You are an employee at a full service bookkeeping and auditing firm called Accounting Solutions. One of your clients is Jane Jewels, who owns a retail hobby store, Hobbies Galore. She just read an article on a supplier’s blog about how managing inventory costs can affect her profit. Jane is interested in growing her business and wants to report a high income. She feels investors are more likely to buy her stock when she shows a higher net profit. Jane recently acquired new technology and will be switching from a periodic inventory to a perpetual inventory system in the current month, August. Jane rotates her stock and sells the oldest items first.
Click this link to download a template, and then complete the tasks below:
- Compare three different costing schedules for the August inventory
- Journalize the transactions
- Show which costing method reports the highest profit
- Using the information Jane gives you, show the estimated ending inventory using the gross profit method.
Lastly, on the second workbook page (‘Financial Statements’ tab), using the information given, create a monthly multi-step income statement (#1), statement of retained earnings (#2) and a classified balance sheet for Hobbies Galore (#3).
Submit your completed assignment by following the directions linked below. Please check the Course Calendar for specific due dates.