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1

Accounting Oct 01, 2020

1.Putter's Choice carries an inventory of putters and other golf clubs. The sales price of each putter is $144. Company records indicate the following for a particular line of Putter's Choice's putters: (Click the icon to view the records.) Read the requirements. Requirement 1. Prepare a perpetual inventory record for the putters assuming Putter's Choice uses the FIFO inventory costing method. Theri identify the cost of ending inventory and cost of goods sold for the month. Start by entering the beginning inventory balances. Enter the transactions in chronological order, calculating new inventory on hand balances after each transaction. Once all of the transactions have been entered into the perpetual record, calculate the quantity and total cost of Inventory purchased, sold, and on hand at the end of the period. (Enter the oldest Inventory layers first.) Purchases Cost of Goods Sold 0 ? Data Table Unit Total Unit Total Inventory on Hand Unit Total Quantity Cost Cost Dato Quantity Cost Cost Quantity Cost Cost Sep. 1 Date Item Quantity Unit Cost S S 72 Balance Sep. 1 8 - X A Requirements 6 Sale 2 8 Purchase 12 S 75 17 Sale 12 1. 30 Sale 4 Prepare a perpetual inventory record for the putters assuring Putler's Choice uses the FIFO inventory costing method. Then identify the cost of ending inventory and cost of goods sold for the month. Journalize Putter's Choice's inventory transactions using the FIFO inventory costing method. (Assume purchases and sales are made on account.)

2.The Accounting Cycle Learning Objective 4 State the required steps in the accounting cycle. 1. Analyze business transactions 9. Prepare a post-closing trial balance 2. Journalize the transactions 8. Journalize and post closing entries 3. Post to ledger accounts 7. Prepare financial statements 4. Prepare a trial balance 6. Prepare an adjusted trial balance 5. Journalize and post adjusting entries 4-1 Illustration 4-11 Steps in the accounting cycle LO 4

3.Putter's Choice carries an inventory of putters and other golf clubs. The sales price of each putter is $144. Company records indicate the following for a particular line of Putter's Choice's putters: (Click the icon to view the records.) Read the requirements. Requirement 1. Prepare Putter's Choice's perpetual inventory record for the putters assuming Putter's Choice uses the LIFO inventory costing method. Then identify the cost of ending inventory and cost of goods sold for the month. Start by entering the beginning inventory balances. Enter the transactions in chronological order, calculating new inventory on hand balances after each transaction. Once all of the transactions have been entered into the perpetual record, calculate the quantity and total cost of inventory purchased, sold, and on hand at the end of the period. (Enter the oldest inventory layers first.) Purchases Cost of Goods Sold Inventory on Hand Data Table - X Unit Total Unit Total Unit Total Date Quantity Cost Cost Quantity Cost Cost Quantity Cost Cost Sep. 1 Date Item Quantity Unit Cost Sep. 1 Balance 13 $ 75 Requirements - X 6 Sale 5 8 Purchase 12 $ 85 17 Sale 12 1. 30 Sale 3 Prepare Putler's Choice's perpetual inventory record for the putters assuming Puller's Choice uses the LIFO inventory costing method. Then identify the cost of ending inventory and cost of goods sold for the month. Journalize Putter's Choice's inventory transactions using the LIFO inventory costing method. (Assume purchases and sales are made on account.)

Expert Solution

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2.Started new business Alnaqbi for Football Training. Following transaction are made in the month of August 2020.

Transactions

1. You contribute $4,000 in cash to start the business.

2. You purchase $500 worth of equipment for use during classes

3. You purchase liability insurance at a total cost of $1,200. The policy covers September 1 through December31 paid on 08-03-2020.

4. You receive cash totaling $800 for classes

5. Your instructor teaches classes for the month. You agree to pay $600 for the classes. $300 is paid on August 31, and $300 will be paid on September 15.

6. You pay rent for august of $1,000 on August 31.

7. You use utilities (electricity and water) totaling $200. This amount is payable on September 15.

You purchase an additional $400 worth of mats, equipment, and clothing for sale

8. You sell inventory costing $150 for a revenue of $225

9. You are worried about money, so your Uncle makes you an offer. He agrees to loan you $2,000 in cash. You will need to repay him sometime later, but he doesn’t say when

10. After borrowing money, you decide to withdraw some of your investment in the studio to pursue other opportunities. You decide to withdraw $1,000.

11. Depreciation @ $20/month.

Step 1 – Analyze Business Transactions (Accounting Cycle):

Accounting Equation: Assets = Liabilities + Stockholders’ Equity

Business activity will impact various asset, liability, and/or equity accounts without disturbing the equality of the accounting equation.

