# Question & Answer: In excel format, answer questions 1 & 2:…..

In excel format, answer questions 1 & 2:

Question #1

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Transactions should follow this format, as in this transaction on Dec. 31 – “the company paid cash dividends of \$5,000”:

Date     Description                                                                  DR                  CR

12/31   owner’s equity (dividends)                                         5,000

cash                                                                                         5,000

Record the following transactions then construct the income statement, statement of owner’s equity and balance sheet.

On January 3 a company began business by issuing owner’s equity for \$500,000 cash.

On Jan. 10 the company bought equipment of \$400,000 using a 10-yr., 5% notes payable.

On Jan. 14 the company purchased merchandise inventory for \$100,000 cash.

During the year the company had cash sales of \$300,000.

During the year cost of goods sold were \$75,000.

During the year operating expenses \$100,000.

On Dec. 31 the company paid the interest expense in cash.

On Dec. 31 the company paid the income tax expense of \$25,000 in cash.

On Dec. 31 the company paid cash dividends of \$5,000.

Question #2

Summertime Fun is a local toy store which specializes in beach and pool toys. Sales are slow during the most of the year, including X-Mas; however, summer is particularly hectic. Here is some information about an inflatable bulldog:

Date                             Transaction                  # of Units        Unit Cost         Total

January 1st                   beginning inventory                10        \$10                  \$   100

February 7th                 purchase                                  12        \$12                  \$   144

July 29th                      purchase                                  60        \$14                  \$   840

November 27th                   purchase                                  15        \$15                  \$   225

December 14th             purchase                                  3       \$20                  \$     60

total                                       100 units                       \$1,369

At the end of the year, Summertime Fun had 25 of these inflatable bulldogs remaining.

Calculate ending inventory and cost of goods sold for this inflatable bulldogs using:

FIFO

LIFO

Weighted Average

Method                        Ending Inventory                    Cost of Goods Sold

FIFO                           ________________                ________________

LIFO                           ________________                ________________

Weighted Average       ________________                ________________