ACC 557 Homework 2: Chapters 4, 5, and 6Due Week 4 and worth 105 pointsDirections: Answer the…

ACC 557 Homework 2: Chapters 4, 5, and 6Due Week 4 and worth 105 pointsDirections: Answer the following questions on a separate Microsoft Word or Excel document. Explain howyou reached the answer or show your work if a mathematical calculation is needed, or both. Submit yourassignment using the assignment link in Blackboard.ExercisesE4-7. Kay Magill Company had the following adjusted trial balance.Instructionsa) Prepare closing entries at June 30, 2015.b) Prepare a post-closing trial balance.E4-13. Keenan Company has an inexperienced accountant. During the rst 2 weeks on the job, theaccountant made the following errors in journalizing transactions. All entries were posted as made.1. A payment on account of $840 to a creditor was debited to Accounts Payable $480 andcredited to Cash $480.2. The purchase of supplies on account for $560 was debited to Equipment $56 andcredited to Accounts Payable $56.3. A $500 cash dividend was debited to Salaries and Wages Expense $500 and credited toCash $500.InstructionsPrepare the correcting entries.© 2015 Strayer University. All Rights Reserved. This document contains Strayer University Confidential and Proprietary informationand may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission ofStrayer University.ACC 557 Homework 2: Chapters 4, 5, and 6 (4-22-2015)Page 1 of 5ACC 557 Homework 2: Chapters 4, 5, and 6E5-4. On June 10, Tuzun Company purchased $8,000 of merchandise from Epps Company, FOBshipping point, terms 2/10, n/30. Tuzun pays the freight costs of $400 on June 11. Damaged goodstotaling $300 are returned to Epps for credit on June 12. The fair value of these goods is $70. On June19, Tuzun pays Epps Company in full, less the purchase discount. Both companies use a perpetualinventory system.Instructionsa) Prepare separate entries for each transaction on the books of Tuzun Company.b) Prepare separate entries for each transaction for Epps Company. The merchandise purchased byTuzun on June 10 had cost Epps $4,800.E5-7. Juan Morales Company had the following account balances at year-end: Cost of Goods Sold$60,000, Inventory $15,000, Operating Expenses $29,000, Sales Revenue $115,000, Sales Discounts$1,200, and Sales Returns and Allowances $1,700. A physical count of inventory determines thatmerchandise inventory on hand is $13,900.Instructionsa) Prepare the adjusting entry necessary as a result of the physical count.b) Prepare closing entries.E6-1. Tri-State Bank and Trust is considering giving Josef Company a loan. Before doing so,management decides that further discussions with Josefs accountant may be desirable. One area ofparticular concern is the inventory account, which has a year-end balance of $297,000. Discussions withthe accountant reveal the following.1. Josef sold goods costing $38,000 to Sorci Company, FOB shipping point, on December 28. Thegoods are not expected to arrive at Sorci until January 12. The goods were not included in thephysical inventory because they were not in the warehouse.2. The physical count of the inventory did not include goods costing $95,000 that were shipped toJosef FOB destination on December 27 and were still in transit at year-end.3. Josef received goods costing $22,000 on January 2. The goods were shipped FOB shipping pointon December 26 by Solita Co. The goods were not included in the physical count.4. Josef sold goods costing $35,000 to Natali Co., FOB destination, on December 30. The goodswere received at Natali on January 8. They were not included in Josefs physical inventory.5. Josef received goods costing $44,000 on January 2 that were shipped FOB destination onDecember 29. The shipment was a rush order that was supposed to arrive December 31. Thispurchase was included in the ending inventory of $297,000.InstructionsDetermine the correct inventory amount on December 31.