Jack and Mary Smith own TQ, a small landscaping business. TQ has two sources of revenues:

• providing general landscaping services; and selling miscellaneous landscaping supplies.

Date Transaction details

June 30 Ending inventory of 20 rakes, each costing $5, owner’s equity of $3,000, accounts payable of $200, cash is only remaining asset.

July 1 Bought 50 rakes, $10 each, on account, 2/10, n/30 from Supplier Who.

July 1 Later in the day, TQ negotiated a $100 allowance as the rake handles were the wrong thickness.

July 2 Sold 10 rakes for total of $400 to Customer ABC, received cash.

July 4 TQ bought a riding lawn mower for $4,000. Expected life is 5 years. Payment due in 30 days.

July 5 Bought 5 rakes, $12 each. Paid for rakes with cash.

July 7 Sold 40 rakes for $25 each to Customer DEF, granted payment terms of 2/15, n/30.

July 9 Customer DEF returned 2 rakes purchased July 7. Both were broken. Customer wanted cash reimbursement for 1 rake & a new rake in exchange for the other. The customer also requested a reduction in price on the other 38 rakes purchased as they were not working as well as promised. TQ Landscaping reduced the selling price to $20 for these 38 rakes.

July 11 Payment of $400 is made on the July 1 purchase of rakes.

July 14 Received payment of $1,000 for 4 months of future landscaping services for XYZ Realty Co.

July 15 Provided landscaping to UFV. Charged UFV $200. Terms 2/20, n/60. Used one of the company rakes purchased on July 5. Somehow, the rake got lost on the way back to company offices.

July 16 Payment of $400 is received on the July 7 sale to Customer DEF.

July 22 Bought 15 rakes, $20 each, 3/10, n/16. Rakes were delivered to TQ by courier. Courier charges were $30; courier was paid with a company check.

July 24 Returned 2 of the 15 rakes bought on July 22.

July 30 Completed landscaping for XYZ Realty Co as required for July.

July 31 Inventory count of rakes at month end shows only 2 rakes are left in inventory.

Your job

Provide the following under a perpetual inventory record system using the FIFO, not MVA:

1. Detailed inventory records/worksheet; please include the column in relation to sales as per class.
2. Journal entries for all transactions;
3. T-Accounts, trial balances, adjusting entries, adjusted trial balance (with all 7 columns please), financial statements, closing entries and post-closing trial balance;
4. Diagrams for each journal entry showing the impact of the transactions on the assets, liabilities and/or owner’s equity account;
5. List of any assumptions; and
6. Statement as to whether total Cost of Goods Sold and the dollar value of ending inventory will be higher or lower if the weighted average method was used instead of FIFO, and why this change occurs.

Answer rating: 100% (QA)

To provide the requested information I will go through each transaction and provide the necessary records journal entries Taccounts and other details Lets begin 1 Detailed Inventory RecordsWorksheet U... View the full answer