Accounting for inventory using the perpetual system―LIFO Consider the January transactions for Draper Consulting: Completed a consulting engagement and received cash of $7,800. Prepaid three months' office rent, $1,650. Purchased 80 units software inventory on account, $1,680, plus freight in, $80. Sold 40 software units on account, $3,500. Consulted with a client for a fee of $1,000 on account. Jan 02 Jan 02 Jan 07 Jan 18 Jan 19 Jan 20 Jan 21 Jan 22 Jan 24 Paid utilities, $250. Jan 28 Sold 120 units of software for cash, $4,680. Paid employee salary, $2,055. Paid on account, $1,760. Purchased 240 units software inventory on account, $6,240. Jan 31 Recorded the following adjusting entries: Accrued salary expense, $685. Depreciation, $100 (Equipment, $30; Furniture, $70). Expiration of prepaid rent, $550. Physical count of inventory, 145 units. Requirements 1. Prepare perpetual inventory records for January for Draper using the LIFO perpetual method. (Note: You must figure cost on the 18th, 28th, and 31st.) 2. Journalize and post the January transactions using the perpetual inventory record created in requirement 1. Key all items by date. Compute each account balance, and denote the balance as Bal. 3. Journalize and post the adjusting entries. Denote each adjusting amount as Adj. After posting all adjusting entries, prove the equality of debits and credits in the ledger.
Accounting for inventory using the perpetual system―LIFO Consider the January transactions for Draper Consulting: Completed a consulting engagement and received cash of $7,800. Prepaid three months' office rent, $1,650. Purchased 80 units software inventory on account, $1,680, plus freight in, $80. Sold 40 software units on account, $3,500. Consulted with a client for a fee of $1,000 on account. Jan 02 Jan 02 Jan 07 Jan 18 Jan 19 Jan 20 Jan 21 Jan 22 Jan 24 Paid utilities, $250. Jan 28 Sold 120 units of software for cash, $4,680. Paid employee salary, $2,055. Paid on account, $1,760. Purchased 240 units software inventory on account, $6,240. Jan 31 Recorded the following adjusting entries: Accrued salary expense, $685. Depreciation, $100 (Equipment, $30; Furniture, $70). Expiration of prepaid rent, $550. Physical count of inventory, 145 units. Requirements 1. Prepare perpetual inventory records for January for Draper using the LIFO perpetual method. (Note: You must figure cost on the 18th, 28th, and 31st.) 2. Journalize and post the January transactions using the perpetual inventory record created in requirement 1. Key all items by date. Compute each account balance, and denote the balance as Bal. 3. Journalize and post the adjusting entries. Denote each adjusting amount as Adj. After posting all adjusting entries, prove the equality of debits and credits in the ledger.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter6: Cost Of Goods Sold And Inventory
Section: Chapter Questions
Problem 66BPSB: Recording Sale and Purchase Transactions Jordan Footwear sells athletic shoes and uses the perpetual...
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Transcribed Image Text:Accounting for inventory using the perpetual system―LIFO
Consider the January transactions for Draper Consulting:
Completed a consulting engagement and received cash of $7,800.
Prepaid three months' office rent, $1,650.
Purchased 80 units software inventory on account, $1,680, plus freight in, $80.
Sold 40 software units on account, $3,500.
Consulted with a client for a fee of $1,000 on account.
Jan 02
Jan 02
Jan 07
Jan 18
Jan 19
Jan 20
Jan 21
Jan 22
Jan 24
Paid utilities, $250.
Jan 28
Sold 120 units of software for cash, $4,680.
Paid employee salary, $2,055.
Paid on account, $1,760.
Purchased 240 units software inventory on account, $6,240.
Jan 31
Recorded the following adjusting entries:
Accrued salary expense, $685.
Depreciation, $100 (Equipment, $30; Furniture, $70).
Expiration of prepaid rent, $550.
Physical count of inventory, 145 units.
Requirements
1.
Prepare perpetual inventory records for January for Draper using the LIFO perpetual method.
(Note: You must figure cost on the 18th, 28th, and 31st.)
2. Journalize and post the January transactions using the perpetual inventory record created in
requirement 1. Key all items by date. Compute each account balance, and denote the balance as
Bal.
3. Journalize and post the adjusting entries. Denote each adjusting amount as Adj. After posting
all adjusting entries, prove the equality of debits and credits in the ledger.
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