© 2015 Strayer University. All Rights Reserved. This document contains Strayer University Confidential and Proprietary informationand may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission ofStrayer University.ACC 557 Homework 2: Chapters 4, 5, and 6 (4-22-2015)Page 2 of 5ACC 557 Homework 2: Chapters 4, 5, and 6E6-6. Kaleta Company reports the following for the month of June.Instructionsa) Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO and (2)LIFO.b) Which costing method gives the higher ending inventory? Why?c) Which method results in the higher cost of goods sold? Why?ProblemsP4-3A. The completed nancial statement columns of the worksheet for Fleming Company are shown onbelow.Instructionsa) Prepare an income statement, a retained earnings statement, and a classied balance sheet.b) Prepare the closing entries.c) Post the closing entries and underline and balance the accounts. (Use T-accounts.) IncomeSummary is account No. 350.d) Prepare a post-closing trial balance.P5-2A. Latona Hardware Store completed the following merchandising transactions in the month of May.At the beginning of May, the ledger of Latona showed Cash of $5,000 and Common Stock of $5,000.© 2015 Strayer University. All Rights Reserved. This document contains Strayer University Confidential and Proprietary informationand may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission ofStrayer University.ACC 557 Homework 2: Chapters 4, 5, and 6 (4-22-2015)Page 3 of 5ACC 557 Homework 2: Chapters 4, 5, and 6May1 Purchased merchandise on account from Grays Wholesale Supply $4,200, terms 2/10, n/30.2 Sold merchandise on account $2,100, terms 1/10, n/30. The cost of the merchandise sold was$1,300.5 Received credit from Grays Wholesale Supply for merchandise returned $300.9 Received collections in full, less discounts, from customers billed on sales of $2,100 on May 2.10 Paid Grays Wholesale Supply in full, less discount.11 Purchased supplies for cash $400.12 Purchased merchandise for cash $1,400.15 Received refund for poor quality merchandise from supplier on cash purchase $150.17 Purchased merchandise from Amland Distributors $1,300, FOB shipping point, terms 2/10,n/30.19 Paid freight on May 17 purchase $130.24 Sold merchandise for cash $3,200. The merchandise sold had a cost of $2,000.25 Purchased merchandise from Horvath, Inc. $620, FOB destination, terms 2/10, n/30.27 Paid Amland Distributors in full, less discount.29 Made refunds to cash customers for defective merchandise $70. The returned merchandisehad a fair value of $30.31 Sold merchandise on account $1,000 terms n/30. The cost of the merchandise sold was$560.Latona Hardwares chart of accounts includes the following: No. 101 Cash, No. 112 Accounts Receivable,No. 120 Inventory, No. 126 Supplies, No. 201 Accounts Payable, No. 311 Common Stock, No. 401 SalesRevenue, No. 412 Sales Returns and Allowances, No. 414 Sales Discounts, and No. 505 Cost of GoodsSold.Instructionsa) Journalize the transactions using a perpetual inventory system.b) Enter the beginning cash and common stock balances and post the transactions. (Use J1 for thejournal reference.)c) Prepare an income statement through gross prot for the month of May 2015.© 2015 Strayer University. All Rights Reserved. This document contains Strayer University Confidential and Proprietary informationand may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission ofStrayer University.ACC 557 Homework 2: Chapters 4, 5, and 6 (4-22-2015)Page 4 of 5ACC 557 Homework 2: Chapters 4, 5, and 6P6-3A. Ziad Company had a beginning inventory on January 1 of 150 units of Product 4-18-15 at a costof $20 per unit. During the year, the following purchases were made.Mar. 15 400 units at $23July 20 250 units at $24Sept. 4 350 units at $26Dec. 2 100 units at $291,000 units were sold. Ziad Company uses a periodic inventory system.Instructionsa) Determine the cost of goods available for sale.b) Determine (1) the ending inventory, and (2) the cost of goods sold under each of the assumedcost ow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods soldunder the FIFO and LIFO methods.c) Which cost ow method results in (1) the highest inventory amount for the balance sheet, and (2)the highest cost of goods sold for the income statement?© 2015 Strayer University. All Rights Reserved. This document contains Strayer University Confidential and Proprietary informationand may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission ofStrayer University.ACC 557 Homework 2: Chapters 4, 5, and 6 (4-22-2015)Page 5 of 5