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Chapter 5 - Exercises With Instructions

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22 views17 pages

Chapter 5 - Exercises With Instructions

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tudnnse182330
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© © All Rights Reserved
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Exercise 5-6

Perpetual system
1. Journal entries of York Co. (Buyer)
11/5 Merchandise inventory 38,000
Account payable
Purchased merchandise on credit

11/5 Merchandise inventory 520


Cash
Paid shipping charges on purchased merchandise

12/5 Account payable 2,000


Merchandise inventory
Returned unacceptable merchandise

20/5 Account payable 36,000


Merchandise inventory
Cash
Paid balance within the 3% discount period

1. Journal entries of Troy (Seller)


11/5 Account receivable 38,000
Sales
Sold merchandise on account

COGS 25,460
Merchandise inventory
To record cost of sale

13/5 Sales returns and allowances 2,000


Account receivable
Accepted a return from a customer

Merchandise inventory 1,393


COGS
Returned goods to inventory

21/5 Cash 34,920


Sales discounts 1,080
Account receivable
Collected account receivable
Exercise 5-16
Periodic system
1. Journal entries of York Co. (Buyer)
11/5 Purchase 38,000
Account payable

11/5 Transportation-in 520


Cash

12/5 Account payable 2,000


Purchase returns and allowances

20/5 Account payable 36,000


Purchase discount
Cash

1. Journal entries of Troy (Seller)


11/5 Account receivable 38,000
Sales

13/5 Sales returns and allowances 2,000


Account receivable

21/5 Cash 34,920


Sale discounts 1,080
Account receivable

Problem 5-2A
Preparing journal entries for Gore Company
Aug
1 Merchandise inventory 7,800
Account payable - Arotek

4 Account payable - Arotek 270


Cash

5 Account receivable - Larton 5,460


Sales
COGS 3,898
Merchandise inventory

8 Merchandise inventory 7,340


Account payable - Frees

9 Delivery expense 120


Cash

10 Sales returns and allowances - Larton 910


Account receivable - Larton

Merchandise inventory 649


COGS

12 Account payable - Frees 1,100


Merchandise inventory - Frees

15 Cash 4,459
Sale discount 91
Account receivable - Larton

18 Account payable - Frees 6,240


Merchandise inventory
Cash

19 Account receivable - Jones 4,680


Sales

COGS 3,247
Merchandise inventory

22 Sales returns and allowances 780


Account receivable - Jones

29 Cash 3,861
Sales discount 39
Account receivables - Jones

30 Account payables - Arotek 7,530


Cash

Problem 5-3A
1. Adjusting journal entries
a Store supplies expense 2,950
Store supplies
b Insurance expense (G&A) 1,450
Prepaid insurance

c Depreciation expense - store equipment (Selling) 1,975


Accumulated depreciation - store equipment

d COGS 2,700
Merchandise inventory

Adjusted trial balance


HELIX COMPANY
January 31, 2009

Unadjusted Trial Balance Adjustment


Debit Credit Debit
Cash 28,750
Merchandise inventory 13,000
Store supplies 5,500
Prepaid insurance 2,400
Store equipment 42,600
Accumulated depreciation-Store equipment 19,750
Accounts payable 14,000
A.Helix, Capital 39,000
A.Helix, Withdrawals 2,000
Sales 115,800
Sales discounts 1,900
Sales returns and allowances 2,300
Cost of goods sold 38,000 2,700
Depreciation expense-Store equipment - 1,975
Salaries expense 27,400
Insurance expense - 1,450
Rent expense 15,000
Store supplies expense - 2,950
Advertising expense 9,700
Totals 188,550 188,550 9,075

2. Multiple-step income statement


HELIX COMPANY
Income Statement
For Year Ended January 31, 2009

Sales
Less: Sales discounts 1,900
Sales returns and allowances 2,300
Net sales
Cost of goods sold
Gross profit
Expenses:
Selling expenses
Depreciation expense, Store equipment 1,975
Sales salaries expense 13,700
Rent expense-Selling space 7,500
Store supplies expense 2,950
Advertising expense 9,700
Total selling expenses 35,825

General and administrative expenses (G&A expenses)


Insurance expense 1,450
Office salaries expense 13,700
Rent expense-Office space 7,500
Total general and administrative expenses 22,650
Total expenses
Net income

3. Single-step income statement


HELIX COMPANY
Income Statement
For Year Ended January 31, 2009

Net sales
Expenses
COGS 40,700
Selling expenses 35,825
General and administrative expenses (G&A expenses) 22,650
Total expenses
Net income

4. Compute current ratio, acid-test ratio, gross margin ratio


Current ratio:
Current assets:
Cash 28,750
Merchandise inventory 10,300
Store supplies 2,550
Prepaid insurance 950
Total current assets 42,550
Current liabilities 14,000
Current ratio 3.04

Acid-test ratio:
Quick assets: Cash 28,750
Current liabilities 14,000
Acid-test ratio 2.05
Gross margin ratio:
Net sales 111,600
Cost of goods sold 40,700
Gross margin 70,900
Gross margin ratio 63.5%
38,000

520

2,000

1,080
34,920

38,000

25,460

2,000

1,393

36,000
38,000

520

2,000

1,080
34,920

38,000

2,000

36,000

7,800

270

5,460
3,898

7,340

120

910

649

1,100

4,550

60
6,180

4,680

3,247

780

3,900

7,530

2,950
1,450

1,975

2,700

Adjustment Adjusted Trial Balance


Credit Debit Credit
28,750
2,700 10,300
2,950 2,550
1,450 950
42,600
1,975 21,725
14,000
39,000
2,000
115,800
1,900
2,300
40,700
1,975
27,400
1,450
15,000
2,950
9,700
9,075 190,525 190,525

115,800

111,600
40,700
70,900
58,475
12,425

111,600

99,175
12,425

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