(Solved by Humans)-Problem Set 2. Diamond Company The following unadjusted trial balance is prepared at fiscal year-end

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Problem Set 2. Diamond Company The following unadjusted trial balance is prepared at fiscal year-end for Diamond Company.     DIAMOND COMPANY Unadjusted Trial Balance January 31, 2013 Debit Credit   Cash $23,450   Merchandise inventory $13,000   Store supplies $5,900   Prepaid insurance $2,300   Store equipment $42,800 Accumulated depreciationA????1Store equipment $16,300   Accounts payable $17,000   Common stock $17,000   Retained earnings $18,000   Dividends $2,150   Sales $114,650   Sales discounts $2,000   Sales returns and allowances $2,150   Cost of goods sold $38,000   Depreciation expenseA????1Store equipment $0   Salaries expense $27,700   Insurance expense $0   Rent expense $14,000 Store supplies expense $0   Advertising expense $9,500 Totals $182,950 $182,950 Rent expense and salaries expense are equally divided between selling activities and the general and administrative activities. a. Store supplies still available at fiscal year-end amount to $2,250. b. Expired insurance is $1,400 for the fiscal year. c. Depreciation expense on store equipment is $1,600 for the fiscal year. d. A physical count of the ending inventory shows $10,600 of inventory is still available for sale. Suppose Diamond Company uses a perpetual inventory system. 1. Prepare adjusting entries and income statements for the fiscal year, and computing gross margin, acid-test, and current ratios. Now, suppose you are interested in knowing more about the companyA????1s inventory and how they calculate the cost of goods sold for financial reporting purposes, so you obtain the following information from the manager. Notice here, for simplification, only one month of data is used. Date    Activities                                Units Acquired at Cost           Units Sold at Retail 1          Beginning inventory                200 units @ $90 each             5          Purchase                                  500 units @ $95 each 9          Sales                                                                                        520 units @ $125 each 18        Purchase                                  320 units @ $100 each 25        Purchase                                  400 units @ $102 each 29        Sales                                                                                        360 units @ $135 each 2. Calculate the cost of goods sold and ending inventory using both FIFO and LIFO methods, assuming periodic system. 3. State the potential effects to both income statement and balance sheet if different methods are used. 4. How your answers to 2 will change if you stick to the perpetual system that the company uses.          5. CompanyA????1s Bank statement shows a cash balance of $31,000, which is different from the one reported on the trial balance. Please prepare a bank conciliation using the following information.             a. Outstanding checks of $6,500    b. A note from a customer for the amount of $1,500 is cleared at the bank, but forgot to be recorded on the book.               c. A check collected from the customer in the amount of $300 was bounced    d. Earned interest of $55    e. Bank service charge for the return check was $25    f. A check cleared for $570 was recorded as $750 on the book