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Accounting? | Yahoo Answers

Ex. 1

On October 1, Taylor Bicycle Store had an inventory of 20 ten speed bicycles at a cost of $200 each. During the month of October, the following transactions occurred.

Oct. 4 Purchased 25 bicycles at a cost of $200 each from Lang Bicycle Company, terms 2/10, n/30

Dr Merchandise inventory 5,000

Cr A/cs payable 5,000

6 Sold 15 bicycles to Team America for $300 each, terms 2/10, n/30

Dr A/cs receivable 4,500

Cr Sales 4,500

Dr COGS 3,000

Cr Merchandise inventory 3,000

7 Received credit from Lang Bicycle Company for the return of 2 defective bicycles

Dr AP 400

Cr Merchandise inventory 400

13 Issued a credit memo to Team America for the return of a defective bicycle

Dr Sales returns 300

Cr AR 300

(I'm not adjusting COGS on the basis that the bicycle is defective and cannot be sold again)

14 Paid Lang Bicycle Company in full, less discount

Dr AP 4,600

Cr Purchase discount 92

Cr Cash 4,508

Ex. 2

Prepare the necessary journal entries to record the following transactions, assuming Lewis Company uses a perpetual inventory system

(a)Lewis sells $40,000 of merchandise, terms 1/10, n/30. The merchandise cost $30,000

Dr AR 40k

Cr Sales 40k

Dr COGS 30k

Cr Merchandise inventory 30k

(b)The customer in (a) returned $4,000 of merchandise to Lewis. The merchandise returned cost $3,000

Dr Sales 4k

Cr AR 4k

Dr Merch. inv. 3k

Cr COGS 3k

(c)Lewis received the balance due within the discount period.

Dr Cash 35,640

Dr Sales discount 360

Cr AR 36,000

Ex. 3

Closing entries:

Dr Sales 510,000

Dr Interest revenue 25,000

Cr Income summary 535,000

Dr Income summary 470,000

Cr Sales Returns and Allowances 20,000

Cr Sales Discounts 7,000

Cr Cost of Goods Sold 337,000

Cr Freight-out 2,000

Cr Advertising Expense 15,000

Cr Interest Expense 19,000

Cr Store Salaries Expense 45,000

Cr Utilities Expense 18,000

Cr Depreciation Expense 7,000

Dr Income summary 65,000

Cr Retained earnings 65,000

Dr Capital 42,000

Cr Drawings 42,000

Ex. 4

multiple-step income statement

Sales $580,000


Sales Returns and Allowances $20,000

Sales Discounts 7,000

Net sales $553,000


Cost of Goods Sold 386,000

Gross profit $167,000


Operating expenses

Selling expenses -

- Freight-out 2,000

- Advertising Expense 15,000

General & admin. expenses -

- Store Salaries Expense 50,000

- Utilities Expense 28,000

- Depreciation Expense 7,000

Operating income $65,000

Non-operating or other

Interest Revenue 30,000


Interest Expense (18,000)

Net income $77,000

Ex. 5

(a) Cost of goods sold

Net sales $900,000 - Gross profit 350,000 = COGS $550,000

(b) Cost of goods available for sale -

Beginning inventory 100,000

Purchases 540,000

Purchase discounts (15,000)

Purchase returns and allowances (8,000)

Freight-in 10,000

Cost of gds available for sale $627,000

(c) Ending inventory

Cost of gds available for sale $627k - COGS $550k = Ending inventory $77k

Ex. 6

Morton Company uses the periodic inventory method and had the following inventory information available:

1/1 Beginning Inventory 100 $4 $400

1/20 Purchase 400 $5 $2,000

7/25 Purchase 200 $7 $1,400

10/20 Purchase 300 $8 $2,400

Total 1,000units costing $6,200

A physical count of inventory on December 31 revealed that there were 350 units on hand, i.e. 650 units were sold

1.Assume that the company uses the FIFO method. The value of the ending inventory at Dec 31 is $2,750

2.Assume that the company uses the Average Cost method. The value of the ending inventory on Dec 31 is $2,170

3.Assume that the company uses the LIFO method. The value of the ending inventory on Dec 31 is $1,650

Ex. 7

1.Mr. Dexter invested cash in the business (CR)

2.Purchased store supplies on account. (G)

3.Sold merchandise to customer on account. (S)

4.Purchased a 2-year fire insurance policy for cash. (G)

5.Received a check from a customer as payment on account(CR)

6.Paid for store supplies purchased in transaction 2. (CP)

7.Purchased merchandise on account. (P)

8.Issued a credit memorandum to a customer who returned defective merchandise previously sold on account. (G)

9.Purchased office equipment for cash. (G)

10.Made an adjusting entry for store supplies used during the period. (G)

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