FINANCE

P5-2 Presented below are a number of balance sheet items for Montoya, Inc., for the current year, 2014.
Goodwill
$125,000
Accumulated Depreciation – Equipment
$292,000
Payroll Taxes Payable
177,591
Inventory
239,800
Bonds Payable
300,000
Rent Payable – Short-term
45,000
Discount on Bonds Payable
15,000
Income Tax Payable
98,362
Cash
360,000
Rental Expense Long-term
480,000
Land
480,000
Common Stock, $1 Par Value
200,000
Notes Receivable
445,700
Preferred Stock, $10 Par Value
150,000
Notes Payable to Banks
265,000
Prepaid Expenses
87,920
Accounts Payable
490,000
Equipment
1,470,000
Retained Earnings
?
Equity Investments (Trading)
121,000
Income Taxes Receivable
97,630
Accumulated Depreciation – Buildings
270,200
Unsecured Notes Payable (Long-term)
1,600,000
Buildings
1,640,000

Instructions

Prepare a classified balance sheet in good form. Common stock authorized was400,000shares, and preferred stock authorized was 20,000 shares. Assume that notes receivable and notes payable are short-term, unless stated otherwise. Cost and fair value of marketable securities are the same.
E8-9 (Periodic versus Perpetual Entries) Fong Sai-Yuk Company sells one product. Presented below is information for January for Fong Sai-Yuk Company.
Jan 1
Inventory
100
units at
$5.00
each
Jan 4
Sale
80
units at
$8.00
each
Jan 11
Purchase
150
units at
$6.00
each
Jan 13
Sale
120
units at
$8.75
each
Jan 20
Purchase
160
units at
$7.00
each
Jan 27
Sale
100
units at
$9.00
each
Fong Sai-Yuk uses the FIFO cost flow assumption. All purchases and sales are on account.
Instructions
(a) Assume Fong Sai-Yuk uses a periodic system. Prepare all necessary journal entries, including the end-of-month closing entry to record cost of goods sold. A physical count indicates that the ending inventory for January is 110 units.
(b) Compute the gross profit using the periodic system.
(c) Assume Fong Sai-Yuk uses a perpetual system. Prepare all necessary journal entries.
(d) Compute the gross profit using the perpetual system.

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