Merchandising Operations and the Accounting Cycle - Pearson

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Requirement 2 252 Part One The Basic Structure of Accounting Adjusting entries 2003 Dec. 31 Supplies expense.................................................... 2,580 Supplies.............................................................. 2,580 Dec. 31 Rent expense........................................................... 5,000 Prepaid rent ....................................................... 5,000 Dec. 31 Unearned sales revenue ($3,500 – $2,400).......... 1,100 Sales revenue..................................................... 1,100 Dec. 31 Amortization expense—furn. ($26,500/10) ...... 2,650 Accumulated amortization—furniture ......... 2,650 Dec. 31 Salary expense........................................................ 1,300 Salary payable ................................................... 1,300 Dec. 31 Interest expense ..................................................... 600 Interest payable................................................. 600 Dec. 31 Inventory ($65,800 – $60,500)............................... 5,300* Cost of goods sold ............................................ 5,300 Closing entries 2003 Dec. 31 Sales revenue ...................................................... 347,800 Income summary.......................................... 347,800 Dec. 31 Income summary ............................................... 295,550 Cost of goods sold ........................................ 166,470 Sales discounts.............................................. 10,300 Sales returns and allowances...................... 8,200 Salary expense............................................... 84,050 Rent expense ................................................. 12,000 Amortization expense—furniture.............. 2,650 Utilities expense............................................ 5,800 Supplies expense .......................................... 2,580 Interest expense ............................................ 3,500 Dec. 31 Income summary ($347,800 – $295,550) ......... 52,250 Retained earnings......................................... 52,250 Dec. 31 Retained earnings .............................................. 48,000 Dividends ...................................................... 48,000 Income Summary Clo. 295,550 Clo. 347,800 Clo. 52,250 Bal. 52,250 *Excess of inventory on hand over the balance in the Inventory account. This adjustment brings Inventory to its correct balance.
Requirement 3 JAN KING DISTRIBUTING COMPANY LTD. Income Statement For the Year Ended December 31, 2003 Sales revenue .......................................................... $347,800 Less: Sales discounts........................................... $10,300 Sales returns and allowances................... 8,200 18,500 Net sales revenue ................................................ $329,300 Cost of goods sold ................................................. 166,470 Gross margin .......................................................... 162,830 Operating expenses: Salary expense ..................................................... 84,050 Rent expense ........................................................ 12,000 Utilities expense .................................................. 5,800 Amortization expense—furniture .................... 2,650 Supplies expense ................................................. 2,580 107,080 Income from operations........................................ 55,750 Other expense: Interest expense................................................... 3,500 Net income.............................................................. $ 52,250 JAN KING DISTRIBUTING COMPANY LTD. Statement of Retained Earnings For the Year Ended December 31, 2003 Retained earnings, January 1, 2003......................................................................... $13,680 Add: Net income....................................................................................................... 52,250 65,930 Dividends................................................................................................................... 48,000 Retained earnings, December 31, 2003 .................................................................. $17,930 Assets Current assets: Cash................................ $ 5,670 Accounts receivable..... 37,100 Inventory....................... 65,800 Supplies ......................... 1,350 Prepaid Rent ................. 1,000 Total current assets.... 110,920 Capital assets: Furniture ....................... $26,500 Less: Accumulated amortization............... 23,850 2,650 Total assets........................ $113,570 JAN KING DISTRIBUTING COMPANY LTD. Balance Sheet December 31, 2003 Liabilities Current liabilities: Accounts payable................ $ 46,340 Salary payable...................... 1,300 Interest payable ................... 600 Unearned sales revenue ..... 2,400 Total current liabilities.... 50,640 Long-term liabilities Note payable........................ 35,000 Total liabilities.................. 85,640 Shareholders’ Equity Common stock ........................ 10,000 Retained earnings ................... 17,930 Total shareholders’ equity ..... 27,930 Total liabilities and shareholders’ equity........... $113,570 Chapter Five Merchandising Operations and the Accounting Cycle 253
Page 1 and 2: C H 5A P T E R Merchandising Operat
Page 3 and 4: Before launching into merchandising
Page 5 and 6: Suppose FGL’s Sports Experts stor
Page 7 and 8: debiting the Inventory account. A $
Page 9 and 10: Austin paid within the discount per
Page 11 and 12: STOP & THINK Refer to the Accounts
Page 13 and 14: STOP & THINK Why is there no Januar
Page 15 and 16: sales. Therefore the GST paid on pu
Page 17 and 18: Requirement 2 Inventory Cost of Goo
Page 19 and 20: Exhibit 5-5. All the new accounts
Page 21 and 22: EXHIBIT 5-7 Financial Statements of
Page 23 and 24: Journal Adjusting Entries a. Dec. 3
Page 25 and 26: Two Key Ratios for Decision Making
Page 27 and 28: Wal-Mart 1 2 3 4 5 6 Austin Sound C
Page 29 and 30: Decision Guidelines How do merchand
Page 31: 3. Prepare the company’s multi-st
Page 35 and 36: c. Buying a large enough quantity o
Page 37 and 38: Date: ___________________________ T
Page 39 and 40: 2. The R39 truck tires were ordered
Page 41 and 42: Required 1. Prepare the business’
Page 43 and 44: $7,700, $12,160, and $10,180 thousa
Page 45 and 46: 2. The note payable signed on May 2
Page 47 and 48: Trial Balance Adjustments Account T
Page 49 and 50: Sales discounts....................
Page 51 and 52: e. Store supplies on hand at Decemb
Page 53 and 54: Required 1. Inventory on hand at Se
Page 55 and 56: c. The equipment is expected to las
Page 57 and 58: HEIGHTS PHARMACY LTD. Balance Sheet
Page 59 and 60: Supplement to Chapter 5 Accounting
Page 61 and 62: Panel A Panel B Beginning inventory
Page 63 and 64: AUSTIN SOUND CENTRE INC. Trial Bala
Page 65 and 66: Assets Current assets: Cash .......
Page 67 and 68: Journal Adjusting Entries a. Dec. 3
Page 69 and 70: Summary Problem for Your Review The
Page 71 and 72: Requirement 2 Adjusting Entries 200
Page 73 and 74: Requirement 4 Inventory Cost of goo
Page 75 and 76: Required Journalize these transacti
Page 77: BLISS SALES COMPANY LTD. Trial Bala

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