Company “Candle lighters Ltd” sells long-lasting candle lighters.
The company had the following account
balances at 31/12/2012:
Cash 18000 Creditors 25000
Debtors 33000 Rent Payable 2000
Inventory 6300 Loan 10000
Office equipment 21000 Share capital 20000
Accumulated Depreciation 6000 Retained Earnings 15300
15000
Total Assets 72300 Liabilities and OE 72300
During 2013 the company had the following transactions:
5/1: Paid €600 for rent due
22/1: bought 500 candle lighters at €2.1 each, on credit
17/2: bought 700 candle lighters at €2.2 each, for cash
31/3: sold 2000 candle lighters at €3.9 each, for cash
4/5: bought 1200 candle lighters at €2.25 each, for cash
7/7: received from debtors €13000
8/8: Paid salaries for the first 6 months of 2013, €2200
14/9: bought 1000 candle lighters at €2.3 each on credit
28/9: Paid €11000 to creditors for amounts due
10/10: sold 2100 candle lighters at 4 each, on credit, with terms 4/9, n/20.
17/10: The client paid the amount due for the sale on 10/10
28/12: paid electricity and telephone expenses in the amount of €200
30/12: paid an annual installment on the loan of €2000, plus interest
31/12: Paid dividends €1500
Additional information:
a. All equipment was bought on 3/1/11.
b. The bank charges an annual interest rate of 5%
c. Beginning inventory comprised of 3150 candle holders with a cost of €2 each.
d. Monthly rent is €100
e. Physical count of inventory shows a total of 2410 candle lighters in stock on 31/12/13.
Required:
A: Record all transactions, adjusting and closing entries and prepare financial statements for 2013,
assuming the company uses the perpetual system of accounting and:
1. FIFO 2. LIFO 3. WA
B: Record all transactions, adjusting and closing entries and prepare financial statements for 2013,
assuming the company uses the periodic system of accounting.
1. FIFO 2. LIFO 3. WA
Periodic System:
DATE FIFO LIFO WA
5/1 Rent payable 600 600 600
Cash 600 600 600
22/1 Purchases 1050 1050 1050
Creditors 1050 1050 1050
17/2 Purchases 1540 1540 1540
Cash 1540 1540 1540
31/3 Cash 7800 7800 7800
Sales 7800 7800 7800
4/5 Purchases 2700 2700 2700
Cash 2700 2700 2700
7/7 Cash 13000 13000 13000
Debtors 13000 13000 13000
8/8 Salaries expense 2200 2200 2200
Cash 2200 2200 2200
14/9 Purchases 2300 2300 2300
Creditors 2300 2300 2300
28/9 Creditors 11000 11000 11000
Cash 11000 11000 11000
10/10 Debtors 8400 8400 8400
Sales 8400 8400 8400
17/10 Cash 8064 8064 8064
Sales discounts 336 336 336
Debtors 8400 8400 8400
28/12 Utility expenses 200 200 200
Cash 200 200 200
30/12 Loan 2000 2000 2000
Interest expense 500 500 500
Cash 2500 2500 2500
31/12 Dividends 1500 1500 1500
Cash 1500 1500 1500
Adjusting entries: FIFO LIFO WA
31/12 Salaries expense 2200 2200 2200
Salaries payable 2200 2200 2200
31/12 Depreciation expense 3000 3000 3000
Accumulated depreciation 3000 3000 3000
31/12 Rent expense 1200 1200 1200
Rent payable 1200 1200 1200
Closing entries:
BI + Purchases == CofS + EI
FIFO LIFO WA
Inventory 5462 4820 5111
Cost of Sales 8428 9070 8779
Purchases 7590 7590 7590
Inventory 6300 6300 6300
Sales 16200 16200 16200
16200 16200 16200
Retained earnings
Retained earnings 9636 9636 9636
Cost of sales 8428 9070 8779
Salaries expense 4400 4400 4400
Rent expense 1200 1200 1200
Sales discounts 336 336 336
Utility expense 200 200 200
Depreciation expense 3000 3000
3000
Interest expense 500 500 500
Retained earnings 1500 1500 1500
Dividends 1500 1500 1500
Workings: EI
Units Price FIFO LIFO WA
BI 3150 2 6300 1000*2.3 2300 2410*2 4820 2410*2.1206=5111
Purchase 500 2.1 1050 1200*2.25 2700
Purchase 700 2.2 1540 210*2.2 462
Purchase 1200 2.25 2700
Purchase 1000 2.3 2300
6550 13890
EI 2410 5462 4820 5111
CofS 4140
* €13890 / 6550 = 2.1206
Workings: CS
Units Price FIFO LIFO WA
