Problem 1: The completed financial statement columns of the work sheet for Panaka Company are shown below.
PANAKA COMPANY Work Sheet For the Year Ended December 31, 2002
|
Account
|
|
Income Statement
|
Balance Sheet
|
|
|
No.
|
|
Account Titles
|
Dr.
|
Cr.
|
Dr.
|
Cr.
|
|
101
|
Cash
|
|
|
|
10,200
|
|
|
112
|
Accounts Receivable
|
|
7,500
|
|
|
130
|
Prepaid Insurance
|
|
1,800
|
|
|
157
|
Equipment
|
|
28,000
|
|
|
167
|
Accumulated Depreciation
|
|
8,600
|
|
|
201
|
Accounts Payable
|
|
12,000
|
|
|
212
|
Salaries Payable
|
|
3,000
|
|
|
311
|
Common Stock
|
|
20,000
|
|
|
320
|
Retained Earnings
|
|
14,000
|
|
|
332
|
Dividends
|
|
7,200
|
|
|
400
|
Service Revenue
|
44,000
|
|
|
|
622
|
Repair Expense
|
3,200
|
|
|
|
711
|
Depreciation Expense
|
2,800
|
|
|
|
722
|
Insurance Expense
|
1,200
|
|
|
|
726
|
Salaries Expense
|
36,000
|
|
|
|
732
|
Utilities Expense
|
3,700
|
|
|
|
|
Totals
|
46,900
|
44,000
|
54,700
|
57,600
|
|
|
|
Net Loss
|
|
2,900
|
2,900
|
|
|
|
|
|
46,900
|
46,900
|
57,600
|
57,600
|
|
Instructions:
(a) Prepare an income statement, a retained earnings statement, and a classified balance sheet.
(b) Prepare the closing entries.
(c) Post the closing entries and rule and balance the accounts. Use T accounts. Income Summary is account No. 350.
(d) Prepare a post-closing trial balance.
Problem 2: A Scott Company had a beginning inventory of 400 units of Product E2-D2 at a cost of $8.00 per unit. During the year, purchases were:
Feb. 20 700 units at $9.00 Aug. 12 300 units at $11.00
May 5 500 units at $10.00 Dec. 8 100 units at $12.00
Scott Company uses a periodic inventory system. Sales totaled 1,500 units.
Instructions
(a) Determine the cost of goods available for sale.
(b) Determine (1) the ending inventory, and (2) the cost of goods sold under each of the as¬sumed cost flow methods (FIFO, LIFO, and average). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods.
(c) Which cost flow method results in (1) the lowest inventory amount for the balance sheet, and (2) the lowest cost of goods sold for the income statement?