BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows.
| Administration | Accounting | Domestic | International | |||||||||
| Employees | – | 28 | 51 | 21 | ||||||||
| Transactions | 32,000 | – | 19,000 | 76,000 | ||||||||
| Department direct costs | $ | 358,000 | $ | 149,000 | $ | 935,000 | $ | 3,560,000 | ||||
Required:
a. Allocate the cost of the service departments
to the operating departments using the direct method.
b. Allocate the cost of the service departments to
the operating departments using the step method. Start with
Administration.
c. Allocate the cost of the service departments to
the operating departments using the reciprocal method.
Allocate the cost of the service departments to the operating departments using the direct method. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.)
required A
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required B
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| required C | |||||||||||||||||||||||||||||||
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In: Accounting
Tiger Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for May of the current year. The company expected to operate the department at 100% of normal capacity of 8,700 hours.
|
TIGER EQUIPMENT INC. |
|
Factory Overhead Cost Budget—Welding Department |
|
For the Month Ended May 31 |
|
1 |
Variable costs: |
||
|
2 |
Indirect factory wages |
$44,370.00 |
|
|
3 |
Power and light |
21,750.00 |
|
|
4 |
Indirect materials |
17,400.00 |
|
|
5 |
Total variable cost |
$83,520.00 |
|
|
6 |
Fixed costs: |
||
|
7 |
Supervisory salaries |
$19,200.00 |
|
|
8 |
Depreciation of plant and equipment |
35,200.00 |
|
|
9 |
Insurance and property taxes |
19,550.00 |
|
|
10 |
Total fixed cost |
73,950.00 |
|
|
11 |
Total factory overhead cost |
$157,470.00 |
During May, the department operated at 9,120 standard hours, and the factory overhead costs incurred were indirect factory wages, $47,092; power and light, $22,500; indirect materials, $18,850; supervisory salaries, $19,200; depreciation of plant and equipment, $35,200; and insurance and property taxes, $19,550.
Prepare a factory overhead cost variance report for May. To be useful for cost control, the budgeted amounts should be based on 9,120 hours. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter all variances as positive amounts.
In: Accounting
Cost is classified on the basis of behaviour as fixed cost, variable cost and semi-variable cost. You are required to explain these 3 elements of cost with an example in an engineering organization
In: Accounting
what are the fixed cost variable cost, semi variable cost and sunk cost for oil and refinery sector companies like HPCL, IOL etc?
In: Accounting
Assignment Exercise 23–1: Cost of Owning and Cost of Leasing Cost of owning and cost of leasing tables are reproduced below.
Required Using the appropriate table from the Chapter 13 Time Value of Money Appendices appearing as 13-A, 13-B, and 13-C, record the present-value factor at 10% for each year and compute the present-value cost of owning and the present value of leasing. Which alternative is more desirable at this interest rate? Do you think your answer would change if the interest rate was 6% instead of 10%?
|
Cost of Owning—Anywhere Clinic—Comparative Present Value |
||||||
|
For-Profit Cost of Owning: |
Year 0 |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|
Net Cash Flow |
(48,750) |
2,500 |
2,500 |
2,500 |
2,500 |
5,000 |
|
Present value factor |
||||||
|
Present value answers = |
||||||
|
Present value cost of owning = |
||||||
|
Cost of Leasing—Anywhere Clinic—Comparative Present Value |
||||||
|
For-Profit Cost of Leasing: |
Year 0 |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|
Net Cash Flow |
(8,250) |
(8,250) |
(8,250) |
(8,250) |
(8,250) |
— |
|
Present value factor |
— |
|||||
|
Present value answers = |
||||||
|
Present value cost of leasing = |
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In: Finance
Select the incorrect statement regarding cost-volume-profit relationships for multiple products.
For a company that sells many different products, the level of the break-even point is affected by the company's sales mix.
An increase in sales volume accompanied by a change in sales mix could cause a company's profits to decrease.
For a multi-product company, cost-volume-profit analysis can be done using the contribution margin ratio of the most profitable product.
None of these answers is correct.
Which of the following statements regarding cost-volume-profit analysis is incorrect?
Cost-volume-profit analysis assumes that fixed cost per unit is constant.
Cost-volume-profit analysis assumes that the selling price cost per unit is constant.
An increase in inventory during a period will affect cost-volume-profit relationships.
