Response to the following problem:
On December 1, 2012, Ruggiero Company had the account balances shown below.
Debits Cash $ 4,800
Accounts Receivable 3,900
Inventory 1,800*
Equipment 21,000 $31,500 $31,500
Credits Accumulated Depreciation"Equipment $ 1,500
Accounts Payable 3,000
Common Stock 10,000
Retained Earnings 17,000 $31,500 *(3,000 $0.60)
The following transactions occurred during December.
Dec. 3 Purchased 4,000 units of inventory on account at a cost of $0.72 per unit.
5 Sold 4,400 units of inventory on account for $0.90 per unit. (It sold 3,000 of the $0.60 units and 1,400 of the $0.72.)
7 Granted the December 5 customer $180 credit for 200 units of inventory returned costing $150.
These units were returned to inventory.
17 Purchased 2,200 units of inventory for cash at $0.80 each.
22 Sold 2,000 units of inventory on account for $0.95 per unit. (It sold 2,000 of the $0.72 units.)
Adjustment data:
1. Accrued salaries payable $400.
2. Depreciation $200 per month.
3. Income tax expense was $215, to be paid next year.
Instructions
(a) Journalize the December transactions and adjusting entries, assuming Ruggiero uses the perpetual inventory method
(b) Enter the December 1 balances in the ledger T accounts and post the December transactions.
In addition to the accounts mentioned above, use the following additional accounts: Cost of Goods Sold, Depreciation Expense, Salaries and Wages Expense, Salaries and Wages Payable, Sales Revenue, Sales Returns and Allowances, Income Tax Expense, and Income Taxes Payable.
(c) Prepare an adjusted trial balance as of December 31, 2012.
(d) Prepare an income statement for December 2012 and a classified balance sheet at December 31, 2012.
(e) Compute ending inventory and cost of goods sold under FIFO, assuming Ruggiero Company uses the periodic inventory system.
(f) Compute ending inventory and cost of goods sold under LIFO, assuming Ruggiero Company uses the periodic inventory system.
Reference: Kimmel, Paul D. (2011-06-28). Financial Accounting: Tools for Business Decision Making, 6th Edition (Page 326). John Wiley & Sons, Inc.. Kindle Edition.