Question

Comprehensive Accounting Cycle Review 6

On December 1, 2017, Carla Vista Co. had the account balances shown below.

		Debits				Credits
Cash		$4,640		Accumulated Depreciation—Equipment		$1,380
Accounts Receivable		3,760		Accounts Payable		2,900
Inventory (2,700 x $0.50)		1,350		Common Stock		10,800
Equipment		19,400		Retained Earnings		14,070
		$29,150				$29,150

The following transactions occurred during December.

Dec. 3		Purchased 3,700 units of inventory on account at a cost of $0.78 per unit.
5		Sold 4,100 units of inventory on account for $0.90 per unit. (It sold 2,700 of the $0.50 units and 1,400 of the $0.78.)
7		Granted the December 5 customer $270 credit for 300 units of inventory returned costing $240. These units were returned to inventory.
17		Purchased 2,200 units of inventory for cash at $0.80 each.
22		Sold 2,100 units of inventory on account for $0.88 per unit. (It sold 2,100 of the $0.78 units.)

Adjustment data:

1.		Accrued salaries and wages payable $400.
2.		Depreciation on equipment $200 per month.
3.		Income tax expense was $200, to be paid next year.

1-Journalize the December transactions and adjusting entries, assuming Carla Vista Co. uses the perpetual inventory method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)

2-Enter the December 1 balances in the ledger T-accounts and post the December transactions. (Post entries in the order of journal entries presented above.)

3-Prepare an adjusted trial balance as of December 31, 2017.

4-Prepare an income statement for December 2017.

5-Prepare a classified balance sheet at December 31, 2017. (List current assets in order of liquidity.)

6-(a) Compute ending inventory and cost of goods sold under FIFO, assuming Carla Vista Co. uses the periodic inventory system.

Ending Inventory		$
Cost of Goods Sold		$

(b) Compute ending inventory and cost of goods sold under LIFO, assuming Carla Vista Co. uses the periodic inventory system.

Ending Inventory		$
Cost of Goods Sold		$

Answer 1

Journal Entries Date Account Title and Explaination Debit Post. Ref. Credit (S) (S) Dec.3 $ 2,886.00 Inventory (3700x$0.78) Accounts Payable (To record inventory purchased on account) $ 2,886.00 Dec.5 3,690.00 Accounts Receivable (4100x$0.90) Sales Revenue (To record Sales on account) 3,690.00 $ 2,442.00 Cost of Goods Sold (2700x$0.50)+(1400x$0.78)) Inventory (To record Cost of Goods Sold) 2.442.00 Dec.7 270.00 Sales Returns and Allowance Accounts Receivable (To record Sales Returns) 270.00

Dec.7 270.00 Sales Returns and Allowance Accounts Receivable (To record Sales Returns) 270.00 240.00 Inventory Cost of Goods Sold (To record cost of goods returned) 240.00 Dec.17 OV 1,760.00 Inventory (2200x$0.80) Cash (To record Inventory purchased for cash) 1,760.00 1,848.00 Dec.22 JAccounts Receivable (2100x$0.88) Sales Revenue (To record Sales on account) 1,848.00 1,638.00 Cost of Goods Sold (2100x$0.78) Inventory (To record Cost of Goods Sold) S 1,638.00

400.00 400.00 Adjusting Entries Salaries and Wages Expense Salaries and wages Payable (To record salaries and wages expense earned) Depreciation Expense - Equipment Accumulated Depreciation - Equipment |(To record Depreciation Expense on Equipment) 200.00 Ann 200.00 200.00 Income Tax Expense Income Tax Payable |(To record Income Tax Expense to be Payable) 200.00