Closing entries

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ACC 557 Homework 2 Chapters 4 5 and 6

Directions: Answer the following questions on a separate Microsoft Word or Excel document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link in Blackboard.

Exercises

E4-7. Kay Magill Company had the following adjusted trial balance.

Instructions

  1. a)Prepare closing entries at June 30, 2015.
  2. b)Prepare a post-closing trial balance.

E4-13. Keenan Company has an inexperienced accountant. During the first 2 weeks on the job, the accountant made the following errors in journalizing transactions. All entries were posted as made.

  1. A payment on account of $840 to a creditor was debited to Accounts Payable $480 and credited to Cash $480.
  2. The purchase of supplies on account for $560 was debited to Equipment $56 and credited to Accounts Payable $56.
  3. A $500 cash dividend was debited to Salaries and Wages Expense $500 and credited to Cash $500.

Instructions

Prepare the correcting entries.

 

 

E5-4. On June 10, Tuzun Company purchased $8,000 of merchandise from Epps Company, FOB shipping point, terms 2/10, n/30. Tuzun pays the freight costs of $400 on June 11. Damaged goods totaling $300 are returned to Epps for credit on June 12. The fair value of these goods is $70. On June 19, Tuzun pays Epps Company in full, less the purchase discount. Both companies use a perpetual inventory system.

Instructions

  1. a)Prepare separate entries for each transaction on the books of Tuzun Company.
  2. b)Prepare separate entries for each transaction for Epps Company. The merchandise purchased by Tuzun on June 10 had cost Epps $4,800.

 

E5-7. Juan Morales Company had the following account balances at year-end: Cost of Goods Sold $60,000, Inventory $15,000, Operating Expenses $29,000, Sales Revenue $115,000, Sales Discounts $1,200, and Sales Returns and Allowances $1,700. A physical count of inventory determines that merchandise inventory on hand is $13,900.

 

Instructions

  1. a)Prepare the adjusting entry necessary as a result of the physical count.
  2. b)Prepare closing entries.

E6-1. 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 $297,000. Discussions with the accountant reveal the following.

  1. Josef sold goods costing $38,000 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 $95,000 that were shipped to Josef FOB destination on December 27 and were still in transit at year-end.
  3. Josef received goods costing $22,000 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 $35,000 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 $44,000 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 $297,000.

Instructions

Determine the correct inventory amount on December 31.

E6-6. Kaleta Company reports the following for the month of June.

Instructions

  1. a)Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO and (2) LIFO.
  2. b)Which costing method gives the higher ending inventory? Why?
  3. c)Which method results in the higher cost of goods sold? Why?

 

Problems

P4-3A. The completed financial statement columns of the worksheet for Fleming Company are shown on