INSTRUCTIONS: Answer all Problem Questions in the blank Journals provided below the questions. Answer the True/False and the Multiple Choice questions in the answer sheet provided on page 7.
Write your name in the spaces provided on pages 1, 2 and 7. Thanks for following instructions. Good luck.
Use the “MOUSE” to navigate. Do not use the “ENTER KEY”.
- PROBLEM QUESTIONS
A. Inventory Valuation – Sunshine Company began business on June 1, 2019. There are
500 units of inventory on hand on June 31, 2019. Purchases during the month of
June follow:
***See Demonstration Problem below “Key Points to Remember” on Page 503 of 22nd Edition.
| Date June | Description | Quantity | Unit Cost | Total Cost |
| 1 | Beginning Inventory | 100 | $1.20 | $ |
| 4 | Purchases | 400 | $1.30 | |
| 10 | Purchases | 300 | $1.25 | |
| 15 | Purchases | 200 | $1.35 | |
| 18 | Purchases | 500 | $1.65 | |
| 31 | Purchases | 300 | $1.85 | |
| TOTAL | 1,800 | $ |
REQUIRED: Using PERIODIC INVENTORY SYSTEM compute the cost of goods
sold and ending inventory under the following methods:
FIFO: TOTAL COST
| Total Goods Available (1,800 Units) | = $ |
| Cost of Goods Sold (1,300 Units) | = ($ ) |
| Ending Inventory (500 Units) | = $ |
LIFO
| Total Goods Available (1,800 Units) | = $ |
| Cost of Goods Sold (1,300 Units | = ($ ) |
| Ending Inventory (500 Units) | = $ |
Average:
| Total Goods Available (1,800 Units) | = $ |
| Cost of Goods Sold (1,300 Units | = ($ ) |
| Ending Inventory (500 Units) | = $ |
CALCULATION:
(Deduct 2 points for each incorrect answer)
B. Ivory Company owns a retail business and made the following sales during the month of
May 2019. There is an 8% sales tax on all sales.
***See Demonstration Problem below “Key Points to Remember” on Page 464 of 22nd Edition
May 2 Sold merchandise on account to S. Jones, $1,800 plus sales tax; Invoice #25A.
6 Sold merchandise on account to M. Gaston, $1,700 plus sales tax; Invoice #25B.
12 Sold merchandise on account to C. Jackson, $1500 plus sales tax; Invoice #25C.
15 Received payment from M. Gaston.
17 Sold merchandise on account to B. Largent, $1,600 plus sales tax; Invoice #25D.
19 Received payment from S. Jones.
31 Cash sales for the week, $2,500 plus sales tax.
REQUIRED: Record the transactions in the Sales, and Cash Receipt Journals provided below.
Total and verify the column totals.
| SALES JOURNAL | |||||||
| May | POST | SALES TAX | |||||
| DATE | INVOICE# | TO WHOM SOLD | REF | A/R DEBIT | SALES CREDIT | PAYABLE CREDIT | |
| TOTAL | $ | $ | $ |
(Deduct 1.5 points for each incorrect answer)
CASH RECEIPT JOURNAL
| May Date | Inv # | Accounts | PR | General column Credit. | A/R Credit | Sales Credit | STP Credit | Cash Debit |
| Total |
(Deduct 1 point for each incorrect answer)
C. Enter the following transactions in the Purchases Journal, and Cash Payment Journal.
Total the appropriate columns.
***See Demonstration Problem below “Key Points to Remember” on Page 503 of 22nd Edition.
March 2 Purchased $2,000 of merchandise from Michaels Co. on account, Invoice
2177, with 1% trade discount. Credit terms 2/10, n/30.
3 Paid rent for the month of March. Issued Check #145 for $1,700.
6 Purchased merchandise for cash from Jamison Company. Issued Check
#146 for $1,650.
10 Paid Invoice 2177 to Michaels Company. Issued Check #147 for
$1,940.40.
