Problems -
Problem 1 - Gillian Shaw opened Shaw's Carpet Cleaners on March 1. During March, the following transactions were completed.
Mar. 1 Invested $10,000 cash in the business.
Mar. 1 Purchased used truck for $6,000, paying $3,000 cash and the balance on account.
Mar. 3 Purchased cleaning supplies for $1,200 on account.
Mar. 5 Paid $1,200 cash on a 1-year insurance policy effective March 1.
Mar. 14 Billed customers $4,800 for cleaning services.
Mar. 18 Paid $1,500 cash on amount owed on truck and $500 on amount owed on cleaning supplies.
Mar. 20 Paid $1,800 cash for employee salaries.
Mar. 21 Collected $1,400 cash from customers billed on March 14.
Mar. 28 Billed customers $2,500 for cleaning services.
Mar. 31 Paid $200 for the monthly gasoline bill for the truck.
Mar. 31 Withdrew $700 cash for personal use.
The chart of accounts for Shaw's Carpet Cleaners contains the following accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126 Supplies, No. 130 Prepaid Insurance, No. 157 Equipment, No. 158 Accumulated Depreciation-Equipment, No. 201 Accounts Payable, No. 212 Salaries and Wages Payable, No. 301 Owner's Capital, No. 306 Owner's Drawings, No. 350 Income Summary, No. 400 Service Revenue, No. 631 Supplies Expense, No. 633 Gasoline Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, and No. 726 Salaries and Wages Expense.
Instructions -
(a) Journalize and post the March transactions. Use page J1 for the journal and the three-column form of account.
(b) Prepare a trial balance at March 31 on a worksheet.
(c) Enter the following adjustments on the worksheet and complete the worksheet.
(1) Unbilled revenue for services performed at March 31 was $500.
(2) Depreciation on equipment for the month was $300.
Please be aware that there are 3 adjustments that are not listed in the problem's instructions: insurance is $ 100.00, supplies expense is $ 950.00 and salaries & wages expense is $ 550.00.
Problem 2 - Val Knight operates a retail clothing operation. She purchases all merchandise inventory on credit and uses a periodic inventory system. The Accounts Payable account is used for recording inventory purchases only; all other current liabilities are accrued in separate accounts. You are provided with the following selected information for the fiscal years 2014-2017.
2014 2015 2016 2017
Inventory (ending) $13,000 $ 11,300 $ 14,700 $ 12,200
Accounts payable (ending) 20,000
Sales revenue 239,000 237,000 235,000
Purchases of merchandise inventory on account 146,000 145,000 129,000
Cash payments to suppliers 135,000 161,000 127,000
Instructions -
(a) Calculate cost of goods sold for each of the 2015, 2016, and 2017 fiscal years.
(b) Calculate the gross profit for each of the 2015, 2016, and 2017 fiscal years.
(c) Calculate the ending balance of accounts payable for each of the 2015, 2016, and 2017 fiscal years.
(d) Sales declined in fiscal 2017. Does that mean that profitability, as measured by the gross profit rate, necessarily also declined? Explain, calculating the gross profit rate for each fiscal year to help support your answer. (Round to one decimal place.)
Problem 3 - At the beginning of the current season, the ledger of Everett Tennis Shop showed Cash $2,500; Inventory $1,700; and Owner's Capital $4,200. The following transactions were completed during April.
Apr. 4 Purchased racquets and balls from Riggs Co. $740, terms 3/10, n/30.
Apr. 6 Paid freight on Riggs Co. purchase $60.
Apr. 8 Sold merchandise to customers $900, terms n/30.
Apr. 10 Received credit of $40 from Riggs Co. for a racquet that was returned.
Apr. 11 Purchased tennis shoes from King Sports for cash $300.
Apr. 13 Paid Riggs Co. in full.
Apr. 14 Purchased tennis shirts and shorts from BJ Sportswear $700, terms 2/10, n/60.
Apr. 15 Received cash refund of $50 from King Sports for damaged merchandise that was returned.
Determine cost of goods sold and gross profit under the periodic approach.
Calculate missing amounts and assess profitability.
Journalize, post, and prepare trial balance and partial income statement using periodic approach.
Problem 4 - Walz Company had a beginning inventory of 400 units of Product Ribo at a cost of $8 per unit. During the year, purchases were:
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Feb. 20
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600 units at $9
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Aug. 12
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300 units at $11
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May 5
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500 units at $10
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Dec. 8
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200 units at $12
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Walz Company uses a periodic inventory system. Sales totaled 1,500 units.
Instructions -
(a) Determine the cost of goods available for sale.
(b) Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost low methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods.
(c) Which cost low method results in (1) the lowest inventory amount for the balance sheet, and (2) the lowest cost of goods sold for the income statement?
Attachment:- Assignment Files.rar