Question

Work Sheet Extensions for Merchandise Inventory Adjustments: Periodic Inventory System

1. Complete the Adjustments columns for the merchandise inventory.

2. Extend the merchandise inventory to the Adjusted Trial Balance and Balance Sheet columns.

3. Extend the remaining accounts to the Adjusted Trial Balance and Income Statement columns.

4. Prepare a cost of goods sold section from the partial work sheet.

The following partial work sheet is taken from Kevin's Gift Shop for the year ended December 31, 20--. The ending merchandise inventory is $52,725.

Kevin's Gift Shop Work Sheet (Partial) For Year Ended December 31, 20--
ACCOUNT TITLE	TRIAL BALANCE		ADJUSTMENTS
	DEBIT	CREDIT	DEBIT	CREDIT
Merchandise Inventory	38,160
Income Summary
Purchases	92,325
Purchases Returns and Allowances		1,945
Purchases Discounts		3,215
Freight-In	425			1. Complete the Adjustments columns for the merchandise inventory. 2. Extend the merchandise inventory to the Adjusted Trial Balance and Balance Sheet columns. 3. Extend the remaining accounts to the Adjusted Trial Balance and Income Statement columns. Kevin's Gift Shop Work Sheet (Partial) For Year Ended December 31, 20-- ACCOUNT TITLE TRIAL BALANCE ADJUSTMENTS ADJUSTED TRIAL BALANCE INCOME STATEMENT BALANCE SHEET DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT Merchandise Inventory 38,160 Income Summary Purchases 92,325 Purchases Returns and Allowances 1,945 Purchases Discounts 3,215 Freight-In 425 4. Prepare a cost of goods sold section from the partial work sheet. Kevin's Gift Shop Cost of Goods Sold Section Cost of goods sold: $ $ $ Net purchases $ $ Cost of goods sold $

Answer 1

Solution:

1.

Kevin's Gift Shop Work Sheet (Partial) For Year Ended December 31, 20--
ACCOUNT TITLE	TRIAL BALANCE		ADJUSTMENTS
	DEBIT	CREDIT	DEBIT	CREDIT
Merchandise Inventory	38,160		87,590

Net purchases = Purchases + Freight-in - Purchases returns and allowances - Purchases discount

Net purchases = 92,325 + 425 - 1945- 3215

Net purchases = 87,590

Cost of goods sold = Beginning inventory + Net purchases - Ending inventory

Cost of good sold = 38,160 + 87,590 - 52,725

Cost of good sold = $73,025

2.

Kevin's Gift Shop Work Sheet (Partial) For Year Ended December 31, 20--
ACCOUNT TITLE	TRIAL BALANCE
	DEBIT	CREDIT
Merchandise Inventory	87,590

Kevin's Gift Shop
Work Sheet (Partial)
For Year Ended December 31, 20--

Liabilities Amount Assets Amount

Merchandise inventory 52,725

3.

Kevin's Gift Shop
Work Sheet (Partial)
For Year Ended December 31, 20--
ACCOUNT TITLE	TRIAL BALANCE
	DEBIT	CREDIT
Merchandise Inventory		87,590
Income summary
Purchases	92,325
Purchases returns and allowances		1,945
Purchases discount		3,215
Freight in	425
	92,750	92,750