Debit Credit $9,840 8,780 15,900 $7,400 4,220 1,800 45,200 16,000 64,000 6,500 8,000 55,700 732 Utilities Expense 14,900 Total $129,120 $129,120 Prepare the closing entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit July 31 (To close revenue accounts.) July 31 (To close expense accounts.) July 31 (To close net income / ( loss).) July 31 (To close drawings.) SHOW LIST OF ACCOUNTS SHOW ANSWER LINK TO TEXT Post to Owner’s Capital and Income Summary accounts. (Post entries in the order of journal entries presented in the previous part.) Owner’s Capital Date Explanation No. 301 Ref Debit Credit Balance July 31 J15 July 31 J15 July 31 J15 Income Summary Date No. 350 Explanation Ref July 31 J15 July 31 J15 July 31 J15 Debit Prepare a post-closing trial balance at July 31. PLEVIN COMPANY Post-Closing Trial Balance July 31, 2014 Debit Total Credit $ $ $ $ Credit Balance
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