*Question 2 On December 1, 2017, Sunland Company had the account balances shown below. Debits Credits $4,860 $1,630 Cash Accumulated Depreciation-Equipment 3,610 2,820 Accounts Receivable Accounts Payable 1,680 9,100 Inventory (2,800 x $0.60) Common Stock 21,600 Retained Earnings 18,200 Equipment $31,750 $31,750 The following transactions occurred during December. Dec. 3 Purchased 3,800 units of inventory on account at a cost of $0.75 per unit 5 Sold 4,200 units of inventory on account for $0.90 per unit. (It sold 2,800 of the $0.60 units and 1,400 of the $0.75.) 7 Granted the December 5 customer $90 credit for 100 units of inventory returned costing $60. These units were returned to inventory. 17 Purchased 2,000 units of inventory for cash at $0.80 each 22 Sold 1,700 units of inventory on account for $0.91 per unit. (It sold 1,700 of the $0.75 units.) Adjustment data: 1. Accrued salaries and wages payable $360. 2. Depreciation on equipment $200 per month 3. Income tax expense was $240, to be paid next year. Journalize the December transactions and adjusting entries, assuming Sunland 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.) Debit Date Account Titles and Explanation 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.) (2) (To record depreciation expense.) (3) (To record income tax expense.) 21 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 Receiva ble 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 4 Sales Returns & Allowances Depreciation Expense Income Tax Expense Prepare an adjusted trial balance as of December 31, 2017 Sunland Company Adjusted Trial Balance Debit Credit $ Prepare an income statement for December 2017 Sunland Company Income Statement $ Prepare a classified balance sheet at December 31, 2017. (List current assets in order of liquidity.) Sunland Com pany Balance Sheet Assets $ Liabilities and Stockholders' Equity Sunland Com pany Balance Sheet Assets Liabilities and Stockholders' Equity $ $ (a) Compute ending inventory and cost of goods sold under FIFO, assuming Sunland Company uses the periodic inventory system. Ending Inventory Cost of Goods Sold (b) Compute ending inventory and cost of goods sold under LIFO, assuming Sunland Company uses the periodic inventory system Ending Inventory Cost of Goods Sold
