Reference no: EM13604666

Comprehensive ProblemCP6 On December 1, 2012, Ruggiero Company had the account balances shown below.

Debits Credits
Cash $ 1,500
Accumulated Depreciation-Equipment $4,800
Accounts Receivable 3,900 Accounts Payable 3,000
Inventory 1,800* Common Stock 10,000
Equipment 21,000 Retained Earnings 17,000
$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.
Dec 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.)
Dec 7 Granted the December 5 customer $180 credit for 200 units of inventory returned costing $150. These units were returned to inventory.
Dec 17 nPurchased 2,200 units of inventory for cash at $0.80 each.
Dec 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.
3. Income tax expense was $215, to be paid next year.

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, Sales Returns and Allowances, Income Tax Expense, and Income Taxes Payable.

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

(d) You do NOT have to do instruction (d) (Financial Statements), but: In place of Instruction (d), you need to prepare all necessary Closing Entries.

(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