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At the end of October, the ABC Company needed to make accrual adjustments to the accounts, using the following information: Depreciation for the month is £50 An inventory count on October 31 revealed that 125units were in the company’s warehouse. The cost flow assumption followed for the preparation of statements is FIFO.   On September 1, ABC Company issued a 3-month, annual rate 6%, $1,000 Note Payable to Credit Bank. Capital and interest are to be paid at the end of November.     Prepare a worksheet showing the October transactions and the October accrual adjustments for the ABC Company. The work sheet is attached below, which is solvevd. But I wonder how to get the lastest amount of inventory, which is 125? Can you please show me the calculation process?

At the end of October, the ABC Company needed to make accrual adjustments to the accounts, using the following information: Depreciation for the month is £50 An inventory count on October 31 revealed that 125units were in the company’s warehouse. The cost flow assumption followed for the preparation of statements is FIFO.   On September 1, ABC Company issued a 3-month, annual rate 6%, $1,000 Note Payable to Credit Bank. Capital and interest are to be paid at the end of November.     Prepare a worksheet showing the October transactions and the October accrual adjustments for the ABC Company. The work sheet is attached below, which is solvevd. But I wonder how to get the lastest amount of inventory, which is 125? Can you please show me the calculation process?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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At the end of October, the ABC Company needed to make accrual adjustments to the accounts, using the following information:

  • Depreciation for the month is £50
  • An inventory count on October 31 revealed that 125units were in the company’s warehouse. The cost flow assumption followed for the preparation of statements is FIFO.  
  • On September 1, ABC Company issued a 3-month, annual rate 6%, $1,000 Note Payable to Credit Bank. Capital and interest are to be paid at the end of November.

 

 

  1. Prepare a worksheet showing the October transactions and the October accrual adjustments for the ABC Company.

The work sheet is attached below, which is solvevd. But I wonder how to get the lastest amount of inventory, which is 125?

Can you please show me the calculation process?

ABC Company sells novelty mugs that it sources from various local small businesses to national retailers. At end of September, the balance sheet of ABC Company was: Assets: Liabilities : Cash 3,245 Debt 1,005 Accounts Receivable 1,450 Accounts Payable 2,360 Inventory* 1,300 Uneamed Revenue 60 Equipment - at cost 8,500 Total liabilities: 3,425 Less: Accum. depreciation -2,500 Equity: Total assets: 11,995 Share capital £8,000 Retained eamings 570 Total equity: 8,570 *325 units at £4 each During October, the following transactions occurred: Purchased 400 units at £3 each on credit Purchased 400 units at £2 each, paying cash Acquired office equipment on credit for £2,500 October 1 October 2 October 5 October 20 Received a £100 cash advance from customer A October 24 Sold inventory on account for £1,000 Sold inventory for cash £4,000 Paid £1,500 for various selling and administrative costs incurred during the month October 25 October 31 of October.
Transcribed Image Text:ABC Company sells novelty mugs that it sources from various local small businesses to national retailers. At end of September, the balance sheet of ABC Company was: Assets: Liabilities : Cash 3,245 Debt 1,005 Accounts Receivable 1,450 Accounts Payable 2,360 Inventory* 1,300 Uneamed Revenue 60 Equipment - at cost 8,500 Total liabilities: 3,425 Less: Accum. depreciation -2,500 Equity: Total assets: 11,995 Share capital £8,000 Retained eamings 570 Total equity: 8,570 *325 units at £4 each During October, the following transactions occurred: Purchased 400 units at £3 each on credit Purchased 400 units at £2 each, paying cash Acquired office equipment on credit for £2,500 October 1 October 2 October 5 October 20 Received a £100 cash advance from customer A October 24 Sold inventory on account for £1,000 Sold inventory for cash £4,000 Paid £1,500 for various selling and administrative costs incurred during the month October 25 October 31 of October.
Question 1 a) АВС Соmрanу October Transactions & Accruals Assets Liabilities Equity Equipment - Equipment - Accumulated Depreciation Аcсounts Accounts Unearned Share Retained Revenue Capital Earnings Item Beginning balances Cash Receivable Inventory at cost Debt Payable 1,300 1,200 3,245 1,450 8,500 -2,500 1,005 2,360 60 8,000 570 October 1st 1,200 October 2nd -800 800 October 5th 2500 2500 October 20th 100 100 October 24th 1000 1000 Revenue October 24th 4000 4000 Revenue October 27th -1500 -1500 SG&A Balances before accruals 5,045 2,450 3,300 11,000 -2,500 1,005 6,060 160 8,000 4,070 -50 Depreciation expense -3050 Cost of goods sold Depreciation expense -50 Cost of goods sold -3050 Interest expense -5 Interest expense Balances after adjustments 5,045 2,450 11,000 250 -2,550 1,010 6,060 160 8,000 965 * Inventory: 125 units *£2=£250 Cost of goods sold: Goods available for sale (325*4+400*3+400*2) – Inventory 250 =3,050
Transcribed Image Text:Question 1 a) АВС Соmрanу October Transactions & Accruals Assets Liabilities Equity Equipment - Equipment - Accumulated Depreciation Аcсounts Accounts Unearned Share Retained Revenue Capital Earnings Item Beginning balances Cash Receivable Inventory at cost Debt Payable 1,300 1,200 3,245 1,450 8,500 -2,500 1,005 2,360 60 8,000 570 October 1st 1,200 October 2nd -800 800 October 5th 2500 2500 October 20th 100 100 October 24th 1000 1000 Revenue October 24th 4000 4000 Revenue October 27th -1500 -1500 SG&A Balances before accruals 5,045 2,450 3,300 11,000 -2,500 1,005 6,060 160 8,000 4,070 -50 Depreciation expense -3050 Cost of goods sold Depreciation expense -50 Cost of goods sold -3050 Interest expense -5 Interest expense Balances after adjustments 5,045 2,450 11,000 250 -2,550 1,010 6,060 160 8,000 965 * Inventory: 125 units *£2=£250 Cost of goods sold: Goods available for sale (325*4+400*3+400*2) – Inventory 250 =3,050
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