Comprehensive Accounting Cycle Pharoah Company
*Comprehensive Accounting Cycle Review 6 On December 1, 2017, Pharoah Company had the account balances shown below. Cash Accounts Receivable Inventory (2,900 x $0.60) Equipment Debits $4,870 Accumulated Depreciation Equipment 3,550 Accounts Payable 1,740 Common Stock 20,700 Retained Earnings $30,860 Credits $1,620 3,260 9,600 16,380 $30,860 The following transactions occurred during December Dec. 3 Purchased 3,900 units of inventory on account at a cost of $0.73 per unit. 5 Sold 4,300 units of inventory on account for $0.90 per unit. (It sold 2,900 of the $0.60 units and 1,400 of the $0.73.) 7 Granted the December 5 customer $180 credit for 200 units of inventory returned costing $150. These units were returned to inventory. 17 Purchased 2,000 units of inventory for cash at $0.80 each. 22 Sold 1,800 units of inventory on account for $0.90 per unit. (It sold 1,800 of the $0.73 units.) Adjustment data: 1. Accrued salaries and wages payable $450. 2. Depreciation on equipment $220 per month. 3. Income tax expense was $200, to be paid next year. Journalize the December transactions and adjusting entries, assuming Pharoah Company uses the perpetual inventory method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record sales revenue.) (To record cost of goods sold.) (To record sales return.) (To record sales revenue.) (To record cost of goods sold.) (1) (To record accrued expense.) (To record depreciation expense.) (To record income tax expense.) Enter the December 1 balances in the ledger T-accounts and post the December transactions. (Post entries in the order of journal entries presented above.) Enter the December 1 balances in the ledger T-accounts and post the December transactions. (Post entries in the order of journal entries presented above.) Cash Accounts Receivable Inventory Equipment Accounts Payable Accumulated Depreciation-Equipment Salaries and Wages Payable Common Stock Income Taxes Payable Retained Earnings Sales Revenue Salaries and Wages Expense Cost of Goods Sold Sales Returns & Allowances Depreciation Expense Income Tax Expense Prepare an adjusted trial balance as of December 31, 2017. Prepare an adjusted trial balance as of December 31, 2017. Pharoah Company Adjusted Trial Balance Debit Credit Prepare an income statement for December 2017. Pharoah Company Income Statement Prepare a classified balance sheet at December 31, 2017. (List current assets in order of liquidity.) Prepare a classified balance sheet at December 31, 2017. (List current assets in order of liquidity.) Pharoah Company Balance Sheet Assets Liabilities and Stockholders' Equity (a) Compute ending inventory and cost of goods sold under FIFO, assuming Pharoah Company uses the periodic inventory system. Ending Inventory Cost of Goods Sold (b) Compute ending inventory and cost of goods sold under LIFO, assuming Pharoah Company uses the periodic inventory system. Ending Inventory Cost of Goods Sold
