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FIFO INVENTORY ADJUSTING JOURNAL ENTRY STUDY PROBLEM 1 BEGINNING ACCOUNT BALANCES: 1. Cash 200,000 2. Accounts...

FIFO INVENTORY ADJUSTING JOURNAL ENTRY STUDY PROBLEM 1 BEGINNING ACCOUNT BALANCES: 1. Cash 200,000 2. Accounts Receivable 300,000 3. Inventory (10,000 units $20 each) 200,000 4. Prepaid Insurance 24,000 5. Equipment 500,000 6. Accumulated Depreciation 100,000 7. Accounts Payable 150,000 8. Note Payable 250,000 9. Common Stock 300,000 10. Retained Earnings ? Current Transactions: TRANSACTIONS: Quantity Unit Cost or SP 1. Invested additional $100,000 in business 2. Purchase Inv 10,000 $25 3. Purchase Inv 10,000 $30 4. Cash Sale 20,000 $100 5. Purchase Inv 30,000 $32.50 6. Sale on Account 10,000 $100 7. Sale on Account 20,000 $100 8. Purchase Inv 30,000 $40 9. Sale on Account 10,000 $100 10. Cash Sale 20,000 $100 11. Purchased new insurance policy on July 1 for $36,000 as old policy expired 12. Paid salaries expense, $2,000,000 13. Salaries Accrued at year end $200,000 14. Equipment was purchased last year and has a 5-year life with no salvage value, make adjusting entry for depreciation expense 15. Record adjusting entry for insurance expense 16. Paid rent expense $1,000,000 17. Paid $$1,200,000 on accounts payable 18. Collections 19. Paid dividends $200,000 20. Collections in advance for James Hardin special edition shoe 2,000 pairs $200 each 21. Purchased James Hardin special edition shoe for $50 each (since this is a special item, pace on separate inventory table 22. A total of 1500 customers picked up James Hardin special edition ( two entries required) REQUIRED: 1. Post beginning balances to T-accounts 2. Record current transactions 3. Post to ledger 4. Prepare trial balance 5. Prepare income statement 6. Prepare statement of retained earnings 7. Prepare balance sheet 8. Prepare closing entries

Expert Solution

Cash Account
Date	Account Tittle	Debit	Credit	Debit	Credit
	Beg. Bal.			200,000
1	Common Stock	100,000		300,000
4	Sales	2,000,000		2,300,000
10.	Sales	2,000,000		4,300,000
11	Insurance Expense		36,000	4,264,000
12	Salaries Expense		2,000,000	2,264,000
16.	Rent Expense		1,000,000	1,264,000
17.	Account Payable		1,200,000	64,000
18.	Account Receivable	3,000,000		3,064,000
19.	Dividend		200,000	2,864,000
20	Unearned Revenue	400,000		3,264,000
21	Inventory		100,000	3,164,000

Account Receivable
Date	Account Tittle	Debit	Credit	Debit	Credit
	Beg. Bal.			300,000
6	Sales	1,000,000		1,300,000
7	Sales	2,000,000		3,300,000
9.	Sales	1,000,000		4,300,000
18.	Cash		3,000,000	1,300,000

Inventory Account
Date	Account Tittle	Debit	Credit	Debit	Credit
	Beg. Bal.			200,000
2	Account Payable	250,000		450,000
3	Account Payable	300,000		750,000
4	Cost of Goods sold		450,000	300,000
5	Account Payable	975,000		1,275,000
6	Cost of Goods Sold		300,000	975,000
7	Cost of Goods Sold		650,000	325,000
8.	Account Payable	1,200,000		1,525,000
9.	Cost of Goods Sold		325,000	1,200,000
21	Cash	100,000		1,300,000
22	Cost of Goods Sol		75,000	1,225,000

Prepaid Insurance
Date	Account Tittle	Debit	Credit	Debit	Credit
	Beg. Bal.			24,000
15.	Insurance Expense		24,000	0

