Best Way Company purchases inventory in crates of merchandise; each crate of inventory is a unit. The fiscal year of Best Way ends each January 31. Assume you are dealing with a single Best Way store in Dallas, Texas. The Dalls store began the year with an inventory of 14,000 units that cost a total of $742,000. During the year, the store purchased merchandise on account as follows:
Best Way Company purchases inventory in crates of merchandise; nach crate of inventory is a unit. The fiscal ynar af Bes Way ens Cash payments on account totaled $8,20,000. During fiscal year 2018, the store sold 147,000 units of merrhandise for each January 31. Assurre you are dealing with a single Besl Way store in Dallas. Texas. The Dallas slore began the year with an nventory of 14,000 units that oost a total of $742,000. During the year, the store purchased merchandise on 0oount as follows: S15.C67,5ca, of which 55,800,000 was for cash and the balance was on account Bee! Way and al ofits stares use the average cost method for inventarins. The Dallas storns operating expenses for the year were $2,750,000, paid 70% in cash and arcrund the rast as accrued liabilities. Ine store accrued income tax at the rate of 30%. (Cick the ican to view the purchases.) Read the requirements. Requirement 1. Make summary journal entries to record the tore's trensactions for the year ended January 31, 2018. Best Way and all of its stores use a perpetuel inventory system. Round average cost per unit to two decimal pleces and round all other amounts to the nearest dollar. (Record debits first, then credits. Exclude explanations from any jcurnal entries.) Lel's start with the entry to record the purchases on account. Journal Entry Date Accounts Debit Credlt Ja 31 Next, recore the cash payments on socount for $8,208,000. Journal Entry Date Debit Credit Jan 31 No reoord te sale of merchandise or $15,067 500, of which $5 600,000 was or cash and the balance was on account. Do not record cost related to the sale. We will do this n the next our al entry. Journal Entry Date Accounts Debit Credit Jan 31 Record the cost related to the sale of merchandise. (Round unit costs to the nearest cent. Round your answer to the nearest whole collar.) Journal Entry Date Accounts Debit Credit Jan 31 Now record the $2,750,000 og excenses fo the year. Bes Way paid 70% i cash and accrued the rest as accrued liabiliies. Round yaur final answers to the nearest whale dolar.) ournal Entry Date DebitCredit Jan 31 Finally, record the entry to accrue inoome fax. (Round your final answers to the nearest whole dollar.) Journal Entry Date Accounts Debit Credit Jan 31 Requirement 2. Prepare a T-sccount to show the activity in the Inventory account. Post the beginning balano and actvity to the T-account and calculats tha ending inventory balancs. (Abbreviations used: Bag Bal Beginning Balanoe, COGS Cost of Goods Sold, End Bal- Ending Balance.) Requirement 3. Prepare the store's income statement for the year enced January 31, 2018. Show totals for gross prefit, inccme before tax and net income Best Way Store in Dallas Income Statement Year Ended January 31, 2018 Net income (lnss)
