Demonstration_Problems_for_Chapter_5 - Demonstration...

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Demonstration Problems for Chapter 5 Demonstration Problem 5-1 Inventory Purchase/Sale, Perpetual Method The following events pertain to Jefferson Hardware Store. Jefferson uses the perpetual inventory method. 1. Jefferson Hardware was started on January 1, 2003 when it acquired $5,000 cash by issuing common stock. 2. The store paid $4,500 cash to purchase inventory. 3. Jefferson sold for $6,000 cash inventory that cost $3,500. 4. During 2003, the store paid $2,000 cash for operating expenses. Required Record the events in a financial statements model. Prepare a formal income statement and a balance sheet. 1
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Demonstration Problem 5-2 Perpetual Inventory Transactions Lisa’s Dress Shop (LDS) experienced the following events in 2004, its first year of oper- ations. The dress shop uses the perpetual inventory method. 1. LDS was started when it issued common stock for $60,000 cash. 2. LDS purchased on account inventory with a list price of $54,000. Payment terms were 2/10, n/30. LDS records inventory transactions at the net amount.
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