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Vermont Resources, which uses the FIFO inventory costing method, has the following account balances at December 31, 2019, prior to releasing the financial statements for the year: Merchandise Inventory, ending Cost of Goods Sold Sales Revenue $ 13,000 67,000 120,000 Vermont has determined that the current replacement cost (current market value) of the December 31, 2019, ending merchandise inventory is $12,500. Read the requirements. Requirement 1. Prepare any adjusting journal entry required from the given information. (Record debits first, then credits. Select the explanation on the last line of the journal entry. For situations that do not require an entry, make sure to select "No entry required" in the first cell in the "Accounts" column and leave all other cells blank.) Date Accounts and Explanation Debit Credit Dec. 31

Vermont Resources, which uses the FIFO inventory costing method, has the following account balances at December 31, 2019, prior to releasing the financial statements for the year: Merchandise Inventory, ending Cost of Goods Sold Sales Revenue $ 13,000 67,000 120,000 Vermont has determined that the current replacement cost (current market value) of the December 31, 2019, ending merchandise inventory is $12,500. Read the requirements. Requirement 1. Prepare any adjusting journal entry required from the given information. (Record debits first, then credits. Select the explanation on the last line of the journal entry. For situations that do not require an entry, make sure to select "No entry required" in the first cell in the "Accounts" column and leave all other cells blank.) Date Accounts and Explanation Debit Credit Dec. 31

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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### Income Statement for New Home **Year Ended December 31, 2019** #### Net Sales Revenue - $162,000 #### Cost of Goods Sold: 1. **Beginning Merchandise Inventory** - $9,200 2. **Net Cost of Purchases** - $78,000 3. **Cost of Goods Available for Sale** - $87,200 4. **Less: Ending Merchandise Inventory** - $14,400 5. **Cost of Goods Sold** - $72,800 #### Gross Profit: - $89,200 #### Operating Expenses: - $56,400 #### Net Income: - $32,800 --- This statement provides an overview of the financial performance of New Home for the year ending December 31, 2019. It includes the following elements: - **Net Sales Revenue**: The total revenue generated from sales, which stands at $162,000. - **Cost of Goods Sold (COGS)**: This includes the beginning inventory ($9,200), the net cost of purchases ($78,000), and after adjusting for the ending inventory ($14,400), the total cost of goods sold amounts to $72,800. - **Gross Profit**: This is calculated by subtracting the COGS ($72,800) from the Net Sales Revenue, resulting in a gross profit of $89,200. - **Operating Expenses**: Total expenses necessary to run the business operations, which amount to $56,400. - **Net Income**: The final profit after all expenses have been deducted from the gross profit, which is $32,800. This income statement is a key financial document that indicates the profitability of New Home over the specified period.
Transcribed Image Text:### Income Statement for New Home **Year Ended December 31, 2019** #### Net Sales Revenue - $162,000 #### Cost of Goods Sold: 1. **Beginning Merchandise Inventory** - $9,200 2. **Net Cost of Purchases** - $78,000 3. **Cost of Goods Available for Sale** - $87,200 4. **Less: Ending Merchandise Inventory** - $14,400 5. **Cost of Goods Sold** - $72,800 #### Gross Profit: - $89,200 #### Operating Expenses: - $56,400 #### Net Income: - $32,800 --- This statement provides an overview of the financial performance of New Home for the year ending December 31, 2019. It includes the following elements: - **Net Sales Revenue**: The total revenue generated from sales, which stands at $162,000. - **Cost of Goods Sold (COGS)**: This includes the beginning inventory ($9,200), the net cost of purchases ($78,000), and after adjusting for the ending inventory ($14,400), the total cost of goods sold amounts to $72,800. - **Gross Profit**: This is calculated by subtracting the COGS ($72,800) from the Net Sales Revenue, resulting in a gross profit of $89,200. - **Operating Expenses**: Total expenses necessary to run the business operations, which amount to $56,400. - **Net Income**: The final profit after all expenses have been deducted from the gross profit, which is $32,800. This income statement is a key financial document that indicates the profitability of New Home over the specified period.
### Vermont Resources Inventory Adjustment Vermont Resources, which uses the FIFO inventory costing method, has the following account balances at December 31, 2019, prior to releasing the financial statements for the 2019 year: - **Merchandise Inventory, ending**: $13,000 - **Cost of Goods Sold**: $67,000 - **Sales Revenue**: $120,000 Vermont has determined that the current replacement cost (current market value) of the December 31, 2019, ending merchandise inventory is $12,500. **Requirement**: Read the [requirements](#). --- ### Requirement 1: **Task**: Prepare any adjusting journal entry required from the given information. **Instructions**: - Record debits first, then credits. - Select the explanation on the last line of the journal entry. - For situations that do not require an entry, make sure to select **"No entry required"** in the first cell in the "Accounts" column and leave all other cells blank. #### Journal Entry Format | Date | Accounts and Explanation | Debit ($) | Credit ($) | |----------|--------------------------------------------------------|-----------|------------| | Dec. 31 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- **Detailed Explanation**: Based on the above accounts and the need to reflect the current replacement cost, a journal entry might be required to adjust the merchandise inventory value from $13,000 to $12,500. The appropriate accounts to debit or credit will be determined based on the accounting standards for inventory adjustments. --- **Note**: This educational content is designed to help students understand the process of adjusting journal entries for inventory based on the FIFO method and current market values.
Transcribed Image Text:### Vermont Resources Inventory Adjustment Vermont Resources, which uses the FIFO inventory costing method, has the following account balances at December 31, 2019, prior to releasing the financial statements for the 2019 year: - **Merchandise Inventory, ending**: $13,000 - **Cost of Goods Sold**: $67,000 - **Sales Revenue**: $120,000 Vermont has determined that the current replacement cost (current market value) of the December 31, 2019, ending merchandise inventory is $12,500. **Requirement**: Read the [requirements](#). --- ### Requirement 1: **Task**: Prepare any adjusting journal entry required from the given information. **Instructions**: - Record debits first, then credits. - Select the explanation on the last line of the journal entry. - For situations that do not require an entry, make sure to select **"No entry required"** in the first cell in the "Accounts" column and leave all other cells blank. #### Journal Entry Format | Date | Accounts and Explanation | Debit ($) | Credit ($) | |----------|--------------------------------------------------------|-----------|------------| | Dec. 31 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- **Detailed Explanation**: Based on the above accounts and the need to reflect the current replacement cost, a journal entry might be required to adjust the merchandise inventory value from $13,000 to $12,500. The appropriate accounts to debit or credit will be determined based on the accounting standards for inventory adjustments. --- **Note**: This educational content is designed to help students understand the process of adjusting journal entries for inventory based on the FIFO method and current market values.
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