12 Purchased $3,700 of merchandise from Sallinger’s Incorporation on
account, Invoice 2179. Credit terms 1/10,
16 Purchased $750 office supplies from Wave Company for cash, Invoice #2180.
26 Paid Invoice 2179 to Sallinger’s Incorporation. Issued Check #149.
31 Purchased $1,200 of merchandise from Michaels Company on account,
Invoice 2181. Credit terms 2/10, n/30.
PURCHASES JOURNAL
| MARCH Date | Invoice # | From Whom Purchased | PR | Purchases Debited/ Accounts Payable Credited |
(Deduct 2 points each incorrect answer)
CASH PAYMENTS JOURNAL
| Date | Check Number | Account Debited | Post Ref. | General Dr. | Accounts Pay. Dr. | Purch. Dr. | Purchase Discount Cr. | Cash Cr. | |
| TOTAL |
(Deduct 1.5 points for each incorrect answer)
- TRUE OR FALSE QUESTIONS
T F 1. The use of special journals creates additional posting and causes the entries to
become more difficult.
T F 2. Transactions that are similar in type and recorded frequently are likely to
have a special journal.
T F 3. Each special journal allows for a wide variety of transactions.
T F 4. Special journals enable a substantial time savings and make for more
efficient posting process.
T F 5. The sales journal can be used to enter any kind of sales, including cash sales
and sales on account.
T F 6. A purchases journal is a special journal used to record purchases for cash
and on account.
T F 7. At the end of the month, the columns of the cash payments journal must be
totaled and ruled, and total debits and credits are verified to see that they are
equal.
T F 8. If a buyer is given an allowance for damaged merchandise, an entry is
required in the purchases journal.
T F 9. If goods are shipped FOB destination, the buyer should include these items in
inventory.
T F 10. Merchandise inventory at the beginning of the period – purchases +
merchandise inventory at the end of the period = the cost of goods sold for the
period.
(Deduct 2 points for each incorrect answer)
III. MULTIPLE CHOICE QUESITONS
1. A journal designed for entering only sales on account is called the:
a. Cash receipts journal.
b. Cash payments journal.
c. Sales journal.
d. General journal.
e. Purchases journal.
2. The following information regarding each charge sales ticket is entered in the sales
journal:
a. Date and number of the sales ticket.
b. To whom sold.
c. Amount charged to customer.
d. Amount of the sale and sales tax.
e. All of the above.
3. A journal designed for entering only cash receipts is called the:
a. Cash receipts journal.
b. Sales journal.
c. Cash payments journal.
d. General journal.
e. Purchases journal.
4. When purchasing merchandise for resale on account, record the transaction in the:
a. Sales journal.
b. Cash receipts journal.
c. Cash payments journal.
d. Purchases journal.
e. All of the above.
5. When purchasing merchandise for resale for cash, record the transaction in the:
a. Sales journal.
b. Cash receipts journal.
c. Cash payments journal.
d. Purchases journal.
e. None of the above.
6. The inventory system in which the merchandise inventory account balance is merely a
record of the most recent physical inventory count is called:
a. perpetual;
b. FIFO
c. LIFO
d. periodic
e. specific identification
7. A method of allocating merchandise cost that requires each item sold and each item
remaining in inventory to be separately identified with respect to its purchase cost is
called:
a. last-in, first-out
b. first-in, first-out
c. last-in, last-out
d. specific identification costing
e. perpetual
(Deduct 2 points for each incorrect answer)
BONUS (10 Points)
There are two deliberate errors in one of the problem questions (neither spelling nor grammatical). The errors have nothing to do with correctly solving the problems.
List them below.
NAME:
ANSWER SHEET
| TRUE/FALSE | MULTIPLE CHOICE | |||
| QUESTION # | ANSWER | QUESTION # | ANSWER | |
| 1 | 1 | |||
| 2 | 2 | |||
| 3 | 3 | |||
| 4 | 4 | |||
| 5 | 5 | |||
| 6 | 6 | |||
| 7 | 7 | |||
| 8 | ||||
| 9 | ||||
| 10 |
