QUESTION THREE: (19 POINTS) A company made the following purchases and sales for its only product during the month of July July 1 purchased 380 units at $15 each July 5 purchased 270 units at $20 each July 9 sold 500 units at $55 each July 14 purchased 300 units at $24 each July 20 sold 250 units at $55 each July 30 purchased 250 units at S30 each There was no beginning inventory. The company uses the first-in, first-out method (FIFO) and the perpetual inventory system. Required: a) What would be the cost of the ending inventory at July 30? b) What would be the total cost of goods sold for the month of July? Answer: Date Purchases Cost of goods sold Inventory Balance Units Unit Total Total Units Total Units Unit cost Unit cost Cost a) Cost of Ending Inventory b) Total Cost of Goods Sold- 5 Page QUESTION FOUR: (18 POINTS) Bird Company began business on May 1. They use the perpetual inventory method. The following transactions involving purchases and cash disbursements occurred during the first week of May. May 2 Purchased $25,000 of merchandise inventory on credit from the Canary Company, terms 2/10, 1/30. Invoice dated May 1. May 3 Sold S 20,000 of merchandise on credit May 4 Purchased $18,000 of office equipment and S 18,000 Office Supplies on credit terms n/30 May 6 Returned merchandise to a supplier for cash S 10.000 May 7 Purchased $3,000 of office supplies for cash from Eagle Company. Check no. 1267. May 10 Paid the amount due for the merchandise purchased from Canary Company on May 2 above. Check no. 1268 Required: Use the purchases journal and the cash disbursements (payments) journal to record these transactions Purchases Journal Date Account Date Term Account Inventory Office Other of payable Supplies Account invoice Cr. Dr. Dr. Dr. PR Totals Date Ck. No. Payee Cash Disbursement Journal Account PR Cash Inventory Debited Cr. Cr Other Account Account Payable Dr. Dr. Totals 6 Page QUESTION FIVE: (14 POINTS) Brown Company's bank statement for September 30 showed cash balance of $1,350. The company's Cash account in its general ledger showed a $995 debit balance. The following information was also available as of September 30. a. A customer's check for $100 marked NSF was returned to Brown Company by the bank. In addition, the bank charged the company's account a S25 processing fee. b. The September 30 cash receipts, $1,250, were placed in the bank's night depository after banking hours on that date and this amount did not appear on the September 30 bank statement C. A S15 debit memorandum for bank charges was included with the canceled checks. d. Outstanding checks amounted to $1,145. e. A customer's note for $900 was collected by the bank. A collection fee of $25 was deducted by the bank and the difference was deposited in the account f. Check for rent was correctly written and drawn for $ 275 but not recorded in the journal of the company. Required: a) Prepare a bank reconciliation as of September 30. b) Prepare the necessary journal entries to adjust the book balance of cash to the reconciled balance at September 30. a) BANK RECONCILIATION SEPTEMBER 30 71 Page b) General Journal Date Sept 30 Account Title Debit Credit
