Part III. Comprehensive Questions (15*2=30)

1. During the whole December, Cruisers Boat Supply has the following transactions happened. (3*6=18)

1. Dec 2, Cruisers Boat Supply Sold merchandise inventory to Walmart, $ 9200, on account. Terms 1/20, n/60. Cost of goods sold, $3500. FOB destination with the freight of $99, in cash.
2. Dec 5, Cruisers Boat Supply purchased merchandise inventory with cash, $7900. FOB destination. Freight charged 75 of cash.
3. Dec 16, Cruisers Boat Supply rent an office for its headquarter because of office renovation. The rent is paid already for $3,000 for three months.
4. Dec 17, Cruisers Boat Supply returned $1200 of the merchandise purchased on December 5.
5. Dec 21, Cruisers Boat Supply received the payment from Walmart.

2. On Dec. 31, Cruisers Boat Supply made adjusting entries according to the following information. (3*4=12)

1. In December, Cruisers Boat has delivered $5,000 of boats to its customer Costco, who prepaid 10,000 of cash in November. The cost of those boat, $2,000.
2. The salaries of Cruisers Boat to its employees of December, $5,000 will be paid in next month.
3. Depreciation of equipment for the month, $ 200
4. Office rent which as prepaid on December 16 should be recorded for December, 2015.

Part IV. Conventional Question (10)

1. Explain the difference between FIFO and LIFO. Try to indicate the different consequences if a company uses them.