Problem 6-6B (Algo) Record transactions using a perpetual system, prepare a partial income statement, and adjust for the lower of cost and net realizable value (LO6-2, 6-3, 6-4, 6-5, 6-6) At the beginning of November, Yoshi Incorporated's inventory consists of 59 units with a cost per unit of $95. The following transactions occur during the month of November. November 2 Purchase 100 units of inventory on account from Toad Incorporated for $100 per unit, terms 2/10, n/30. November 3 Pay cash for freight charges related to the November 2 purchase, $300. November 9 Return 25 defective units from the November 2 purchase and receive credit. November 11 Pay Toad Incorporated in full. November 16 Sell 100 units of inyentory to customers on account, $13,900. (Hint: The cost of units sold from the November 2 purchase includes $100 unit cost plus $4 per unit for freight less $2 per unit for the purchase discount, or $102 per unit.) November 20 Receive full payment from customers related to the sale on November 16. November 21 Purchase 69 units of inventory from Toad Incorporated for $105 per unit, terms 1/10, n/30. November 24 Sell 90 units of inventory to customers for cash, $9,000. (Note: For calculating the cost of inventory sold, ignore the possible purchase discount on November 20.) Required: 1. Assuming that Yoshi Incorporated uses a FIFO perpetual inventory system to maintain its internal inventory records, record the transactions. 2. Suppose by the end of November that the remaining inventory is estimated to have a net realizable value per unit of $80, record any necessary adjustment for the lower of cost and net realizable value. 3. Prepare the top section of the multiple-step income statement through gross profit for the month of November after the adjusting entry for lower of cost and net realizable value.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
