John Neff owns and operates Waikiki Surf Shop. A year-end
Neff uses the periodic inventory system. Year-end adjustment data are as follows:
(a, b) A physical count shows that merchandise inventory costing $51,800 is on hand as of December 31, 20--.
(c, d, e) Neff estimates that customers will be granted $2,000 in refunds of this year’s sales next year and the merchandise expected to be returned will have a cost of $1,200.
(f) Supplies remaining at the end of the year, $600.
(g) Unexpired insurance on December 31, $2,600.
(h)
(i) Depreciation expense on the store equipment for 20--, $3,000.
(j) Wages earned but not paid as of December 31, $1,800.
(k) Neff also offers boat rentals which clients pay for in advance. Unearned boat rental revenue as of December 31 is $3,000.
Required
- 1. Prepare a year-end spreadsheet.
- 2. Journalize the
adjusting entries . - 3. Compute cost of goods sold using the spreadsheet prepared for part (1).
Trending nowThis is a popular solution!
Chapter 14 Solutions
College Accounting, Chapters 1-27
- On March 1, Bates Board Shop sells 300 surfboards to a local lifeguard station at a sales price of $480 per board. The cost to Bates is $150 per board. The terms of the sale are 3/15, n/30, with an invoice date of March 1. Create the journal entries for Bates to recognize the following transactions. Assume the perpetual inventory system is used. A. the initial sale B. the subsequent customer payment on March 10 If an amount box does not require an entry, leave it blank.arrow_forwardAlpharack Company sells a line of tennis equipment to retailers. Alpharack uses the perpetual inventory system and engaged in the following transactions during April 2019, its first month of operations: On April 2, Alpharack purchased, on credit, 360 Wilbur T-100 tennis rackets with credit terms of 2/10, n/30. The rackets were purchased at a cost of $30 each. Alpharack paid Barker Trucking $195 to transport the tennis rackets from the manufacturer to Alpharack's warehouse, shipping terms were F.O.B. shipping point, and the items were shipped on April 2. On April 3, Alpharack purchased, for cash, 115 packs of tennis balls for $10 per pack. On April 4, Alpharack purchased tennis clothing, on credit, from Designer Tennis Wear. The cost of the clothing was $8,250. Credit terms were 2/10, n/25. On April 10, Alpharack paid for the purchase of the tennis rackets in Transaction a. On April 15, Alpharack determined that $325 of the tennis clothing was defective. Alpharack returned the…arrow_forwardPatricia Flynn owns a business called Patty's Place. The company uses a periodic inventory system. The beginning inventory balance was $31,000. A physical count determined her ending inventory was $25,000. Based on past experience, Patricia estimates that $3,000 of sales from this year will be returned next year. The cost of the merchandise expected to be returned is $900. Which of the following journal entries would record the ending inventory? a.Debit Income Summary for $25,000 and credit Merchandise Inventory for $25,000 b.Debit Income Summary for $6,000 and credit Merchandise Inventory for $6,000 c.Debit Merchandise Inventory for $6,000 and credit Cost of Goods Sold for $6,000 d.Debit Merchandise Inventory for $25,000 and credit Income Summary for $25,000arrow_forward
- The following purchase transactions occurred during the last few days of Yellow Orange Company's business year, which ends October 31, or in the first few days after that date. A periodic inventory system is used. 1. An invoice for P30,000, terms fob shipping point, was received and entered November 1. The invoice shows that the material was shipped October 29, but the receiving report indicates receipts of goods on November 3. 2. An invoice for P27,000, terms fob destination, was received and entered November 2. The receiving report indicates that the goods were received October 29. 3. An invoice for P31,500, terms fob shipping point, was received October 15 but never entered. Attached to it is a receiving report indicating that the goods were received October 18. Across the face of the receiving report is the following notation:" Merchandise not of same quality as ordered returned for credit October 19." 4. An invoice for P36,000, terms fob shipping point, was received and entered…arrow_forwardThe following purchase transactions occurred during the last few days of Whilczel Company's business year, which ends October 31, or in the first few days after that date. A periodic inventory system is used. · An invoice for P6,000, terms FOB shipping point, was received and entered November 1. The invoice shows that the material was shipped October 29, but the receiving report indicates receipt of goods on November 3. · An invoice for P2,700, terms FOB destination, was received and entered November 2. The receiving report indicates that the goods were received October 29. · An invoice for P3,150, terms, FOB shipping point, was received October 15, but never entered. Attached to it is a receiving report indicating that the goods were received October 18. Across the face of the receiving report is the following notation: "Merchandise not of the same quality as ordered - returned for credit October 19". · An invoice for P3,600 terms FOB shipping…arrow_forwardThe following purchase transactions occurred during the last few days of Whilczel Company's business year, which ends October 31, or in the first few days after that date. A periodic inventory system is used. · An invoice for P6,000, terms FOB shipping point, was received and entered November 1. The invoice shows that the material was shipped October 29, but the receiving report indicates receipt of goods on November 3. · An invoice for P2,700, terms FOB destination, was received and entered November 2. The receiving report indicates that the goods were received October 29. · An invoice for P3,150, terms, FOB shipping point, was received October 15, but never entered. Attached to it is a receiving report indicating that the goods were received October 18. Across the face of the receiving report is the following notation: "Merchandise not of the same quality as ordered - returned for credit October 19". · An invoice for P3,600 terms FOB shipping…arrow_forward
