Comprehensive Problem 6

On December 1, 2017, Matthias Company had the account balances shown below.

Debit Credit Cash $6,400 Accumulated DepreciationEquipment $1,200 Accounts Receivable 4,000 Accounts Payable 2,900 Inventory 1,760 * Common Stock 20,000 Equipment 21,400 Retained Earnings 9,460 $33,560 $33,560

*(3,200 x $0.55) The following transactions occurred during December.

Dec. 3 Purchased 4,300 units of inventory on account at a cost of $1 per unit. 5 Sold 4,700 units of inventory on account for $1 per unit. (It sold 3,200 of the $0.55 units and 1,500 of the $0.70.) 7 Granted the December 5 customer $180 credit for 200 units of inventory returned costing $120. These units were returned to inventory. 17 Purchased 2,400 units of inventory for cash at $1 each. 22 Sold 2,200 units of inventory on account for $1 per unit. (It sold 2,200 of the $0.70 units.)

Adjustment data:

1. Accrued salaries payable $300. 2. Depreciation $100 per month.

Journalize the December transactions and adjusting entries, assuming Matthias 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 Dec. 1 Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 23 Dec. 31 Dec. 1 Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 23 Dec. 31 (To record sales revenue.) Dec. 1 Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 23 Dec. 31 (To record cost of goods sold.) Dec. 1 Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 23 Dec. 31 (To record sales returns.) Dec. 1 Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 23 Dec. 31 (To record cost of sales returns.) Dec. 1 Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 23 Dec. 31 Dec. 1 Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 23 Dec. 31 (To record sales revenue.) Dec. 1 Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 23 Dec. 31 (To record cost of goods sold.) Dec. 1 Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 23 Dec. 31 (To record accrued expense.) Dec. 1 Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 23 Dec. 31 (To record depreciation expense.)

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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 Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Accounts Receivable Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Inventory Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Equipment Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Accounts Payable Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Accumulated DepreciationEquipment Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Salaries and Wages Payable Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Common Stock Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Retained Earnings Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Sales Revenue Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Salaries and Wages Expense Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Cost of Goods Sold Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Sales Returns & Allowances Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Depreciation Expense Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal. Dec. 1 Bal. Dec. 3 Dec. 5 Dec. 7 Dec. 17 Dec. 22 Dec. 31 Dec. 31 Bal.

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Prepare an adjusted trial balance as of December 31, 2017.

MATTHIAS COMPANY Adjusted Trial Balance December 31, 2017 For the Year Ended December 31, 2017 For the Quarter Ended December 31, 2017 Debit Credit $ $ Totals $ $

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Prepare an income statement for December 2017.

MATTHIAS COMPANY Income Statement December 31, 2017 For the Year Ended December 31, 2017 For the Month Ended December 31, 2017 Dividends Gross Profit / (Loss) Investments Net Income / (Loss) Net Sales Operating Expenses Other Expenses and Losses Other Revenues and Gains Beginning Balance, December 1 Ending Balance, December 1 Sales Revenues Total Operating Expenses Total Revenues $ Add Less : Dividends Gross Profit / (Loss) Investments Net Income / (Loss) Net Sales Operating Expenses Other Expenses and Losses Other Revenues and Gains Beginning Balance, December 1 Ending Balance, December 1 Sales Revenues Total Operating Expenses Total Revenues Dividends Gross Profit / (Loss) Investments Net Income / (Loss) Net Sales Operating Expenses Other Expenses and Losses Other Revenues and Gains Beginning Balance, December 1 Ending Balance, December 1 Sales Revenues Total Operating Expenses Total Revenues Dividends Gross Profit / (Loss) Investments Net Income / (Loss) Net Sales Operating Expenses Other Expenses and Losses Other Revenues and Gains Beginning Balance, December 1 Ending Balance, December 1 Sales Revenues Total Operating Expenses Total Revenues $ Dividends Gross Profit / (Loss) Investments Net Income / (Loss) Net Sales Operating Expenses Other Expenses and Losses Other Revenues and Gains Beginning Balance, December 1 Ending Balance, December 1 Sales Revenues Total Operating Expenses Total Revenues $

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Prepare a classified balance sheet at December 31, 2017. (List Current Assets in order of liquidity.)

MATTHIAS COMPANY Balance Sheet For the Quarter Ended December 31, 2017 For the Year Ended December 31, 2017 December 31, 2017 Assets Current Assets Current Liabilities Intangible Assets Long-term Investments Long-term Liabilities Stockholders' Equity Property, Plant and Equipment Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity $ Current Assets Current Liabilities Intangible Assets Long-term Investments Long-term Liabilities Stockholders' Equity Property, Plant and Equipment Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity $ Current Assets Current Liabilities Intangible Assets Long-term Investments Long-term Liabilities Stockholders' Equity Property, Plant and Equipment Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity Add Less : Current Assets Current Liabilities Intangible Assets Long-term Investments Long-term Liabilities Stockholders' Equity Property, Plant and Equipment Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity $ Liabilities and Stockholders' Equity Current Assets Current Liabilities Intangible Assets Long-term Investments Long-term Liabilities Stockholders' Equity Property, Plant and Equipment Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity $ Current Assets Current Liabilities Intangible Assets Long-term Investments Long-term Liabilities Stockholders' Equity Property, Plant and Equipment Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity $ Current Assets Current Liabilities Intangible Assets Long-term Investments Long-term Liabilities Stockholders' Equity Property, Plant and Equipment Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity Current Assets Current Liabilities Intangible Assets Long-term Investments Long-term Liabilities Stockholders' Equity Property, Plant and Equipment Total Assets Total Current Assets Total Current Liabilities Total Intangible Assets Total Liabilities Total Liabilities and Stockholders' Equity Total Long-term Investments Total Long-term Liabilities Total Property, Plant and Equipment Total Stockholders' Equity $

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

Ending Inventory $ Cost of Goods Sold $

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

Ending Inventory $ Cost of Goods Sold $