This Website Has Been Moved to a New Link


Loading

ACC557 Week 4

Price: $8.99


ACC557 Chapter 5 E5-3 E5-4 E5-8 E5-11 P5-4A P5-6A

E5-3 On September 1, Howe Office Supply had an inventory of 30 calculators at a cost of $18
each.The company uses a perpetual inventory system. During September, the following transactions
occurred.

Sept. 6 Purchased 80 calculators at $20 each from DeVito Co. for cash.
9 Paid freight of $80 on calculators purchased from DeVito Co.
10 Returned 2 calculators to DeVito Co. for $42 credit (including freight) because they
did not meet specifications.
12 Sold 26 calculators costing $21 (including freight) for $31 each to Mega Book Store, terms n/30.
14 Granted credit of $31 to Mega Book Store for the return of one calculator that was not ordered.
20 Sold 30 calculators costing $21 for $31 each to Barbara’s Card Shop, terms n/30.

Instructions
Journalize the September transactions.

E5-4 On June 10, Meredith Company purchased $8,000 of merchandise from Leinert
Company, FOB shipping point, terms 2/10, n/30. Meredith pays the freight costs of $400 on June
11. Damaged goods totaling $300 are returned to Leinert for credit on June 12.The scrap value
of these goods is $150. On June 19, Meredith pays Leinert Company in full, less the purchase discount.
Both companies use a perpetual inventory system.
Instructions
(a) Prepare separate entries for each transaction on the books of Meredith Company.
(b) Prepare separate entries for each transaction for Leinert Company. The merchandise purchased
by Meredith on June 10 had cost Leinert $5,000

E5-8 Presented below is information related to Rogers Co. for the month of January 2008.

Ending inventory per perpetual records 21,600
Ending inventory actually on hand 21,000
Cost of goods sold 218,000
Freight out 7,000
Insurance expense 12,000
Rent expense 20,000
salary and wages expense 61,000
sales discounts 10,000
sales returns and allowances 13,000
Sales 350,000

Instructions
(a) Prepare the necessary adjusting entry for inventory.
(b) Prepare the necessary closing entries.

E5-11 In 2008, Walter Payton Company had net sales of $900,000 and cost of goods sold of
$540,000. Operating expenses were $230,000, and interest expense was $11,000. Payton prepares
a multiple-step income statement.

Instructions
(a) Compute Payton’s gross profit.
(b) Compute the gross profit rate.Why is this rate computed by financial statement users?
(c) What is Payton’s income from operations and net income?
(d) If Payton prepared a single-step income statement, what amount would it report for net
income?
(e) In what section of its classified balance sheet should Payton report merchandise inventory?

P5-4A J. Hafner, a former professional tennis star, operates Hafner’s Tennis Shop at the Miller
Lake Resort. At the beginning of the current season, the ledger of Hafner’s Tennis Shop showed
Cash $2,500, Merchandise Inventory $1,700, and Common Stock $4,200. The following transactions
were completed during April.
Apr. 4 Purchased racquets and balls from Wellman Co. $840, FOB shipping point, terms 2/10, n/30.
6 Paid freight on purchase from Wellman Co. $40.
8 Sold merchandise to members $1,150, terms n/30. The merchandise sold had a cost of $790.
10 Received credit of $40 from Wellman Co. for a damaged racquet that was returned.
11 Purchased tennis shoes from Venus Sports for cash, $420.
13 Paid Wellman Co. in full.
14 Purchased tennis shirts and shorts from Serena’s Sportswear $900, FOB shipping
point, terms 3/10, n/60.
15 Received cash refund of $50 from Venus Sports for damaged merchandise that was returned.
17 Paid freight on Serena’s Sportswear purchase $30.
18 Sold merchandise to members $810, terms n/30.The cost of the merchandise sold was $530.
20 Received $500 in cash from members in settlement of their accounts.
21 Paid Serena’s Sportswear in full.
27 Granted an allowance of $30 to members for tennis clothing that did not fit properly.
30 Received cash payments on account from members, $660.
The chart of accounts for the tennis shop includes the following: No. 101 Cash, No. 112 Accounts
Receivable,No. 120 Merchandise Inventory,No. 201 Accounts Payable,No. 311 Common Stock,
No. 401 Sales, No. 412 Sales Returns and Allowances, No. 505 Cost of Goods Sold.

Instructions
(a) Journalize the April transactions using a perpetual inventory system.
(b) Enter the beginning balances in the ledger accounts and post the April transactions. (Use J1
for the journal reference.)
(c) Prepare a trial balance on April 30, 2008.

P5-6A Kristen Montana operates a retail clothing operation. She purchases all merchandise inventory
on credit and uses a periodic inventory system. The accounts payable account is used for
recording inventory purchases only; all other current liabilities are accrued in separate accounts.You
are provided with the following selected information for the fiscal years 2005, 2006, 2007, and 2008.


Instructions
(a) Calculate cost of goods sold for each of the 2006, 2007, and 2008 fiscal years.
(b) Calculate the gross profit for each of the 2006, 2007, and 2008 fiscal years.
(c) Calculate the ending balance of accounts payable for each of the 2006, 2007, and 2008 fiscal
years.
(d) Sales declined in fiscal 2008. Does that mean that profitability, as measured by the gross
profit rate, necessarily also declined? Explain, calculating the gross profit rate for each fiscal
year to help support your answer. (Round to one decimal place.)

No comments:

Post a Comment