Although cost-volume-profit analysis is based on assumptions that seldom will be perfectly achieved, the technique is still useful to managers.
Martinez Company sells one product that has a sales price of $20 per unit, variable costs of $8 per unit, and total fixed costs of $200,000, what is the contribution margin ratio?
40%
60%
50%
66%
Select the correct statement regarding the contribution margin ratio.
The contribution margin ratio can be calculated using either total amounts or per unit amounts.
The contribution margin ratio equals contribution margin per unit divided by variable cost per unit.
Total fixed costs divided by the contribution margin ratio equals the break-even point in units.
An increase in variable cost per unit will cause the contribution margin ratio to increase.
In: Accounting
WoodGrain Technology makes home office furniture from fine hardwoods. The company uses a job-order costing system and predetermined overhead rates to apply manufacturing overhead cost to jobs. The predetermined overhead rate in the Preparation Department is based on machine hours, and the rate in the Fabrication Department is based on direct labor-hours. At the beginning of the year, the company’s management made the following estimates for the year:
| Department | |||||||
| Preparation | Fabrication | ||||||
| Machine-hours | 83,000 | 32,000 | |||||
| Direct labor-hours | 39,000 | 51,000 | |||||
| Direct materials cost | $ | 187,000 | $ | 197,000 | |||
| Direct labor cost | $ | 281,000 | $ | 522,000 | |||
| Fixed manufacturing overhead cost | $ | 190,900 | $ | 479,400 | |||
| Variable manufacturing overhead per machine-hour | $ | 2.40 | - | ||||
| Variable manufacturing overhead per direct labor-hour | - | $ | 4.40 | ||||
Job 127 was started on April 1 and completed on May 12. The company's cost records show the following information concerning the job:
| Department | ||||||||
| Preparation | Fabrication | |||||||
| Machine-hours | 330 | 74 | ||||||
| Direct labor-hours | 79 | 134 | ||||||
| Direct materials cost | $ | 948 | $ | 1,180 | ||||
| Direct labor cost | $ | 740 | $ | 960 | ||||
Required:
1. Compute the predetermined overhead rate used during the year in the Preparation Department. Compute the rate used in the Fabrication Department. (Round predetermined overhead rate to 2 decimal places.)
| Predetermined overhead rare | ||
| Preparation department | $ | per MH |
| Fabrication department | $ | per DHL |
2. Compute the total overhead cost applied to Job 127. (Round predetermined overhead rate to 2 decimal places and round your final answer to nearest whole dollar.)
| Total overhead cost | $ |
3-a. What would be the total cost recorded for Job 127? (Round your predetermined overhead rate and intermediate calculations to 2 decimal places and round your final answer to nearest whole dollar.)
Department
| Preparation | Fabrication | Total | |
| Direct materials | $ | $ | $ |
| Direct labor | |||
| Manufacturing overhead | |||
| Total cost | $ | $ | $ |
3-b. If the job contained 28 units, what would be the unit product cost? (Round predetermined overhead rate and final answer to 2 decimal places.)
| Unit product cost | $ | per unit |
4. At the end of the year, the records of WoodGrain Technology revealed the following actual cost and operating data for all jobs worked on during the year: (Round predetermined overhead rate to 2 decimal places.)
| Department | |||||||
| Preparation | Fabrication | ||||||
| Machine-hours | 82,700 | 23,500 | |||||
| Direct labor-hours | 25,000 | 59,000 | |||||
| Direct materials cost | $ | 165,500 | $ | 416,000 | |||
| Manufacturing overhead cost | $ | 398,890 | $ | 778,000 | |||
What was the amount of underapplied or overapplied overhead in each department at the end of the year?
