Question

Financial Accounting Help With Project! Hello, I am having some trouble with the first page of my homework for my financial accounting class. I am having some trouble analyzing the differences between LIFO and FIFO in this specific question and how exactly I begin and end the question. Any help on this problem so I can refresh my memory after being gone over spring break would absolutely help a ton, especially considering I have another 4 pages of this stuff and this is the shortest problem. Also if I could receive assistance on how to analyze the bottom transactions, that would be great too. Thank you!

As a side note, I just posted this question a couple of hours ago. I sadly forgot to include the rest of the the page so the information provided seemed somewhat confusing. Sorry about that whoever answered the first time, here it is again. Thanks in advance!

You have just landed at temporary assignment at ล small retail company in your area. The accountant, who had completed the books through the end of November, went out on matenity leave during the first week of December The task you have been given is to take the ending Trial Balance for Nowember, prepare December transactions and adjustments, prepare the December financials, and close the books. The manager of the company has indicated that salaries, rent and depreciation for December are the same as the 11 months preceding (employees are paid at the end of the month), Additional transaction information follows: December Utilities $700 The manager is pretty sure that they use LIFO for inventory, but it could be FIFO. Given the November transactions, determine which of the two methods is used. Then, use that same method to value ending inventoryor December Compute December Sales and Cost of Goods Sold, as well, and prepare the journal entries. Assume all inventory purchases are on credit. Also assume 80% of sales are credit sales and the rest are for cash. November December 11-01 begin with 500 units $22.00each 11 03 sold 250 units 535.00 each 11-05 purch 500 units $23.00 each 11-10 sold 250 units@ 536.00 each 11-15 purch 450 units$26.00 each 11-19 purch 300 units @末28.00 each 11 23 sold 200 units S37.00 each 11 29 purch 300 units$30.00 cach 12-01 begin with 1,350 units$36,000 12-0 sold 350 units 538.00 cach 12-10 purch 500 units $29.00 each 12 13 sold 600 units$40.00 cach 12-18 purch 600 units $31.00 each 12 20 sold 600 units$41.00 cach 12-21 purch 400 units $30.00 each 12 24 sold 550 units$42.00 cach Continued During December, supplics purchased totaled $1,100. A physical count showed that there were 51,850 remaining at the end of the year. Paid $22,000 towards accounts payable; reccived 5500 in discounts for prompt payment. The company will also distribute $15,000 to the owners of the business. Use the November 30th trial balance shown on the workshoet (pagc 4) for beginning balances and other Prepare the necessary adjusting entry It was discovered that the insurance was renewed on December 1st; coverage will cost $6,720 for the next 12 months, Prepare the necessary entries. information. You may wish to complete the December worksheet before preparing the financial statements. Collected $18,500 in cash from previous sales on credit. Those customers received $350.00 in discounts. Continued Trial Balance ustments d Trial Balance Income Statement Balance Sheet Account Titlle Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit 27,200 8,720 6,000 2.200 cash accounts receivable id insurance 50,000 75,000 30,200 0,000 18,900 accounts payable id-in Gapita retained ea 259,710 sales sales discounts sales return/allowance cost of salaries expense 23,650 118,800 32,230 4,200 5,500 9,020 11,000 6,930 4,620 3,740 insurance advertising expense utilities lles expense net Income

Answer 1

November Inventory account
1-Nov	Beg. Bal.	500
3	Sales		250
5	Purchases	500
10	Sales		250
15	Purchases	450
19	Purchases	300
23	Sales		200
29	Purchases	300
	Total	2050	700
	Inv.bal.	1350
As per LIFO
Everytime, a sale tales place,COGS is valued at the latest price available.So, the balance in inventory are valued at older prices..
If there is a purchase , before a sale, then that purchase price becomes the latest price.
	Beg. Bal.	250	22	5500
5	Purchases	250	23	5750
15	Purchases	450	26	11700
19	Purchases	100	28	2800
29	Purchases	300	30	9000
		1350		34750
Whereas,
In FIFO, COGS is priced at the oldest price available till all inventory in that price category is exhausted.
so,bal.in inventory have the latest price available.
As per FIFO
29	Purchases	300	30	9000
19	Purchases	300	28	8400
15	Purchases	450	26	11700
5	Purchases	300	23	6900
		1350		36000
From the above 2 Tables,
we conclude that the company had used FIFO for calculating November inventory
as we see that $ 36000 is the value of inventory as per the Nov. Trial balance given.
Now,we can calculate the December inventory using the same FIFO method , as under:
Beg. Bal.on Dec 1
5	Purchases	300
15	Purchases	450
19	Purchases	300
29	Purchases	300
Dec. 4	Sales		350
10	Purchases	500
13	Sales		600
18	Purchases	600
20	Sales		600
21	Purchases	400
24	Sales		550
		2850	2100
31	Inv. Bal.	750
so, the inventory as at Dec 31 must be
21-Dec	Purchases	400	30	12000
18	Purchases	350	31	10850
		750		22850

DEC Journal enties
Salaries expense	2930
Cash		2930
(32230/11)
Rent Expense	2200
Cash		2200
(24200/11)
Depreciation expense	1000
Accum. Dep. -equip.		1000
(11000/11)
Advertising expense	900
Cash		900
Utilities expense	700
Cash		700
Communications expense	500
Cash		500
Cash	17000
Accounts receivables	68000
Sales		85000
(350*38)+(600*40)+(600*41)+(550*42)
COGS	58250
Inventory		58250
Supplies	1100
Cash		1100
Supplies expense	1450
Supplies		1450
(2200+1100-1850)
Prepaid Insurance	6160
Insurance expense	560
Cash		6720
(6720/12)
Cash	18500
Accounts receivable		18500
Accounts payable	22500
Cash		22000
Discounts received		500
Distributions	15000
Cash		15000
Retained Earnings	15000
Distributions		15000

	Adj.Dec. T/B		Income Stat.		Balance Sheet
Account Title	Debit	Credit
Cash	10650				10650
Acc.Rec.	58220				58220
Inventory	22850				22850
Supplies	1850				1850
Prepaid Ins.	6160				6160
Land	50000				50000
Equipment	75000				75000
Acc. Depn. Equip		72000				72000
Acc.payabale		52800				52800
Paid-in capital		70000				70000
Ret. Earn.		3900				3900
Distrbns.
Sales		344710		344710
Sales discounts	23650		23650
Sales return/allowance	11000		11000
COGS	177050		177050
Discounts recd		500		500
Salaries expense	35160		35160
Rent expense	26400		26400
Ins. Exp.	6060		6060
Advt. Exp.	9920		9920
Depn. Exp.	12000		12000
Utilities exp.	7630		7630
Commn. Exp.	5120		5120
Supplies exp.	5190		5190
Income summary			26030			26030
Total	543910	543910	345210	345210	224730	224730