On December 1, 2017, Waylon Company had the account balances shown below. The following transactions occurred during

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On December 1, 2017, Waylon Company had the account balances shown below.

On December 1, 2017, Waylon Company had the account balances

The following transactions occurred during December.
Dec. 3 Purchased 4,000 units of inventory on account at a cost of $0.72 per unit.
5 Sold 4,400 units of inventory on account for $0.90 per unit. (Waylon sold 3,000 of the $0.60 units and 1,400 of the $0.72.)
7 Granted the December 5 customer $180 credit for 200 units of inventory returned costing $144. These units were returned to inventory.
17 Purchased 2,200 units of inventory for cash at $0.80 each.
22 Sold 2,000 units of inventory on account for $0.95 per unit. (Waylon sold 2,000 of the $0.72 units.)
Adjustment data:
1. Accrued salaries and wages payable $400.
2. Depreciation on equipment $200 per month.
3. Income tax expense was $215, to be paid next year.
Instructions
(a) Journalize the December transactions and adjusting entries, assuming Waylon uses the perpetual inventory method.
(b) Enter the December 1 balances in the ledger T-accounts and post the December transactions. In addition to the accounts mentioned above, use the following additional accounts: Income Taxes Payable, Salaries and Wages Payable, Sales Revenue, Sales Returns and Allowances, Cost of Goods Sold, Depreciation Expense, Salaries and Wages Expense, and Income Tax Expense.
(c) Prepare an adjusted trial balance as of December 31, 2017.
(d) Prepare an income statement for December 2017 and a classified balance sheet at December 31, 2017.
(e) Compute ending inventory and cost of goods sold under FIFO, assuming Waylon Company uses the periodic inventory system.
(f) Compute ending inventory and cost of goods sold under LIFO, assuming Waylon Company uses the periodic inventory system.

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula                Ending Inventory Formula =...
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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Accounting Tools for Business Decision Making

ISBN: 978-1118096895

6th edition

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso

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