Equipment
Date	Account Tittle	Debit	Credit	Debit	Credit
	Beg. Bal.			500,000
	End. Bal.			500,000

Accumulated Depreciation-Equipment
Date	Account Tittle	Debit	Credit	Debit	Credit
	Beg. Bal.				100,000
14	Depreciation Expense		100,000		200,000

Account Payable
Date	Account Tittle	Debit	Credit	Debit	Credit
	Beg. Bal.				150,000
2	Inventory		250,000		400,000
3	Inventory		300,000		700,000
5	Inventory		975,000		1,675,000
8.	Inventory		1,200,000		2,875,000
17.	Cash	1,200,000			1,675,000

Note Payable
Date	Account Tittle	Debit	Credit	Debit	Credit
	Beg. Bal.				250,000
	End. Bal.				250,000

Common Stock
Date	Account Tittle	Debit	Credit	Debit	Credit
	Beg. Bal.				300,000
	Cash		100,000		400,000

Retained Earnings
Date	Account Tittle	Debit	Credit	Debit	Credit
	Beg. Bal.				424,000

Sales
Date	Account Tittle	Debit	Credit	Debit	Credit
4.	Cash		2,000,000	2,000,000
6.	Account Receivable		1,000,000	3,000,000
7.	Account Receivable		2,000,000	5,000,000
9.	Account Receivable		1,000,000	6,000,000
10.	Cash		2,000,000	8,000,000
22	Unearned Revenue		300,000	8,300,000

Cost of Goods Sold
Date	Account Tittle	Debit	Credit	Debit	Credit
4.	Inventory	450,000		450,000
6.	Inventory	300,000		750,000
7	Inventory	650,000		1,400,000
9.	Inventory	325,000		1,725,000
22	Inventory	75,000		1,800,000

Salaries Expense
Date	Account Tittle	Debit	Credit	Debit	Credit
12	Cash	2,000,000		2,000,000
13	Salaries Payable	200,000		2,200,000

Insurance Expense
Date	Account Tittle	Debit	Credit	Debit	Credit
11	Cash	36,000		36,000
15	Prepaid Insurance	24,000		60,000

Salaries Payable
Date	Account Tittle	Debit	Credit	Debit	Credit
13.	Salaries Expense		200,000		200,000
	End. Bal.				200,000

Depreciation Expense
Date	Account Tittle	Debit	Credit	Debit	Credit
14	Accumulated Depreciation	100,000		100,000

Rent Expense
Date	Account Tittle	Debit	Credit	Debit	Credit
16	Cash	1,000,000		1,000,000

Dividends
Date	Account Tittle	Debit	Credit	Debit	Credit
19	Cash	200,000		200,000

Unearned Revenue
Date	Account Tittle	Debit	Credit	Debit	Credit
20	Cash		400,000		400,000
22	Sales	300,000			100,000

