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Journal Entry, T Acct -Best Way

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Best Way purchases inventory in crates of merchandise, each crate of inventory is a unit. The fiscal year of best Way ends each January 31. Assume you are dealing with a single Best Way store in Cleveland, Ohio. The Cleveland store began 2012 with an inventory of 22,000 units that costs a total of $1,100,000. During the year, the store purchased merchandise on account as follows;Jul (31,000 units at $58) $ 1,798,000;Nov (51,000 units at $ 62) 3,162,000;Dec (61,000 units at $ 68) 4,148,000;Total purchases $9,108,000;Cash payments on account totaled $8,708,000. During fiscal year 2012 the store sold 147,000 units of merchandise for $14,112,000,of which $5,200,000 was for cash and the balance was on account. Best Way uses the averaged-cost method for inventories. Operating expenses for the year were $ 2,000,000. Best Way paid 70% in cash and accrued the rest as accrued liabilities. The store accrued income tax at the rate of 35%.;Requirements;1. Make summary journal entries to record the store's transactions for the year ended January 31, 2012. Best Way uses a perpetual inventory system.;2. Prepare a T-account to show the activity in the inventory account.;3. Prepare the store's income statement for the year ended January 31, 2012. Show totals for gross profit, income before tax and net income.

 

Paper#75051 | Written in 18-Jul-2015

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