Big Oak Lumber is a lumber yard on Angel Island. Some of Big Oak’s transactions during the current year are as follows: Apr. 15 Sold lumber on account to Hard Hat Construction, $19,700. The inventory subsidiary ledger shows the cost of this merchandise was $10,300. Apr. 19 Purchased lumber on account from LHP Company, $3,700. May 10 Collected in cash the $19,700 account receivable from Hard Hat Construction. May 19 Paid the $3,700 owed to LHP Company. Dec. 31 Big Oak’s personnel counted the inventory on hand and determined its cost to be $114,000. The accounting records, however, indicate inventory of $116,500 and a cost of goods sold of $721,000. The physical count of the inventory was observed by the company’s auditors and is considered correct. Instructions a. Prepare journal entries to record these transactions and events in the accounting records of Big Oak Lumber. (The company uses a perpetual inventory system.) b. Prepare a partial income statement showing the company’s gross profit for the year. (Net sales for the year amount to $1,422,000.)
Big Oak Lumber is a lumber yard on Angel Island. Some of Big Oak’s transactions during the current year are as follows:
Apr. 15 Sold lumber on account to Hard Hat Construction, $19,700. The inventory subsidiary ledger shows the cost of this merchandise was $10,300.
Apr. 19 Purchased lumber on account from LHP Company, $3,700.
May 10 Collected in cash the $19,700
May 19 Paid the $3,700 owed to LHP Company.
Dec. 31 Big Oak’s personnel counted the inventory on hand and determined its cost to be $114,000. The accounting records, however, indicate inventory of $116,500 and a cost of goods sold of $721,000. The physical count of the inventory was observed by the company’s auditors and is considered correct.
Instructions
a. Prepare
b. Prepare a partial income statement showing the company’s gross profit for the year. (Net sales for the year amount to $1,422,000.)
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