General Journal
Date	Account Tittle	Debit	Credit
	Cash	100,000
1.	Common Stock		100,000
	To record additional investment
	Inventory	250,000
2	Account Payable		250,000
	To record 10,000 Inv. on account @ $25
	Inventory	300,000
3	Account Payable		300,000
	To record 10,000 Inv. on account @ $30
4	Cash	2,000,000
	Sales		2,000,000
	To record Cash Sales, 20,000 units @ $100
	Cost of Goods Sold	450,000
4	Inventory		450,000
	To record COGs Sold, 10,000 units @ $20 & 10,000 Units & $25
	Inventory	975,000
5	Account Payable		975,000
	To record purchase of Inv. 30,000 units @$32.5
	Account Receivable	1,000,000
6	Sales		1,000,000
	To record 10,000 units @ $100 on account
	Cost of Goods Sold	300,000
6	Inventory		300,000
	To record cost of Inv. sold, 10,000 units @ $30
	Account Receivable	2,000,000
7.	Sales		2,000,000
	To record sale of 20,000 Inv. @ $100 on account
7.	Cost of Goods Sold	650,000
	Inventory		650,000
	To record Cost of 20,000 Inv. sold @ $32.5
8	Inventory	1,200,000
	Account Payable		1,200,000
	To record Inv. Purchase, 30,000 units @ $40
9	Account Receivable	1,000,000
	Sales		1,000,000
	To record sale of 10,000 inventory @ $100
9.	Cost of Goods Sold	325,000
	Inventory		325,000
	To record Cost of 10,000 inv. Sold @ $32.5
10.	Cash	2,000,000
	Sales		2,000,000
	To record Cash sales, 20,000 units @ $100
10.	Cost of Goods Sold	650,000
	Inventory		650,000
	To record cost of 20,000 Inv. Sold, @ $32.5
11.	Insurance Expense	36,000
	Cash		36,000
	To record purchase of new insurance policy for 6 monts
12.	Salaries Expense	2,000,000
	Cash		2,000,000
	To record payment of salary expense
13.	Salaries Expense	200,000
	Salary Payable		200,000
	To record accrued salaries
14.	Depreciation Expense-Equipment	100,000
	Accumulated Depreciation-Equipment		100,000
	To record adjusting entry for depreciation expense
15.	Insurance Expense	24,000
	Prepaid Insurance		24,000
	To record adjusting entry for prepaid insurance
16.	Rent Expense	1,000,000
	Cash		1,000,000
	To record rent payment
17.	Account Payable	1,200,000
	Cash		1,200,000
	To record payment to account payable
18.	Cash	3,000,000
	Account Receivable		3,000,000
	To record Collection from A/R- * 3,000,000, Assumed as Collection amount not given in point number.18. Note.
19.	Dividend	200,000
	Cash		200,000
	To record payment of dividend
20	Cash	400,000
	Unearned Revenue		400,000
	To record collection in advance
21	Inventory	100,000
	Cash		100,000
	To record purchase of special JH Shoes
22	Unearned Revenue	300,000
	Sales		300,000
	To record adjusting entry for unearned revenue
22.	Cost of Goods Sold	75,000
	Inventory		75,000
	To record cost of Inventory sold, 1,500 units @ $50

**4. Trial Balance**
Account Tittle	Debit	Credit
Cash	3,164,000
Account Receivable	1,300,000
Inventory	1,225,000
Prepaid Insurance	0
Equipment	500,000
Accumulated Depreciation-Equipment		200,000
Account Payable		1,675,000
Note Payable		250,000
Common Stock		400,000
Retained Earnings		424,000
Sales		8,300,00
Unearned Revenue		100,000
Salaries Payable		200,000
Dividend	200,000
Cost of Goods Sold	1,800,000
Salaries Expense	2,200,000
Rent Expense	1,000,000
Insurance Expense	60,000
Depreciation Expense	100,000
Total	11,549,000	11,549,000

**5. Income Statement**
Sales Revenue		8,300,000
Less: Cost of Goods Sold		1,800,000
Gross Income		6,500,000
Less: Opt. Expenses
Salaries Expense	2,200,000
Rent Expense	1,000,000
Depreciation Expense	100,000
Insurance Expense	60,000
Total operating Expense		3,360,000
Net Income		$ 3,140,000

**7- Statement of Retained Earnings**
Beginning Balance	$ 424,000
Add: Net Income	3,140,000
Less: Dividend	200,000
Ending Balance	$ 3,364,000

8. Balance Sheet
Assets
Cash	3,164,000
Account Receivable	1,300,000
Inventory	1,225,000
Equipment (net)	300,000
Total Assets	5,989,000
Account Payable	1,675,000
Salaries Payable	200,000
Unearned Revenue	100,000
Note Payable	250,000
Common Stock	400,000
Retained Earnings	3,364,000
Total Liabilities & Equities	5,989,000

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