Transactions	Explaination	Impact on Accounting Equation
1. You contribute $4,000 in cash to start the business.	Cash 4,000, Contributed Capital 4,000	Assets(+4000)=Equity(+4000)
2. You purchase $500 worth of equipment for use during classes	Cash -500, PPE 500	Assets(+500), Assets(-500)
3. You purchase liability insurance at a total cost of $1,200. The policy covers September 1 through December31 paid on 08-03-2020	Cash -1,200, Prepaid Insurance 1,200	Assets(+1200), Assets(-1200)
4. You receive cash totaling $800 for classes	Cash 800, Service Revenue 800	Assets(+800)= Equity(+800)
5. Your instructor teaches classes for the month. You agree to pay $600 for the classes. $300 is paid on August 31, and $300 will be paid on September 15.	Cash -300, Wage Payable 300, Instructor Expense 600	Assets(-300)=Liabilities(+300)+Equity(-600)
6. You pay rent for august of $1,000 on August 31.	Cash -1,000, Rent Expense 1,000	Assets(-1000)=Equity(-1000)
7. You use utilities (electricity and water) totaling $200. This amount is payable on September 15.	Utility Payable 200, Utility Expense 200	Liability(+200)+Equity(-200)
You purchase an additional $400 worth of mats, equipment, and clothing for sale	Cash -400, Inventory 400	Assets(+400), Assets(-400)
8. You sell inventory costing $150 for a revenue of $225	a.Cash 225, Sales Revenue 225 b.Inventory -150, Cost of Goods Sold 150	a. Assets(+225)=Equity(+225) b. Assets(-150)=Equity(-150)
9. You are worried about money, so your Uncle makes you an offer. He agrees to loan you $2,000 in cash. You will need to repay him sometime later, but he doesn’t say when	Cash 2,000, Loan Payable 2,000	Assets(+2000)=Liabilities(+2000)
10. After borrowing money, you decide to withdraw some of your investment in the studio to pursue other opportunities. You decide to withdraw $1,000.	Cash -1,000, Contributed Capital -1,000	Assets(-1000)=Equity(-1000)

11. Depreciation @ $20/month.

Accumulated Depreciation 20, Depreciation Expense 20

Assets(-20)=Equity(-20)

Step 2 Accounting Cycle – Journalize Business Transactions:

Date	General Journal	Debit	Credit
08-01-2020	Cash	$4,000
	Contributed Capital		$4,000
08-02-2020	Property Plant and Equipment(PPE)	$500
	Cash		$500
08-03-2020	Prepaid Insurance	$1,200
	Cash		$1,200
08-05-2020	Cash	$800
	Service Revenue		$800
08-15-2020	Inventory	$400
	Cash		$400
08-27-2020	Cash	$225
	Revanue		$225
08-27-2020	Cost of Good Sold	$150
	Inventory		$150
08-29-2020	Cash	$2,000
	Loan Payable		$2,000
08-30-2020	Contributed Capital	$1,000
	Cash		$1,000
08-31-2020	Wage Expense	$600
	Cash		$300
	Wage Payable		$300
08-31-2020	Rent Expense	$1,000
	Cash		$1,000
08-31-2020	Utility Expense	$200
	Utility Payable		$200

Step 3 Accounting Cycle – Post Business Transactions:

Cash Ledger
Date	Particulars	Debit	Date	Particulars	Credit
08-01-2020	Contributed Capital	$4,000	08-02-2020	Property Plant and Equipment(PPE)	$500
08-05-2020	Service Revenue	$800	08-03-2020	Prepaid Insurance	$1,200
08-27-2020	Sales Revanue	$225	08-15-2020	Inventory	$400
08-29-2020	Loan Payable	$2,000	08-30-2020	Contributed Capital	$1,000
			08-31-2020	Wage Expense	$300
			08-31-2020	Rent Expense	$1,000
Balance		$2625

Contributed Capital
Date	Particulars	Debit	Date	Particulars	Credit
08-30-2020	Cash	$1,000	08-01-2020	Cash	$4,000
			Balance		$3000

Property Plant and Equipment(PPE)
Date	Particulars	Debit	Date	Particulars	Credit
08-02-2020	Cash	$500

Balance		$500
Prepaid Insurance
Date	Particulars	Debit	Date	Particulars	Credit
08-03-2020	Cash	$1200

Balance		$1200

Service Revenue
Date	Particulars	Debit	Date	Particulars	Credit
			08-05-2020	Cash	$800
				Balance	$800

Inventory
Date	Particulars	Debit	Date	Particulars	Credit
08-15-2020	Cash	$400	08-27-2020	Cost of Good Sold	$150
	Balance	$250

Sales Revanue
Date	Particulars	Debit	Date	Particulars	Credit
			08-27-2020	Cash	$225
				Balance	$225

Loan Payable
Date	Particulars	Debit	Date	Particulars	Credit
			08-29-2020	Cash	$2,000
				Balance	$2,000

Wage Expense
Date	Particulars	Debit	Date	Particulars	Credit
08-31-2020	Cash	$300
08-31-2020	Wage Payable	$300
	Balance	$600

