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
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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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