| Preparation department | Underapplied or overapplied overhead | $ _____ |
| Fabrication department | Underapplied or overapplied overhead | $_____ |
In: Accounting
The beginning inventory at Midnight Supplies and data on purchases and sales for a three month period ending March 31 are as follows:
|
Date |
Transaction | Number of Units | Per Unit | Total | |
|---|---|---|---|---|---|
| Jan. | 1 | Inventory | 2,500 | $70.00 | $175,000 |
| 10 | Purchase | 8,000 | 78.00 | 624,000 | |
| 28 | Sale | 3,800 | 140.00 | 532,000 | |
| 30 | Sale | 1,250 | 140.00 | 175,000 | |
| Feb. | 5 | Sale | 500 | 140.00 | 70,000 |
| 10 | Purchase | 17,000 | 80.00 | 1,360,000 | |
| 16 | Sale | 9,100 | 145.00 | 1,319,500 | |
| 28 | Sale | 8,700 | 145.00 | 1,261,500 | |
| Mar. | 5 | Purchase | 14,300 | 81.60 | 1,166,880 |
| 14 | Sale | 9,800 | 145.00 | 1,421,000 | |
| 25 | Purchase | 3,000 | 82.00 | 246,000 | |
| 30 | Sale | 7,900 | 145.00 | 1,145,500 | |
| Instructions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1. | Record the inventory,
purchases, and cost of goods sold data in a perpetual inventory
record similar to the one illustrated in
Exhibit 3 , using the first-in, first-out method. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2. | Determine the total sales and the total cost of goods sold for the period. Journalize the entries in the sales and cost of goods sold accounts. Assume that all sales were on account and date your journal entry March 31. Refer to the Chart of Accounts for exact wording of account titles. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3. | Determine the gross profit from sales for the period. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4. | Determine the ending inventory cost as of March 31. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5. |
Based upon the preceding data, would you expect the ending inventory using the last-in, first-out method to be higher or lower?
3. Determine the gross profit from sales for the period. 4. Determine the ending inventory cost as of March 31. 5. Based upon the preceding data, would you expect the ending inventory using the last-in, first-out method to be higher or lower? Higher Lower |
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In: Accounting
The beginning inventory at Midnight Supplies and data on purchases and sales for a three month period ending March 31 are as follows:
|
Date |
Transaction |
Number of Units |
Per Unit |
Total |
|
| Jan. | 1 | Inventory | 2,600 | $54.00 | $140,400 |
| 10 | Purchase | 7,000 | 62.00 | 434,000 | |
| 28 | Sale | 3,850 | 108.00 | 415,800 | |
| 30 | Sale | 1,300 | 108.00 | 140,400 | |
| Feb. | 5 | Sale | 500 | 108.00 | 54,000 |
| 10 | Purchase | 17,500 | 64.00 | 1,120,000 | |
| 16 | Sale | 8,700 | 113.00 | 983,100 | |
| 28 | Sale | 8,600 | 113.00 | 971,800 | |
| Mar. | 5 | Purchase | 14,000 | 65.60 | 918,400 |
| 14 | Sale | 10,100 | 113.00 | 1,141,300 | |
| 25 | Purchase | 3,300 | 66.00 | 217,800 | |
| 30 | Sale | 7,750 | 113.00 | 875,750 | |
| Instructions | |
| 1. | Record the inventory, purchases, and cost of goods sold data in
a perpetual inventory record similar to the one illustrated in
Exhibit 3 , using the first-in, first-out method. |
| 2. | Determine the total sales and the total cost of goods sold for the period. Journalize the entries in the sales and cost of goods sold accounts. Assume that all sales were on account and date your journal entry March 31. Refer to the Chart of Accounts for exact wording of account titles. |
| 3. | Determine the gross profit from sales for the period. |
| 4. | Determine the ending inventory cost as of March 31. |
| 5. |
Based upon the preceding data, would you expect the ending inventory using the last-in, first-out method to be higher or lower? |
| CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Midnight Supplies | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1. Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record similar to the one illustrated in
Exhibit 3
, using the first-in, first-out method. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Goods Sold Unit Cost column and in the Inventory Unit Cost column.
| Date | Purchases | Cost of Goods Sold | Inventory | ||||||
| Date | Quantity | Unit Cost | Total Cost | Quantity | Unit Cost | Total Cost | Quantity | Unit Cost | Total Cost |
| Jan. 1 | |||||||||
| 10 | |||||||||
| 10 | |||||||||
| 28 | |||||||||
| 28 | |||||||||
| 30 | |||||||||
| Feb. 5 | |||||||||
| 10 | |||||||||
| 10 | |||||||||
| 16 | |||||||||
| 16 | |||||||||
| 28 | |||||||||
| Mar. 5 | |||||||||
| 5 | |||||||||
| 14 | |||||||||
| 14 | |||||||||
| 25 | |||||||||
| 25 | |||||||||
| 30 | |||||||||
| 30 | |||||||||
| 31 | Balances | ||||||||
2. Determine the total sales and the total cost of goods sold for the period. Journalize the entries in the sales and cost of goods sold accounts. Assume that all sales were on account and date your journal entry March 31. Refer to the Chart of Accounts for exact wording of account titles.
