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Exercise-1 Steve's Skateboards Uses The Perpetual Inventory System and Had The Following Sales Transactions During April

The document outlines exercises related to accounting transactions, including journal entries for sales, missing financial items, and calculations for multiple companies. It also includes problems on preparing income statements and analyzing purchasing strategies with discounts. Key calculations involve gross profit, operating expenses, and the impact of borrowing on savings from discounts.

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Bracu 2023
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11 views7 pages

Exercise-1 Steve's Skateboards Uses The Perpetual Inventory System and Had The Following Sales Transactions During April

The document outlines exercises related to accounting transactions, including journal entries for sales, missing financial items, and calculations for multiple companies. It also includes problems on preparing income statements and analyzing purchasing strategies with discounts. Key calculations involve gross profit, operating expenses, and the impact of borrowing on savings from discounts.

Uploaded by

Bracu 2023
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Exercise-1

Steve's Skateboards uses the perpetual inventory system and had the following sales transactions
during April:

Prepare the journal entries that Steve's Skateboards must make to record these transactions.

Ex. -2
Instructions
State the missing items identified by ?.

1. Gross profit – Operating expenses = ?


2. ? + ? = Operating expenses
3. Sales – (? + ?) = Net sales
4. Income from operations + ? – ? = Net income
5. Net sales – Cost of goods sold = ?
6. Cost of goods sold + Gross profit on sales = ?

Ex-3
Financial information is presented below for three different companies.

Instructions

I. Determine the missing amounts.


II. Which company has higher sourcing efficiency? Show calculations.
III. Compute the sales return and allowance as a percentage of sales revenue for all companies and interpret
the results.
Ex. 4
Solved Problem:

Problem 1

Ceres Computer Sales uses the perpetual inventory system and had the following transactions
during December.

Required:
Prepare the general journal entries to record these transactions.
Problem 2

From the adjusted trial balance for Worker Products Company given below, prepare a multiple-
step income statement in good form.
Problem 3

Shock Company purchased merchandise from Mee Company with an invoice price of $300,000
and credit terms of 2/10, n/30. The merchandise had cost Mee Company $200,000. Shock
Company paid within the discount period. Assume that both buyer and seller use a perpetual
inventory system.
1. Prepare entries that the buyer should record for (a) the purchase and (b) the cash payment.
2. Prepare entries that the seller should record for (a) the sale and (b) the cash collection.
3. Assume that the buyer borrowed enough cash to pay the balance on the last day of the
discount period at an annual interest rate of 9% and paid it back on the last day of the credit
period. Compute how much the buyer saved by following this strategy. (Assume a 365-day year
and round dollar amounts to the nearest cent.)

3. By borrowing the money on the last day of the discount period and repaying it on the last day
of the credit period, the loan would be outstanding for 20 days (30-10). Interest on the loan is
calculated at 9% for 20 days. The amount saved is the difference between the discount received
for paying on time and the amount of interest expense that would be paid to the bank.

Discount taken $6,000.00


Interest expense ($294,000x.09x20/365) 1,449.86

Amount saved $4,550.14

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