Fill in the blanks for the major accounting principles, assumption, quality, and convention in presenting the financial information. (25 pts)
1._______________ Being cautious or prudent and making sure that net assets and net income are
2._______________ The assumption that an entity will continue to operate indefinitely unless strong evidence exists that the entity will terminate.
3.______________Expenses should be recognized as they are incurred to produce revenues.
4_______________ The principle that revenues should be earned and realized before they are recognized (recorded).
5._____________A qualitative characteristic requiring that information be pertinent to or affect a
6. Closing Entries (35 points)
The end-of-period account balances after adjustments of Hernandez Shoe Repair are as follows:
Adjusted Trial Balances
Cash $ 36,000
Prepaid Rent 9,600
Accumulated Depreciation—Equipment $ 22,000
Accounts Payable 14,500
Capital Stock 54,600
Retained Earnings 0
Service Revenues 41,000
Supplies Expense 2,000
Depreciation Expense 3,000
Rent Expense 900
Salaries and Wages Expense 1,200
Utilities Expense 1,800
Prepare the end of the period closing entries for Hernandez Shoe Repair. You may omit journal entry explanations.
How much is the ending balance of Retained Earnings to be reported in Statement of Retained Earnings?
7. Hamilton Company uses a periodic inventory system and has the following account balances: Beginning Inventory $140,000, Ending Inventory $120,000, Freight-in $20,000, Purchases $680,000, Purchase Returns and Allowances $8,000, and Purchase Discounts $4,000 (10 pts).
Instructions: Compute each of the following:
1. Net cost of purchases
2. Cost of goods available for sale
3. Cost of goods sold
8. Periodic Inventories (30 points)
ABC Company uses the periodic inventory method and had the following inventory information available for the month of March.
Date Transaction Units Unit Cost
3/1 Beginning inventory 100 $2
3/5 Purchase No. 1 200 $3
3/18 Purchase No. 2 200 $3.5
3/30 Purchase No. 3 100 $4
During March, 400 units were sold.
A physical count of units on March 31 revealed that 200 units were on hand.
Determine Goods Available for Sale in units and amount.
Determine COGS and cost of Ending Inventory on March 31 under the methods:
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