Question

Daud Services Co. offers cleaning services to business client. The trial balance for Dakota
services Co. has been prepared on the end of period unadjusted trail balance for the new year
ended July 31, 2008 shown below.

Dakota Services Co.

End of the period unadjusted trail balance
For the year ended July 31, 2008
Account Title Dr Cr
Cash 4
Account Receivable 25
Supplies 4
Prepaid insurance 6
Land 25
Equipment 16
Accumulated Depreciation (Equipment) 1
Account Payable 13
Wages Payable 0
Keene Capital 56
Keene Drawing 4
Fees earned 30
Wages expense 8
Rent expense 4
Insurance expense 0
Utilities expense 3
Depreciation Expense 0
Supplies expene 0
Miscellaneous 1
Total 100 100

The data for yearend adjustments are as follows:

a) Fees earned but not yet billed, $5

b) Supplies on hand, $1
c) Insurance premium expired, $4
d) Depreciation expense, $2

Required:

1. Prepare Ten Column work sheet.

 Dakota Services Co.
End of the period unadjusted trail balance
For the year ended July 31, 2008
Explanation Trial Balance Adjustment Adjusted Trial Income Balance sheet
Balance Statement
Dr Cr Dr Cr Dr Cr Dr Cr Dr Cr
Cash 4 (a) 5 9 4
Account 25 (a) 5 20 20
Receivable
Supplies 4 (b) 1 3 3
Prepaid 6 (c) 4 2 2
insurance
Land 25 25 25
Equipment 16 16 16
Accumulated 1 (d) 2 3 1
Depreciation
(Equipment)
Account 13 13 13
Payable
Wages 0 0
Payable
Keene Capital 56 56 56
Keene 4 4
Drawing
Fees earned 30 30 30
Wages 8 8 8
expense
Rent expense 4 4 4
Insurance 0 (C) 4 4 4
expense
Utilities 3 3 3
expense
Depreciation 0 (d) 2 2 2
Expense
Supplies 0 (b) 1 1 1
expense
Miscellaneous 1 1 1
Total 100 100 12 12 102 102 23
Net 7 7
Income
30 30 70 70
Question
Dated Activities Units acquired at cost Units sold at retail
Jan 1 Beginning inventories 100 @ 10 = 1000
Jan 10 Sales 90
March 14 Purchases 250 @ 15 = 3750
March 18 Sales 140
July 30 Purchases 400 @ 20 = 8000
October 5 Sales 300
October 26 Purchases 600 @ 25 = 15000
Total 1350 units = 27750 530 units

Company uses a perpetual inventory system determine the cost assign to ending inventory and to cost
of goods sold using (1) FIFO (2) Average Method

Solution:

(1) FIFO Method

Hars & Junaid Company
FIFO
Purchases Cost of Goods Sold Inventory on Hand
Dated Q UC TC Q UC TC Q UC TC
Jan 1 100 10 1000
Jan 10 90 10 900 10 10 100
March 250 15 3750 10 10 100
14 250 15 3750
March 10 10 100 120 15 1800
18 130 15 1950
July 30 400 20 8000 120 15 1800
400 20 8000
October 120 15 1800 220 20 4400
5 180 20 3600
October 600 25 15000 220 20 4400
26 600 25 15000
1250 26750 530 8350 820 19400

220 * 20 = 4400
Remaining/Ending inventory = 600 * 25 = 15000
19400

Cost of goods sold = 8350

(2) Average Method

Hars & Junaid Company

Average Method
Purchases Cost of Goods Sold Inventory on Hand
Dated Q UC TC Q UC TC Q UC TC
Jan 1 100 10 1000
Jan 10 90 10 900 10 10 100
March 250 15 3750 260 14.80 3850
14
March 140 14.80 2072 120 14.80 1776
18
July 30 400 20 8000 520 18.84 9800
October 300 18.84 5652 220 18.84 4146.15
5
October 600 25 15000 820 23.34 19138
26
1250 26750 530 8624 820 19138.8

Ending Inventory = 19138.8

Cost of goods sold = 8624