Journal Entry Workshop: COMPREHENSIVE PROBLEM - CHAPTER 4 Problem 4-26B Comprehensive eyele problem: perpetual system At the beginning of Year 2, Euro Enterprises had the following balances in its accounts: Cash Inventory Land Common stock Retained earnings $16,800 4,000 2.000 12.000 10.800 During Year 2, Euro Enterprises experienced the following events: 1. Purchased inventory that cost $11,200 on account from Ivey Company under terms 2/10, 1/30. The merchandise was delivered FOB shipping point. Freight costs of $800 were paid in cash. 2. Returned $600 of the inventory that it had purchased because the inventory was damaged in transit. The seller agreed to pay the return freight cost. 3. Paid the amount due on its account payable to Ivey Company within the cash discount period. 4. Sold inventory that had cost $8,000 for $13,500. The sale was on account under terms 2/10, 1/45. 5. Received merchandise returned from a customer. The merchandise had originally cost $1,200 and had been sold to the customer for $2,100 cash. The customer was paid $2,100 cash for the returned merchandise. 6. Delivered goods in Event 4 FOB destination. Freight costs of $800 were paid in cash. 7. Collected the amount due on accounts receivable within the discount period. S. Sold the land for $3,500. 9. Recognized $500 of accrued interest revenue. 10. Took a physical count indicating that $6,500 of inventory was on hand at the end of the accounting period. Hint: Determine the current balance in the inventory account before calculating the amount of the inventory write down. a. Date Account Titles Debit Credit 8. 9. 10. 5. T-ACCOUNTS Liabilities Stockholders'Equity Cash | Accounts Payable Common Stock Bal Ral. Retained Earnings Merchandise Inventory Bal Sales Revenue Hal 10 Cost of Goods Sold Accounts Receivable Bal. Interest Receivable Transportation-out Land Bal. Interest Revenue Bal Gaines Sale of Land Ral 0 136 Dashboard Calendar To Do Notifications Inbox c. TRIAL BALANCE Cash Merchandise Inventory Totals d. FINANCIAL STATEMENTS Gross Margin Operating Expenses Operating Income Nonoperating Items Net Income d. d. Cash Flows From Operating Activities: Net Cash Flow from Operating Activities Cash Flows From Investing Activities Inflow from Sale of Land Cash Flows From Financing Activities Net Change in Cash Plus: Beginning Cash Balance Ending Cash Balance e. CLOSING ENTRIES Date Account Titles Debit Credit Closing Entries, December 31, Year 2 Dec. 31 f. POST-CLOSING TRIAL BALANCE Account Titles Debit Credit Totals