- The following purchase transactions occurred during the last few days of Whilczel Company's business year, which ends October 31, or in the first few days after that date. A periodic inventory system is used. · An invoice for P6,000, terms FOB shipping point, was received and entered November 1. The invoice shows that the material was shipped October 29, but the receiving report indicates receipt of goods on November 3. · An invoice for P2,700, terms FOB destination, was received and entered November 2. The receiving report indicates that the goods were received October 29. · An invoice for P3,150, terms, FOB shipping point, was received October 15, but never entered. Attached to it is a receiving report indicating that the goods were received October 18. Across the face of the receiving report is the following notation: "Merchandise not of the same quality as ordered - returned for credit October 19". · An invoice for P3,600 terms FOB shipping…arrow_forwardGlasgow Company uses the periodic inventory system. On February 1, the corporation purchased inventory on account for $16,000. The terms were 3/10, n/30. On February 2, it returned damaged goods worth $500 to the supplier and was granted an allowance. Give the journal entry for the payment if the invoice is paid after the discount period. (Round your answers to the nearest dollar.)arrow_forwardCrosby Company owns a chain of hardware stores throughout the state. The company uses a periodic inventory system and the retail Inventory method to estimate ending inventory and cost of goods sold. The following data are available for the three months ending March 31, 2021: Beginning inventory. Net purchases Net markups Net markdowns Net sales Beginning inventory Net purchases Net markups Required: Complete the table below to estimate the LIFO cost of ending inventory and cost of goods sold for the three months ending March 31, 2021, using the information provided. Assume stable retail prices during the period (Round ratio calculation to 2 decimal places (i.e.. 0.1234 should be entered as 12.34%.). Enter amounts to be deducted with a minus sign.) Cost $180,000 630,000 Net markdowns Goods available for sale (excluding beg. inventory) Goods available for sale (including beg inventory) Cost-to-retail percentage (beginning) Cost-to-retail percentage (current) sales Estimated ending…arrow_forward
- Palisade Creek Co. is a merchandising business that uses the perpetual inventory system.The account balances for Palisade Creek Co. as of May 1, 2019 (unless otherwise indicated), are as follows: During May, the last month of the fiscal year, the following transactions were completed:May 1. Paid rent for May, $5,000.3. Purchased merchandise on account from Martin Co., terms 2/10, n/30, FOB shipping point, $36,000.4. Paid freight on purchase of May 3, $600.6. Sold merchandise on account to Korman Co., terms 2/10, n/30, FOB shipping point, $68,500. The cost of the merchandise sold was $41,000.7. Received $22,300 cash from Halstad Co. on account.10. Sold merchandise for cash, $54,000. The cost of the merchandise sold was $32,000.13. Paid for merchandise purchased on May 3.15. Paid advertising expense for last half of May, $11,000.16. Received cash from sale of May 6.19. Purchased merchandise for cash, $18,700.19. Paid $33,450 to Buttons Co. on account.20. Paid Korman Co. a cash refund…arrow_forwardChloe Company employs the perpetual inventory system. Cost of Goods Sold for the year before any adjustment is $275,450. The computer record shows the amount of ending inventory to be $55,382, while the physical count shows ending inventory to be $51,405. Record the adjustment into T accounts and then journalize the adjusting entry.arrow_forwardIrene uses a calendar-year accounting period and a periodic inventory system. Assume Irene had the following independent situations: Situation 1. Goods shipped to Irene by a vendor f.o.b. shipping point on 12-28-11 were in transit at 12-31-11. The goods cost $15,000. On 12-29-11, Irene recorded a credit purchase of $15,000. Situation 2. Goods shipped to Irene by a vendor f.o.b. destination on 12-28-11 were in transit at 12-31-11. The goods cost $7,000. On 01-04-12, the day the goods arrived, Irene recorded a credit purchase of $7,000. Situation 3. Goods shipped to Irene by a vendor f.o.b. shipping point on 12-29-11 were in transit at 12-31-11. The goods cost $9,000. On 01-03-12, the day the goods arrived, Irene recorded a credit purchase of $9,000. Situation 4. Goods shipped by Irene to a customer f.o.b. destination on 12-30-11 were in transit at 12-31-11. The goods cost $8,000. On 12-30-11, Irene billed the customer and recorded a credit sale of $20,000. Situation 5. Goods shipped…arrow_forward
- College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeCollege Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub
- Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning