The Davis Lamp Company (DLC) is a wholesale company that purchases lamps from the manufacturer and resells them to retail stores. The company has three inventory items: desk lamps, table lamps, and floor lamps. DLC uses a perpetual inventory system, FIFO method. DCL owns land with a building, which is separated into two parts: office space and warehouse space. All expenses associated with the office are categorized as Administrative Expenses. All expenses associated with the warehouse, which is used for the shipping and receiving functions of the company, are categorized as Selling Expenses. In addition to the land and building, DLC also owns office furniture and equipment and warehouse fixtures. The company uses one accumulated depreciation account for all the depreciable assets.

The trial balance for DLC as of September 30, 2018 follows:

Merchandise Inventory as of September 30 consists of the following lamps:

During the fourth quarter of 2018, DLC completed the following transactions:
Oct. 1 Purchased lamps on account from Blue Ridge Lights, terms n/30, FOB destination:
5,000 desk lamps at $9 each
7,500 table lamps at $19 each
2,500 floor lamps at $25 each
12 Sold lamps on account to Atlas Home Furnishings, terms 2/10, n/30:
4,000 table lamps at $45 each
15 Sold lamps on account to Hiawassee Office Supply, terms 2/10, n/30:
1,000 desk lamps at $20 each
20 Received a check from Atlas Home Furnishings for full amount owed on Oct. 12 sale.
23 Received a check from Hiawassee Office Supply for full amount owed on Oct. 15 sale.
28 Sold lamps on account to Parkway Home Stores, terms 2/10, n/30:
3,500 table lamps at $45 each
1,500 floor lamps at $65 each
30 Paid amount due to Blue Ridge Lights from Oct. 1 purchase.
31 Paid salaries, $40,000 (75% selling, 25% administrative).
31 Paid utilities, $2,500 (60% selling, 40% administrative).
Nov. 1 Sold lamps on account to Hiawassee Office Supply, terms 2/10, n/30:
3,000 desk lamps at $20 each
5 Purchased lamps on account from Blue Ridge Lights, terms n/30, FOB destination:
5,000 desk lamps at $10 each
10,000 table lamps at $21 each
5,000 floor lamps at $27 each
5 Received a check from Parkway Home Stores for full amount owed on Oct. 28 sale.
8 Received a check from Hiawassee Office Supply for full amount owed on Nov. 1 sale.
10 Purchased and paid for supplies: $325 for the office; $675 for the warehouse.
15 Sold lamps on account to Anderson Office Supply, n/30:
2,000 desk lamps at $20 each
18 Sold lamps on account to Go-Mart Discount Stores, terms 1/10, n/30:
2,000 table lamps at $45 each
2,000 floor lamps at $65 each
28 Received a check from Go-Mart Discount Stores for full amount owed on Nov. 18 sale.
30 Paid salaries, $40,000 (75% selling, 25% administrative).
30 Paid utilities, $2,670 (60% selling, 40% administrative).
Dec. 5 Paid amount due to Blue Ridge Lights from Nov. 5 purchase.
15 Received a check from Anderson Office Supply for full amount owed on Nov. 15 sale.
15 Paid dividends, $50,000.
27 Sold lamps on account to Atlas Home Furnishings, terms 2/10, n/30:
4,500 desk lamps at $20 each
5,000 table lamps at $45 each
31 Paid salaries, $40,000 (75% selling, 25% administrative).
31 Paid utilities, $3,200 (60% selling, 40% administrative).
Requirements
1. Open general ledger T-accounts and enter opening balances as of September 30, 2018.
2. Open inventory records for the three inventory items and enter opening balances as of September 30, 2018. Complete the inventory records using the following transactions: Oct. 1, 12, 15, 28; Nov. 1, 5, 15, 18, and Dec. 27.
3. Record the transactions in the general journal.
4. Post transactions to the general ledger.
5. Prepare adjusting entries for the year ended December 31, 2018, and post to the ledger:
a. Depreciation, $48,500 (75% selling, 25% administrative).
b. Supplies on hand: office, $200; and warehouse, $650.
c. A physical inventory account resulted in the following counts: desk lamps, 1,990; table lamps, 5,995; and floor lamps, 6,000. Update the inventory records.
6. Prepare an adjusted trial balance.
7. Provide a summary for the month, in both units and dollars, of the change in inventory for each item in the following format:

Does the sum of the ending balances in the inventory records match the balance in Merchandise Inventory in the general ledger? If not, review the transactions to find your error.
8. Prepare Davis Lamp Company's multi-step income statement and statement of retained earnings for the year ended December 31, 2018, and a classified balance sheet as of December 31, 2018.
9. Calculate the following ratios for DLC as of December 31, 2018: gross profit percentage, inventory turnover, and days' sales in inventory.
10. Record and post the closing entries.
11. Prepare a post-closing trial balance.

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DAVIS LAMP COMPANY Trial Balance September 30, 2018 Balance Account Debit Credit $ 457,000 Cash Accounts Receivable Merchandise Inventory 126,000 Office Supplies 275 Warehouse Supplies 350 Land 20,000 Building 780,000 Office Furniture and Equipment 125,000 Warehouse Fixtures 260,000 $ 194,000 Accumulated Depreciation Accounts Payable Common Stock 100,000 Retained Earnings 298,925 Dividends Sales Revenue 2,654,150 Cost of Goods Sold 1,061,450 Salaries Expense-Selling 270,000 Utilities Expense-Selling 32,000 Supplies Expense-Selling Depreciation Expense-Selling Salaries Expense-Administrative 90,000 25,000 Utilities Expense-Administrative Supplies Expense-Administrative Depreciation Expense-Administrative $ 3,247,075 $ 3,247,075 Total Item Unit Cost Total Cost Quantity Desk Lamp $ 20,000 2,500 Table Lamp 3,000 18 54,000 Floor Lamp 2,000 26 52,000 Total $ 126,000