ACCOUNTING-Adjustment for Merchandise Inventory Using T Accounts: Periodic Inventory System

Exercise 14-1A
Adjustment for Merchandise Inventory Using T Accounts: Periodic Inventory
System
Matt Henry owns a business called Henry’s Sporting Goods. His
beginning inventory as of January 1, 20–, was $45,000, and his ending
inventory as of December 31, 20–, was $57,000. Set up T accounts for
Merchandise Inventory and Income Summary and perform the year-end adjustment
for Merchandise Inventory.

Merchandise Inventory

(Beginning Inventory)

45,000

– Select your answer –
(a)
(b)

Item 1

– Select your answer –
(a)
(b)

Item 3

Income Summary

– Select your answer –
(a)
(b)

Item 5

– Select your answer –
(a)
(b)

Item 7

Exercise 14-3A
Adjustment for Unearned Revenues Using T accounts
Set up T
accounts for Cash, Unearned Ticket Revenue, and Ticket Revenue. Post the
following two transactions to the appropriate accounts, indicating each
transaction by letter:
a. Sold 1,200 season
tickets at $400 each, receiving cash of $480,000.
b. An end-of-period
adjustment is needed to recognize that $120,000 in ticket revenue has been
earned.

Cash

– Select your answer –
(a)
(b)

Item 1

Ticket Revenue

– Select your answer –
(a)
(b)

Item 3

Unearned Ticket Revenue

– Select your answer –
(a)
(b)

Item 5

– Select your answer –
(a)
(b)

Item 7

Exercise 14-4A
Work Sheet Extensions for Merchandise Inventory Adjustments: Periodic Inventory
System
The following partial work sheet is taken from Kevin’s Gift Shop
for the year ended December 31, 20–. The ending merchandise inventory is
$50,000.

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1.Complete
the Adjustments columns for the merchandise inventory.
2.Extend
the merchandise inventory to the Adjusted Trial Balance and Balance Sheet
columns.
3.Extend
the remaining accounts to the Adjusted Trial Balance and Income Statement
columns.

Kevin’s Gift Shop
Work Sheet (Partial)
For Year Ended December 31, 20–

ACCOUNT TITLE

TRIAL BALANCE

ADJUSTMENTS

ADJUSTED TRIAL BALANCE

INCOME STATEMENT

BALANCE SHEET

DEBIT

CREDIT

DEBIT

CREDIT

DEBIT

CREDIT

DEBIT

CREDIT

DEBIT

CREDIT

Merchandise Inventory

40,000

Income Summary

Purchases

90,000

Purchases Returns and Allowances

2,000

Purchases Discounts

3,000

Freight-In

500

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4.Prepare a cost of goods sold section from the partial
work sheet.

Kevin’s Gift Shop

Cost of Goods Sold Section

Cost of goods sold:

$

$

$

Net
purchases

$

$

Cost of goods sold

$

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Exercise 14-7A
Journal Entries Under the Perpetual Inventory System
Bhushan Building Supplies entered into the following
transactions.

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Prepare journal entries under the perpetual inventory system.
If an amount box does not require an entry, leave it blank.

GENERAL JOURNAL

page

1

DATE

ACCOUNT TITLE

DOC.
NO.

POST.
REF.

DEBIT

CREDIT

1

Jun. 1

1

2

2

3

3

4

Jun. 3

4

5

5

6

6

7

Jun. 5

7

8

Record Sale

8

9

9

10

Jun. 5

10

11

Record Cost

11

12

12

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Problem 14-9A
Completion of a Work Sheet Showing a Net IncomThe trial balance for the Venice
Beach Kite Shop, a business owned by Molly Young, is shown below.

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Year-end adjustment information is as follows:

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Required:
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1. Complete
the Adjustments columns.
2. Complete
the work sheet.
If an amount box does not require an entry,
leave it blank.

Venice Beach Kite Shop
Work Sheet
For Year Ended December 31, 20–

TRIAL BALANCE

ADJUSTMENTS

ADJUSTED TRIAL BALANCE

INCOME STATEMENT

BALANCE SHEET

ACCOUNT TITLE

DEBIT

CREDIT

DEBIT

CREDIT

DEBIT

CREDIT

DEBIT

CREDIT

DEBIT

CREDIT

Cash

20,000

Accounts Receivable

14,000

Merchandise Inventory

25,000

Supplies

8,000

Prepaid Insurance

5,400

Land

30,000

Building

50,000

Accumulated Depr.—Building

20,000

Store Equipment

35,000

Accumulated Depr.—Store Equip.

14,000

Accounts Payable

9,600

Wages Payable

Sales Tax Payable

5,900

Unearned Rent Revenue

8,900

Mortgage Payable

45,000

M. Young, Capital

65,410

M. Young, Drawing

26,000

Income Summary

Sales

118,000

Sales Returns and Allowances

1,700

Rent Revenue

Purchases

27,000

Purchases Returns and Allow.

1,400

Purchases Discounts

1,800

Freight-In

2,100

Wages Expense

32,000

Advertising Expense

3,600

Supplies Expense

Telephone Expense

1,350

Utilities Expense

8,000

Insurance Expense

Depreciation Expense—Building

Depreciation Exp.—Store Equip.

Miscellaneous Expense

860

290,010

290,010

Net Income

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3. Enter the adjustments in a general journal.
If an amount box does not require an entry, leave it blank.

GENERAL JOURNAL

page

DATE

ACCOUNT TITLE

DOC.
NO.

POST.
REF.

DEBIT

CREDIT

1

a.

1

2

2

3

3

4

b.

4

5

5

6

6

7

c.

7

8

8

9

9

10

d.

10

11

11

12

12

13

e.

13

14

14

15

15

16

f.

16

17

17

18

18

19

g.

19

20

20

21

21

22

h.

22

23

23

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