Compute ending inventory and cost of goods sold under LIFO, assuming Ruggiero Company uses the… 1 answer below »

On December 1, 2012, Ruggiero Company had the account balances shown below.

Debits

Credits

Cash

$ 4,800

Accumulated Depreciation—Equipment

$ 1,500

Accounts Receivable

3,900

Accounts Payable

3,000

Inventory

1,800*

Owner’s Capital

27,000

Equipment

21,000

$31,500

$31,500

*(3,000 × $0.60)

The following transactions occurred during December.

Dec.

3

Purchased 4,000 units of inventory on account at a cost of $0.72 per unit.

5

Sold 4,400 units of inventory on account for $0.90 per unit. (It sold 3,000 of the $0.60

units and 1,400 of the $0.72.)

7

Granted the December 5 customer $180 credit for 200 units of inventory returned

costing $150. These units were returned to inventory.

17

Purchased 2,200 units of inventory for cash at $0.80 each.

22

Sold 2,000 units of inventory on account for $0.95 per unit. (It sold 2,000 of the $0.72 units.)

Adjustment data:

1. Accrued salaries payable $400.

2. Depreciation $200 per month.

Instructions

(a) Journalize the December transactions and adjusting entries, assuming Ruggiero uses the perpetual inventory method.

(b) Enter the December 1 balances in the ledger T accounts and post the December transactions. In addition to the accounts mentioned above, use the following additional accounts: Cost of Goods Sold, Depreciation Expense, Salaries and Wages Expense, Salaries and Wages Payable, Sales Revenue, and Sales Returns and Allowances.

(c) Prepare an adjusted trial balance as of December 31, 2012.

(d) Prepare an income statement for December 2012 and a classifi ed balance sheet at December 31, 2012.

(e) Compute ending inventory and cost of goods sold under FIFO, assuming Ruggiero Company uses the periodic inventory system.

(f) Compute ending inventory and cost of goods sold under LIFO, assuming Ruggiero Company uses the periodic inventory system.

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