Adjusting Journal Entries, Adjusted Trial Balance, Financial Statements, Closing Entries, Periodic Inventory Valuation

The questions are in the file below

BTA 111 Exam 2
Fall 2023
Problem #1–Adjusting Journal Entries, Adjusted Trial Balance, Financial Statements Mr.
Sky started his own pharmaceutical firm to discover new drugs to make people’s lives better,
SkyPVP Inc., on Nov 1, 2023. The trial balance on Nov 31 is as follows.
SKYPVP INC. Trial Balance May 31, 2023
Acc. No. Debit Credit
101 Cash 7,500
112 Accounts Receivable 3,000
126 Supplies 3,900
130 Prepaid Insurance 7,200
149 Equipment 48,000
201 Accounts Payable 4,500
209 Unearned Service Revenue 2,000
301 Owner’s Capital 36,900
400 Service Revenue 9,500
726 Salary & Wages Expenses 6,400
729 Rent Expense 900
In addition to those accounts listed on the trial balance, the chart of accounts for SkyPVP Inc.
also contains the following accounts and account numbers: No. 150 Accumulated
Depreciation—Equipment, No. 212 Salaries and Wages Payable, No. 631 Supplies Expense,
No. 717 Depreciation Expense, No. 722 Insurance Expense, and No. 732 Utilities Expense.
Other data: 1. $1,900 of supplies have been used during the month. 2. Utilities expense incurred
but not paid on May 31, 2022, $250. 3. The insurance policy is for 2 years. 4. $600 of the
balance in the unearned service revenue account remains unearned at the end of the month. 5.
May 31 is a Wednesday, and employees are paid on Fridays. SkyPVP Inc. has two employees,
who are paid $960 each for a 5-day workweek. 6. The office equipment has a 5-year life with no
salvage value. It is being depreciated for 60 months. 7. Invoices representing $1,300 of services
performed during the month have not been recorded as of May 31. Instructions
(a) Prepare the adjusting journal entries for the month of May
(b) Prepare an adjusted trial balance on May 31, 2023.
C ) Prepare Income Statement, Statement of Owner’s Equity, and Balance Sheet on
Nov 31, 2023.
Problem # 2 –Closing Entries
Presented below is income statement information of the Schefter Corporation for the year ended
December 31, 2023.
Sales revenue $402,000
Cost of goods sold 187,000
Salaries expense 60,000
Insurance expense 11,000
Interest revenue 4,000
Interest expense 6,500
Advertising expense 8,500
Income tax expense 24,000
Gain on sale of investments 6,600
Depreciation expense 21,000
Drawing 4,000
Required:
Prepare the necessary closing entries in December 31, 2023.
Problem #3– Periodic Inventory Valuation
Elsa’s Boards sells a snowboard, Xpert, that is popular with snowboard enthusiasts. Information
relating to Elsa’s purchases of Xpert snowboards during September is shown below. During the
same month, 131 Xpert snowboards were sold. Elsa’s uses a periodic inventory system. Date
Explanation
Sept. 1 Inventory
Sept. 12 Purchases
Sept. 19 Purchases
Sept. 26 Purchases
Units
46
35
30
70
Unit Cost
$ 97
101
103
108
Total Cost
???
???
???
???
Totals
???
???
Instructions
(a) Compute the ending inventory at September 30 and cost of goods sold using the FIFO,
LIFO, and Average Cost Method. Prove the amount allocated to the cost of goods sold under
each method.
(b) For both FIFO, LIFO, and Average Cost Method, calculate the sum of ending inventory and
cost of goods sold.
(c ) What do you notice about the answers you found for each method?