Accounting Cycle Review 6 a- f

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

Debit

Cash $5,000

Accounts Receivable 4,400

Inventory 1,920

Equipment 21,000

Debit Total $32,320

Credit

Accumulated DepreciationEquipment $1,200

Accounts Payable 3,800

* Owners Capital 27,320

Credit Total $32,320

*(3,200 x $0.60)

The following transactions occurred during December:

Dec. 3 Purchased 5,200 units of inventory on account at a cost of $0.74 per unit.

5 Sold 5,500 units of inventory on account for $0.90 per unit. (Vaughn sold 3,200 of the $0.60 units and 2,300 of the $0.74.)

7 Granted the December 5 customer $177 credit for 200 units of inventory returned costing $118. These units were returned to inventory.

17 Purchased 2,300 units of inventory for cash at $0.80 each.

22 Sold 2,400 units of inventory on account for $0.95 per unit. (Vaughn sold 2,400 of the $0.74 units.)

Adjustment data:

1. Accrued salaries payable $300.

2. Depreciation $240 per month.

Prepare the following:

1. Journalize the December transactions and adjusting entries, assuming Vaughn uses the perpetual inventory method.

2. Enter the December 1 balances in the ledger T-accounts and post the December transactions.

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

4. Prepare an income statement for December 2020.

5. Prepare a classified balance sheet at December 31, 2020.

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

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