Question
Fit for Life (FFL) operates a fitness center and snack lounge. The following is a partial list of FFL transactions during its year ended December
Fit for Life (FFL) operates a fitness center and snack lounge. The following is a partial list of FFL transactions during its year ended December 31. FFL adjusts its records only at year-end.
January 6 | Purchased and received 40 nutritional bars for $76, n/45. |
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January 8 | FFL sold 50 nutritional bars to Big Jim for $294 cash, which includes $27 of sales tax. |
April 30 | FFL received $55,300 from Commerce Bank after signing a 24-month, 6 percent, promissory note. |
August 31 | FFL signed a 6-month contract to sublease a portion of its building. FFL also received a $12,900 check for six months rent. |
December 30 | FFL paid employees net pay through December 31, using direct deposits totaling $3,570, for 250 total hours at a $17 hourly wage. The company had withheld FICA of $275, United Way contributions of $50, and income tax of $355. |
December 31 | FFL adjusted the accounts at year-end, relating to (a) employer payroll taxes, including FICA and $60 of unemployment taxes, (b) interest, and (c) rent. |
Required:
Calculate the cost of goods sold on January 8, assuming FFL began the year with an inventory of 40 nutritional bars at a unit cost of $2.25 ($90 total cost), had no other inventory transactions prior to January 6 and 8, and reports its inventory costs using FIFO.
For each of the above dates, prepare the required journal entries (using a perpetual inventory system) and the adjusting journal entries.
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