ACC 557 Homework 2: Chapters 4, 5, And 6 Due Week 4

Acc 557 Homework 2 Chapters 4 5 And 6due Week 4 And Worth 105 Poi

Answer the following questions on a separate Microsoft Word or Excel document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both.

Prepare closing entries and a post-closing trial balance for Kay Magill Company. Correct journalizing errors made by Keenan Company. Record transactions related to inventory purchases, returns, and payments for Tuzun Company and Epps Company. Adjust for inventory discrepancies based on physical counts for Juan Morales Company, and compute inventory values using FIFO and LIFO methods for Kaleta Company. Prepare financial statements, closing entries, and post-closing trial balance for Fleming Company. Journalize and post transactions related to merchandise for Latona Hardware Store, and prepare income statements. Calculate cost of goods available for sale and determine inventory and COGS under different cost flow assumptions for Ziad Company. Answer economics questions covering profit maximization, demand curves, consumer surplus, elasticity, and revenue changes based on price elasticity.

Sample Paper For Above instruction

Introduction

The purpose of this paper is to address multiple accounting and economic scenarios as part of an advanced financial analysis and managerial decision-making process. Covering topics such as journal entries, inventory management, financial statement preparation, and demand analysis, the goal is to demonstrate competence in financial accounting, inventory valuation, and economic principles in real-world contexts.

Accounting Procedures and Closing Entries

Kay Magill Company’s adjusted trial balance requires the preparation of closing entries and a subsequent post-closing trial balance. Closing entries are necessary to transfer temporary account balances to retained earnings at the end of the accounting period. For instance, revenues and expenses are closed to Income Summary, which in turn updates Retained Earnings. The process involves debiting revenue accounts and crediting expense accounts, followed by closing the Income Summary to Retained Earnings. The post-closing trial balance ensures that all temporary accounts have been closed and only balance sheet accounts remain.

In the case of Keenan Company, the errors committed by an inexperienced accountant—such as incorrect debits and credits—must be rectified through correcting journal entries. For example, the payment debited incorrectly to Accounts Payable and Cash must be adjusted to reflect the correct transaction. Similar corrections are needed for supplies purchased and dividends paid, ensuring that the books accurately reflect the transactions.

Inventory Transactions and Adjustments

Transactions involving inventory purchases and returns, as experienced by Tuzun and Epps Companies, require precise journal entries. Tuzun Company’s purchase on June 10, freight costs on June 11, damaged goods returns on June 12, and payment within discounts all affect inventory and accounting records. Similarly, Epps needs to record sales discounts and returns correctly. The proper entries include debit and credit to inventory, accounts payable, and cash, considering FOB shipping terms and discounts.

Juan Morales Company’s physical inventory count indicates a need for adjustments to inventory balances. This discrepancy arises due to goods in transit and goods shipped FOB destination and FOB shipping point. Correcting inventory figures involves evaluating shipments in transit and adjusting inventory based on ownership and delivery terms, ensuring the inventory valuation accurately reflects the physical count.

Inventory Valuation Methods

Kaleta Company's inventory valuation utilizes FIFO and LIFO methods to determine ending inventory and cost of goods sold (COGS). FIFO assigns the oldest costs to COGS, resulting in lower COGS and higher ending inventory during inflation. LIFO, conversely, assigns the newest costs to COGS, which can produce higher COGS and lower ending inventory under rising prices. Calculating inventories under each method informs decisions on which approach offers better valuation accuracy and tax benefits.

Financial Statement Preparation

The completed worksheet for Fleming Company helps compile financial data into an income statement, retained earnings statement, and classified balance sheet. The income statement reports revenues, COGS, gross profit, and net income, while the retained earnings statement adjusts for net income and dividends. The classified balance sheet organizes assets and liabilities into current and long-term categories. After closing entries are recorded and posted, a post-closing trial balance ensures all accounts are balanced before new financial periods begin.

Merchandising Transactions Analysis

Latona Hardware Store’s detailed transactions require perpetual inventory system journal entries for purchases, sales, returns, and discounts. These transactions affect inventory accounts and revenue recognition. Calculating gross profit (sales minus COGS) highlights profitability for the month. The journal entries reflect immediate updates to inventory and accounts receivable/payable, facilitating real-time accuracy.

Cost of Goods Sold and Inventory Calculations

Ziad Company’s periodic inventory system involves determining the cost of goods available for sale, ending inventory, and COGS under FIFO, LIFO, and average-cost methods. FIFO assumes the earliest purchases are sold first, yielding higher inventory values during inflation. LIFO assigns the most recent costs to COGS, affecting net income and taxes. The average-cost method smooths price fluctuations by calculating a weighted average unit cost. These calculations inform managerial and tax decisions.

Economic Principles and Demand Analysis

The economic questions explore profit maximization for monopolies, demand curve inverses, consumer surplus, and elasticity effects. For instance, a monopoly’s profit maximization involves setting marginal revenue equal to marginal cost, deriving the optimal output level. Demand curve analysis translates quantity demanded into price, and the consumer surplus measures the benefit consumers receive when prices fall. Elasticity calculations reveal sensitivity of demand to price changes, impacting revenue and market strategy.

Conclusion

This comprehensive overview of various accounting procedures and economic analyses demonstrates the integration of financial data management with economic theory. Accurate journal entries, inventory valuations, financial reporting, and demand assessments are essential skills for financial managers and economists. Applying these principles ensures sound decision-making and optimizes organizational performance across accounting and economic domains.

References

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