BI 3150 2 6300 3150*2 6300 1000*2.3 2300 4140*2.1206=8779
Purchase 500 2.1 1050 500*2.1 1050 1200*2.25 2700
Purchase 700 2.2 1540 490*2.2 1078 700*2.2 1540
Purchase 1200 2.25 2700 500*2.1 1050
Purchase 1000 2.3 2300 740*2 1480
6550 13890
EI 2410
CofS 4140 8428 9070 8779
* 13890 / 6550 = 2.1206
Επαλήθευση EI + CofS 13890 13890 13890
Unadj TB -FIFO Unadj TB -LIFO Unadj TB- WA Adj TB -FIFO Adj TB -LIFO Adj TB- WA
Cash 24624 24624 24624 24624 24624 24624
Debtors 20000 20000 20000 20000 20000 20000
Off Eqnt 21000 21000 21000 21000 21000 21000
Ad - Off Eq 6000 6000 6000 9000 9000 9000
Creditors 17350 17350 17350 17350 17350 17350
Rent Payable 1400 1400 1400 2600 2600 2600
loan 8000 8000 8000 8000 8000 8000
Share Capital 20000 20000 20000 20000 20000 20000
Retained Earnings 15300 15300 15300 15300 15300 15300
Sales 16200 16200 16200 16200 16200 16200
Salaries expense 2200 2200 2200 4400 4400 4400
Sales Discounts 336 336 336 336 336 336
Utilities Expense 200 200 200 200 200 200
Interest Expense 500 500 500 500 500 500
Divds 1500 1500 1500 1500 1500 1500
Salaries Payable 2200 2200 2200
Depr Exp 3000 3000 3000
Rent exp 1200 1200 1200
Purchases 7590 7590 7590 7590 7590 7590
Inventory 1/1 6300 6300 6300 6300 6300 6300
84250 84250 84250 84250 84250 84250 90650 90650 90650 90650 90650 90650
BI + Purchases = CofS + EI
Candle lighters Ltd
Income statement for the year that ended 31/12/20X3
FIFO LIFO WA
Sales 16200
Sales discounts (336)
Net Sales 15864 15864 15864
Beginning Inventory 6300
Purchases 7590
Ending Inventory 5462 4820 5111
Cost of Sales 8428 9070 8779
Gross profit 7436 6794 7085
Salaries 4400
Rent 1200
Utilities 200
Depreciation 3000
8800 8800 8800
Operating Loss (1264) (2006) (1715)
Interest expense 500 500 500
Net Loss (1864) (2506) (2215)
Statement of changes in Owners’ equity for the year that ended 31/12/X3
Share Capital RE - FIFO OE- FIFO RE - LIFO OE- LIFO RE- WA OE- LIFO
Balance 1/1 20000 15300 35300 15300 35300 15300 35300
Net Loss (1864) (1764) (2506) (2506) (2215) (2215)
Dividends (1500) (1500) (1500) (1500) (1500) (1500)
Balance 31/12 20000 11936 31936 11294 31294 11585 31585
Statement of Financial position as at 31/12/X3
Cash 24624 24624 24624
Debtors 20000 20000 20000
Inventory 5462 4820 5111
Current Assets 50086 49444 49735
Office Equipment 21000
Accumulated Depreciation 9000 12000 12000 12000
Total Assets 62086 61444 61735
Creditors 17350 17350 17350
Rent Payable 2600 2600 2600
Salaries Payable 2200 2200 2200
Loan – short term portion 2000 2000 2000
Current liabilities 24150 24150 24150
Loan – Long term portion 6000 6000 6000
Total Liabilities 30150 30150 30150
Share Capital 20000 20000 20000
Retained Earnings 11936 11294 11585
31936 31294 31585
Liabilities and Owners’ equity 62086 61444 61735
Statement of Cash flows:
Net Income (1864) (2506) (2215)
Add: Depreciation 3000 3000 3000
Decrease in Debtors 13000 13000 13000
Increase In Rent Payable 600 600 600
Increase in Salaries payable 2200 2200 2200
Decrease in Creditors (7650) (7650) (7650)
Decrease in Inventory 838 1480 1189
Cash flows from Operating Activities 10124 10124 10124
Dividends (1500) (1500) (1500)
Loan Payment (2000) (2000) (2000)
Cash flows from Financing Activities (3500) (3500) (3500)
Total Change in Cash 6624 6624 6624
Cash 1/1 18000 18000 18000
Cash 31/12 24624 24624 24624
Number € €
1/1 3150 2 6300
22/1 500 2.1 1050
17/2 700 2.2 1540
4/5 1200 2.25 2700
14/9 1000 2.3 2300
TOTALS 6550 13890
Ending inventory 2410
Sold 4140
Number € € Number € €
1000 2.3 2300 2410 2 4820
1200 2.25 2700 EI 2410 4820
210 2.2 462
EI 2410 5462 1000 2.3 2300
1200 2.25 2700
3150 2 6300 700 2.2 1540
500 2.1 1050 500 2.1 1050
490 2.2 1078 740 2 1480
CS 4140 8428 CS 4140 9070
13890 13890
13890/6550 = 2.12061
EI 2410 = 5111 CofS=8779
