On December 1, 2020, Matthias Company had the account balances shown below.

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. (Matthias 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 $120. These units ere 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. (Matthias sold 2,000 of the $0.72 units.)

Adjustment data:

1. Accrued salaries payable $400.

2. Depreciation $200 per month.

Instructions

a. Journalize the December transactions and adjusting entries, assuming Matthias 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: Cost of Goods Sold, Depreciation Expense, Salaries and Wages Expense, Salaries and Wages Payable, Sales Revenue, and Sales Returns and Allowances.

c. Prepare an adjusted trial balance as of December 31, 2020.

d. Prepare an income statement for December 2020 and a classified balance sheet at December 31, 2020.

e. Compute ending inventory and cost of goods sold under FIFO, assuming Matthias Company uses the periodic inventory system.

f. Compute ending inventory and cost of goods sold under LIFO, assuming Matthias Company uses the periodic inventory system.

Transcribed Image Text:

Debit Credit Cash $4,800 Accumulated Depreciation- Equipment $1,500 Accounts Receivable 3,900 Accounts Payable 3,000 1,800* Common Stock 21,000 Retained Earnings 20,000 Inventory Equipment 7,000 $31,500 $31,500 *(3,000 x $0.60)