| Problem 1 – Prepare a classified balance sheet | |||||||||
| The following information relates to JB’s Auto Shop for 2021: | |||||||||
| Retained earnings | $100,000 | Buildings | $169,000 | ||||||
| Notes payable due in 2024 | 63,955 | Cash | 74,000 | ||||||
| Long-term investments | 29,070 | Accounts payable | 13,566 | ||||||
| Common stock | 20,000 | Inventory | 11,560 | ||||||
| Prepaid rent | 3,800 | Accumulated depreciationbuildings | 42,019 | ||||||
| Salaries and wages payable | 47,890 | ||||||||
| Purpose | |||||||||
| The purpose of this problem is to demonstrate an understanding of analyzing accounting information and preparing a financial statement. | |||||||||
| Instructions | |||||||||
| After analyzing the data, prepare a classified balance sheet for JB’s Auto Shop as of December 31, 2021. | |||||||||
| Guidance | |||||||||
| For formatting guidance, see the balance sheet examples that are provided in Chapter 4 of the textbook. | |||||||||
| Your Answer: |
| Problem 2 – Prepare journal entries | |
| Green Plants & Things, Inc. buys merchandise from Palm Tree, LLC. Both companies use perpetual inventory systems. Here are the | |
| details related to the transactions between the two companies: | |
| Green Plants & Things, Inc. buys merchandise from Palm Tree, LLC paying $6,080 for the goods. The cost of the goods | |
| for Palm Tree, LLC is $4,930. | |
| Purpose | |
| The purpose of this problem is to demonstrate an understanding of analyzing merchandising transactions and preparing journal entries. | |
| Instructions | |
| After analyzing the transactions, prepare the journal entries for both companies (indicate which are for which | |
| company in your responses). | |
| Guidance | |
| For formatting guidance, see the journal entry examples that are provided in Chapter 5 of the textbook. | |
| Your Answers: |
| Problem 3 – Calculate ending inventory and cost of goods sold | |||||
| Princess Company uses a periodic inventory system. The company’s records for the month of February were as follows: | |||||
| Date | Units | Unit Cost | Total Cost | ||
| February 1 | Inventory | 10 | $12 | $120 | |
| February 8 | Purchase | 90 | 14 | 1,260 | |
| February 17 | Purchase | 35 | 15 | 525 | |
| February 28 | Purchase | 20 | 16 | 320 | |
| Total | 155 | $2,225 | |||
| 146 units were sold in February. | |||||
| Purpose | |||||
| The purpose of this problem is to demonstrate an understanding of calculating ending inventory and cost of different cost flow | |||||
| assumptions. | |||||
| Instructions | |||||
| After analyzing the transactions, calculate the ending inventory at February 28th and cost of goods sold using the FIFO and LIFO methods. | |||||
| Guidance | |||||
| For guidance, see the calculation examples that are provided in Chapter 6 of the textbook. | |||||
| Your Answers: | |||||
| FIFO | LIFO | ||||
| Ending inventory at February 28th | |||||
| Cost of goods sold | |||||
| Show your calculations for each amount: |
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