Wage Payable
Date	Particulars	Debit	Date	Particulars	Credit
			08-31-2020	Wage Expense	$300
				Balance	$300

Rent Expense
Date	Particulars	Debit	Date	Particulars	Credit
08-31-2020	Cash	$1,000
	Balance	$1,000

Utility Expense
Date	Particulars	Debit	Date	Particulars	Credit
08-31-2020	Utility Payable	$200
	Balance	$200

Utility Payable
Date	Particulars	Debit	Date	Particulars	Credit
			08-31-2020	Utility Expense	$200
				Balance	$200

Cost of goods sold
Date	Particulars	Debit	Date	Particulars	Credit
08-27-2020	Inventory	$150
	Balance	$150

Depreciation expense
Date	Particulars	Debit	Date	Particulars	Credit
08-31-2020	Accumulated Depreciation	$20
	Balance	$20

Accumulated Depreciation
Date	Particulars	Debit	Date	Particulars	Credit
			08-31-2020	Depreciation expense	$20
				Balance	$20

Step 4 Accounting Cycle – Prepare Trial Balance:

Trial Balance
Alnaqbi for Football Training
as at August 31, 2020
General Ledger	Debit	Credit
Cash	$2,625
Property Plant and Equipment(PPE)	$500
Prepaid Insurance	$1,200
Inventory	$250
Accumulated Depreciation		$20
Contributed Capital		$3,000
Loan Payable		$2,000
Wage Payable		$300
Uutility Payable		$200
Service Revenue		$800
Sales Revanue		$225
Wages Expense	$600
Rent Expense	$1,000
Uutility Expense	$200
Cost of goods sold	$150
Depreciation expense	$20
Total	$6,545	$6,545

Step 7 Accounting Cycle – Prepare Financial Statements:

Statement of Profit or Loss:

Statement of Profit or Loss
Alnaqbi for Football Training
as at August 31, 2020
Particulars	Amount
Income:
Service Revenue	$800
Sales Revanue	$225
Total Income	$1,025
Expenses:
Cost of goods sold	$150
Wages Expense	$600
Rent Expense	$1,000
Uutility Expense	$200
Depreciation expense	$20
Total Expenses	$1,970
Net Loss	-$945

Balance Sheet:

Balance Sheet
Alnaqbi for Football Training
For the month ended August 31, 2020
Particulars	Amount	Amount
Assets:
Cash		$2,625
Property Plant and Equipment(PPE)	$500
Less : Accumulated Depreciation	$20	$480
Prepaid Insurance		$1,200
Inventory		$250
Total Assets		$4,555
Liabilities:
Loan Payable		$2,000
Wage Payable		$300
Uutility Payable		$200
Total Liabilities		$2,500
Owner's Capital:
Owner's Capital	$3,000
Less : Net Loss	$945	$2,055
Total Liabilities & Owner's Capital		$4,555

Perpetual Inventory Record: LIFO


	Purchases	Cost of Goods Sold	Inventory on Hand
Date	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
Sep. 1								13 units	× $ 75	= $ 975	$ 975
6				5 units	× $ 75	= $ 375	$ 375	8 units	× $ 75	= $ 600	$600

8	12 units	× $85	=$ 1,020					8 units	× $ 75	= $ 600	$ 1,620
								12 units	× $85	= $ 1,020
17				12 units	× $ 85	= $1,020	$ 1,020	8 units	× $ 75	= $ 600	$ 600

30				3 units	× $ 75	= $ 225	$225	5 units	× $ 75	= $375	$ 375

Totals	12 units		$1,020	20 units			$1,620	5 units			$ 375

Using LIFO, the cost of ending merchandise inventory is $375 and cost of goods sold is $1,620.

Requirement 2

Date	Accounts and Explanation	Debit	Credit
Sep. 6	Accounts Receivable	720a)
	Sales Revenue		720(a)
	Sale on account.

6	Cost of Goods Sold	375(d)
	Merchandise Inventory		375(d)
	Recorded the cost of goods sold.

8	Merchandise Inventory	1,020
	Accounts Payable		1,020
	Purchased inventory on account.

17	Accounts Receivable	1,728(b)
	Sales Revenue		1,728(b)
	Sale on account.

17	Cost of Goods Sold	1,020(d)
	Merchandise Inventory		1,020(d)
	Recorded the cost of goods sold.

30	Accounts Receivable	432(c)
	Sales Revenue		432 (c)
	Sale on account.

30	Cost of Goods Sold	225(d)
	Merchandise Inventory		225(d)
	Recorded the cost of goods sold.

Calculations:

Total sales revenue	=	Number of putters sold × Sales price per putter

(a) Sep 6 sale:
	=	5 putters × $144 per putter

	=	$7,20

(b)Sep. 17 sale:
	=	12 putters × $144 per putter

	=	$1,728.

(c)Sep 30 sale:
	=	3 putters × $144 per putter

	=	$432

(d)	Calculated in Requirement 1.

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