#2 CALCULATIONS Task 3: Using the PURCHASE AND SALES DATA table and TRIAL BALANCE for Scenario #2: Apply the FIFO method to calculate Ending Inventory and Cost of Goods Sold for Scenario #2. Show your work in either Excel or Word. Prepare the year-end adjusting entry to record Inventory and Cost of Goods Sold for both scenarios. HINT: Beginning Inventory is $40,000. The PURCHASE account does have a balance, but the company did not have any purchase returns, purchase discounts or freightin. Prepare a Multiple-Step Income Step and a Balance Sheet for both scenarios. The client has a 30% tax rate. Task 4: Using the PURCHASE AND SALES DATA table and TRIAL BALANCE for Scenario #2: Apply the LIFO method to calculate Ending Inventory and Cost of Goods Sold for Scenario #2. Show your work in either Excel or Word. Prepare the year-end adjusting entry to record Inventory and Cost of Goods Sold for both scenarios. HINT: Beginning Inventory is $40,000. The PURCHASE account does have a balance, but the company did not have any purchase returns, purchase discounts or freightin. Prepare a Multiple-Step Income Step and a Balance Sheet for both scenarios. The client has a 30% tax rate. CLIENT PROFILE: Spare Parts, Inc. is a regional retail chain that sells repair parts for vehicles, tractors, and yard equipment. They have been in business since 2010, and are a publicly traded company. Spare Parts, Inc. recently hired a new CEO and he is reviewing the accounting practices related to Inventory. His company currently uses LIFO for tax reporting and financial reporting and wants to understand the impact of switching to FIFO for financial reporting. The company uses a periodic inventory method, and has a 30% tax rate. The client has 50,00 shares of common stock outstanding, with a par value of $0.50 per share. ASSIGNMENT: To help him make this decision, your supervisor has asked you to complete several tasks. In Blackboard you have been provided a PURCHASE AND SALES DATA table, with two scenarios. Under Scenario #1, purchase prices are increasing. In Scenario #2, purchase prices are decreasing. You have also been provided with a Trial Balance for December 31, 2016. All account balances are current and adjusted except for the Inventory account and Cost of Goods Sold. Because the company uses the periodic method, it has not adjusted these accounts yet. SCENARIO #1 CALCULATIONS Task 1: Using the PURCHASE AND SALES DATA table and TRIAL BALANCE for Scenario #1: Apply the FIFO method to calculate Ending Inventory and Cost of Goods Sold for Scenario #1. Show your work in either Excel or Word. Prepare the year-end adjusting entry to record Inventory and Cost of Goods Sold for both scenarios. HINT: Beginning Inventory is $40,000. The PURCHASE account does have a balance, but the company did not have any purchase returns, purchase discounts or freightin. Prepare a Multiple-Step Income Step and a Balance Sheet for both scenarios. The client has a 30% tax rate. Task 2: Using the PURCHASE AND SALES DATA table and TRIAL BALANCE for Scenario #1: Apply the LIFO method to calculate Ending Inventory and Cost of Goods Sold for Scenario #1. Show your work in either Excel or Word. Prepare the year-end adjusting entry to record Inventory and Cost of Goods Sold for both scenarios. HINT: Beginning Inventory is $40,000. The PURCHASE account does have a balance, but the company did not have any purchase returns, purchase discounts or freightin. Prepare a Multiple-Step Income Step and a Balance Sheet for both scenarios. The client has a 30% tax rate.

DATE

TRANSACTION

QUANTITY

PRICE/COST

1/1

Beginning Inventory

2000

$20

4/2

Sale

800

5/1

Purchase

1,000

$21

7/17

Sale

1200

10/5

Sale

500

11/2

Purchase

1,700

$22

12/8

Sale

1,300

SPARE PARTS, INC.
Adjusted Trial Balance
December 31, 2016
SCENARIO #1
	Debit		Credit
CASH	$ 320,000
ACCOUNTS RECEIVABLE	18,000
INVENTORY	40,000
SUPPLIES	15,000
EQUIPMENT	289,000
ACCUMULATED DEPRECIATION-EQUIPMENT			$ 12,000
ACCOUNTS PAYABLE			550
NOTES PAYABLE (DUE IN 3 YEARS)			6,000
INTEREST PAYABLE			250
SALARIES AND WAGES PAYABLE			3,000
UTILITIES PAYABLE			190
COMMON STOCK			25,000
PAID IN CAPITAL IN EXCESS OF PAR			16,000
RETAINED EARNINGS			85,000
DIVIDENDS	16,000
SALES REVENUE			730,000
PURCHASES	58,400
RENT EXPENSE	20,000
INSURANCE EXPENSE	3,000
INTEREST EXPENSE	90
SALARIES AND WAGES EXPENSE	60,000
SUPPLIES EXPENSE	16,000
UTILITIES EXPENSE	5,000
DEPRECIATION EXPENSE	1,000
PHONE/INTERNET EXPENSE	2,500
ADVERTISING EXPENSE	14,000
	$ 877,990		$ 877,990