Reference no: EM132535539

Question - HomeAlone Appliance Company sells home appliances specialized for young people living alone. The company uses the periodic system of inventory. It started the operation by receiving $80,000 from the shareholder on 1st December 2019. Here are the company's transactions.

2 December: HomeAlone purchases the delivery van and send the note payable to the seller. This note payable indicates that HomeAlone will pay $50,000 two years later.

5 December: HomeAlone purchases the inventory and pay $30,000.

12 December: HomeAlone has its first sales. The customer pays $27,500.

15 December: HomeAlone purchases more inventory worthy of $20,000 for the Christmas market. It will pay 6 months later.

24 December: HomeAlone was very successful in the Christmas market. It recorded sales of $90,000, half in cash and half in note receivable.

Requirements -

1. Make the journal entries and the trial balance of HomeAlone at the end of December 2019.

2. Record the adjustment entries for depreciation and inventory. The physical checking shows that the value of the ending inventory is $3,000. The company depreciates 20% of the cost of the fixed assets each period.

3. After the adjustment, record the closing entries and calculate the net income.