Entries and Perpetual Inventory Account (LIFO) EXHIBIT 4 Item 127B Jan. 4 Accounts Receivable 21,000 Sales 21,000 Cost of 4 Cost of Merchandise Sold 14,000 Purchases Merchandise Sold Inventory Merchandise Inventory 14,000 Unit Total Unit Total Unit Total Date Cost Quantity Cost Cost Quantity Cost Quantity Cost Cost 10 Merchandise Inventory 11,200 Accounts Payable 11,200 Jan. 1 20,000 1,000 20.00 20.00 14,000 700 300 20.00 6,000 22.40 11,200 22 Accounts Receivable 10,800 10 500 300 20.00 6,000 Sales 10,800 11,200 500 22.40 22 Cost of Merchandise Sold 8,064 8,064 22 360 22.40 300 20.00 6,000 Merchandise Inventory 8,064 140 22.40 3,136 28 140 22.40 3,136 200 20.00 4,000 28 Accounts Receivable 7,200 100 20.00 2,000 Sales 23.30 13,980 4,000 13,980 7,200 30 600 200 20.00 28 Cost of Merchandise Sold 5,136 600 23.30 Merchandise Inventory 5,136 27,200 Balances 31 17,980 30 Merchandise Inventory 13,980 January 31 inventory Accounts Payable Cost of 13,980 merchandise sold
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Beginning inventory, purchases, and sales data for prepaid cell phones for May are as follows:
Inventory Purchases Sales
May 1 1,550 units at $44 May 10 720 units at $45 May 12 1,200 units
20 1,200 units at $48 14 830 units
31 1,000 units
a. Assuming that the perpetual inventory system is used, costing by the LIFO method, determine the cost of merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 4.
b. Based upon the preceding data, would you expect the inventory to be higher or lower using the first-in, first-out method?
Exhibit 4 is attached
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