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Accounting Chap 5
Accounting Chap 5
CHAPTER 5 EXERCISES
Ex 1: BE5-3
a) March 2 Accounts Receivable 800,000
Sales Revenues 800,000
(Record collection within 2/10, n/30 from McLeena)
2 Cost of Goods Sold 540,000
Inventory 540,000
(Record cost of goods sold)
b) March 6 Sales Returns and Allowances 140,000
Accounts Receivable 140,000
(Record credit granted to Mc Leena for returned goods)
6 Inventory 94,000
Cost of Goods Sold 94,000
(Record costs of goods returned)
c) March 12 Sales Discount (800,000 - 140,000) x 2% 13,200
Cash (800,000 - 140,000 - 13,200) 646,800
Accounts Receivable 660,000
(Record customer payment with 2% discount and return)
Ex 2: BE5-7
a)
Income Statement
For The Year Ended Dec 31, 2017
Sales
Service Revenue 62,500
Operating Expense
Salaries Expense 28,000
Utilities Expense 3,100
Advertising Expense 1,800
Rent Expense 10,400
Total Expense 43,300
Net Income 19,200
b)
Comprehensive Income Statement
For The Year Ended Dec 31, 2017
Net income $19,200
Other Comprehensive Income (net of tax) 400
Comprehensive Income $19,600
Ex 3: E5-2
Sep 6 Inventory $1,650
Accounts Payable 1,650
(Record purchase on account term n/30)
9 Inventory 50
Cash 50
(Record payment of freights)
10 Accounts Payable 66
Inventory 66
(Record return of goods purchased on Mar 6)
12 Accounts Receivable 690
Sales Revenue 690
(Record sales credit term n/30 from Dragoo Co.)
12 Cost of goods sold 520
Inventory 520
(Record cost of goods sold)
14 Sales Returns and Allowances 45
Accounts Receivable 45
(Record credit granted to Fryer for returned goods)
14 Inventory 34
Cost of Goods Sold 34
(Record costs of goods returned)
20 Accounts Receivable 760
Sales Revenue 760
(Record sales of goods on credit term n/30)
20 Cost of goods sold 570
Inventory 570
(Record cost of goods sold)
Ex 4: E5-6
a)
LIEU CO.
Income Statement
For the month January 2017
Sales
Sales Revenue 370,000
Less: Sales Discounts 8,000
Sales Returns and Allowance 20,000 28,000
Net Sales 342,000
Cost of goods sold 212,000
Gross Profit 130,000
Operating Expense
Salaries and Wages Expense 60,000
Rent Expense 32,000
Freight- out 7,000
Insurance Expense 12,000
Total Operating Expense 111,000
Income from Operations 19,000
Income Tax Expense 5,000
Net Income 14,000
b)
LIEU CO.
Comprehensive Income Statement
For the month January 2017
Net income $14,000
Other Comprehensive Income (net of $400 tax) 2,000
Comprehensive Income $16,000
c) Profit Margin = Net Income/ Net Sales = 14,000/ 342,000 = 4.1%
Gross Profit Rate = Gross Profit / Net Sales = 130,000/ 342,000 = 38%
Ex 5: P5-3A
a)
Apr 5 Inventory $1,500
Accounts Payable 1,500
(Purchase from Arnie on credit term 3/10, n/60)
Apr 7 Inventory 80
Cash 80
(Payment of freights on goods purchased)
Apr 9 Accounts Payable 200
Inventory 200
(Return of goods purchased from Arnie)
Apr 10 Accounts Receivable 1,340
Sales Revenue 1,340
(Record sales credit term n/30 from members)
10 Cost of goods sold 820
Inventory 820
(Record cost of goods sold)
Apr 12 Inventory 830
Accounts Payable 830
(Purchase from Woods on credit term 1/10, n/30)
Apr 14 Accounts Payable (1,500 - 200) (less returns) 1,300
Inventory (1,300 x 3%) 39
Cash 1,261
(Payment for purchases from Arnie 3% discount)
Apr 17 Accounts Payable 30
Inventory 30
(Record purchase returns to Woods)
Apr 20 Accounts Receivable 810
Sales Revenue 810
(Record sales credit term n/30 from members)
20 Cost of goods sold 550
Inventory 550
(Record cost of goods sold)
Apr 21 Accounts Payable (830 - 30) (less returns) 800
Inventory (800 x 1%) 8
Cash 792
(Payment for purchases from Woods 1% discount)
Apr 27 Sales Allowance 80
Accounts Receivable 80
(Allowance granted for members)
Apr 30 Cash 1,220
Accounts Receivable 1,220
(Payments receive on account from members)
b)
CASH ACCOUNTS PAYABLE
Apr 1 2,500 Apr 7 80 Apr 9 200 Apr 5 1,500
30 1,220 14 1,261 14 1,300 12 830
21 792 17 30
Apr 30 Bal. 1,587 21 800
Apr 30 Bal. 0
ACCOUNTS RECEIVABLE
Apr 10 1,340 Apr 27 80 COMMON STOCK
20 810 30 1,220 Apr 1 6,000
Apr 30 Bal. 850 Apr 30 Bal. 6,000