Question not attempted.
PAGE 10
JOURNAL
ACCOUNTING EQUATION
Score: 0/51
| DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
|---|---|---|---|---|---|---|---|---|
|
1 |
||||||||
|
2 |
||||||||
|
3 |
||||||||
|
4 |
3. Determine the gross profit from sales for the period.
4. Determine the ending inventory cost as of March 31.
5. Based upon the preceding data, would you expect the ending inventory using the last-in, first-out method to be higher or lower?
Lower
Higher
In: Accounting
The beginning inventory at Midnight Supplies and data on purchases and sales for a three month period ending March 31 are as follows:
|
Date |
Transaction |
Number of Units |
Per Unit |
Total |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Jan. |
1 |
Inventory |
7,500 |
$ 75.00 |
$ 562,500 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
10 |
Purchase |
22,500 |
85.00 |
1,912,500 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
28 |
Sale |
11,250 |
150.00 |
1,687,500 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
30 |
Sale |
3,750 |
150.00 |
562,500 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Feb. |
5 |
Sale |
1,500 |
150.00 |
225,000 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
10 |
Purchase |
54,000 |
87.50 |
4,725,000 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
16 |
Sale |
27,000 |
160.00 |
4,320,000 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
28 |
Sale |
25,500 |
160.00 |
4,080,000 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Mar. |
5 |
Purchase |
45,000 |
89.50 |
4,027,500 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
14 |
Sale |
30,000 |
160.00 |
4,800,000 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
25 |
Purchase |
7,500 |
90.00 |
675,000 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
30 |
Sale |
26,250 |
160.00 |
4,200,000 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Instructions |
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|
1. |
Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record similar to the one illustrated in Exhibit 3 , using the first-in, first-out method. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
2. |
Determine the total sales and the total cost of goods sold for the period. Journalize the entries in the sales and cost of goods sold accounts. Assume that all sales were on account and date your journal entry March 31. Refer to the Chart of Accounts for exact wording of account titles. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
3. |
Determine the gross profit from sales for the period. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
4. |
Determine the ending inventory cost as of March 31. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
5. |
Based upon the preceding data, would you expect the ending inventory using the last-in, first-out method to be higher or lower? |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
CHART OF ACCOUNTS |
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|
Midnight Supplies |
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|
General Ledger |
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|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1. Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record similar to the one illustrated in
Exhibit 3
, using the first-in, first-out method. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Goods Sold Unit Cost column and in the Inventory Unit Cost column.
|
Date |
Purchases |
Cost of goods Sold |
Inventory |
||||||
|
Date |
Quantity |
Unit Cost |
Total Cost |
Quantity |
Unit Cost |
Total Cost |
Quantity |
Unit Cost |
Total Cost |
|
Jan. 1 |
|||||||||
|
10 |
|||||||||
|
10 |
|||||||||
|
28 |
|||||||||
|
28 |
|||||||||
|
30 |
|||||||||
|
Feb. 5 |
|||||||||
|
10 |
|||||||||
|
10 |
|||||||||
|
16 |
|||||||||
|
16 |
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28 |
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Mar. 5 |
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|
5 |
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|
14 |
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|
14 |
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|
25 |
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|
25 |
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|
30 |
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|
30 |
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|
31 |
Balances |
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2. Determine the total sales and the total cost of goods sold for the period. Journalize the entries in the sales and cost of goods sold accounts. Assume that all sales were on account and date your journal entry March 31. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 10
JOURNAL
ACCOUNTING EQUATION
|
DATE |
DESCRIPTION |
POST. REF. |
DEBIT |
CREDIT |
ASSETS |
LIABILITIES |
EQUITY |
|
|---|---|---|---|---|---|---|---|---|
|
1 |
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|
2 |
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|
3 |
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|
4 |
3. Determine the gross profit from sales for the period.
4. Determine the ending inventory cost as of March 31.
5. Based upon the preceding data, would you expect the ending inventory using the last-in, first-out method to be higher or lower?
Higher
Lower
In: Accounting