1. What is the basic accounting equation?
2. Show the basic accounting equation using ‘T' accounts and by showing the ‘normal balance' in each ‘T' account.
3. Prepare journal entries and ‘T' accounts to record the following merchandise transactions of Martinez Excavation Equipment, Inc., which applies the perpetual inventory system.
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May 3
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Sold merchandise to Walton for $18,000 under credit terms of 1/10, n/30, FOB destination, invoice date May 3. The merchandise had cost $15,000.
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4. A company made the following merchandise purchases and sales during the month of May:
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May 1
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Purchased
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380 units at
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$15 each
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May 5
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Purchased
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270 units at
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$17 each
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May 10
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Sold
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400 units at
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$50 each
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May 20
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Purchased
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300 units at
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$22 each
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May 25
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Sold
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400 units at
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$50 each
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There was no beginning inventory. If the company uses the periodic inventory method, what would be the Cost of the Ending Inventory and the Cost of Goods Sold (COGS) using FIFO, LIFO, and Weighted Average?
5. The following information is available for the Topper Company for the month of July.
a. On July 31, after all transactions have been recorded, the balance in the company's Cash account has a balance of $15,244.
b. The company's bank statement shows a balance on July of $16,450.
c. Outstanding checks at July total $2,063.
d. A credit memo included with the bank statement indicates that the bank collected $570 on a note receivable for Topper. The $570 includes $550 principle and $20 interest. e. A debit memo included with the bank statement shows a $107 NSF check from a customer, P. Flank.
f. A deposit placed in the bank's night depository on July 31 totaling $1,275 did not appear on the bank statement.
g. Included with the bank statement was a debit memorandum in the amount of $45 for check printing charges that have not been recorded on the company's books.
Prepare the July bank reconciliation for the Topper Company. Also prepare the Journal Entries to record the adjustments.