APPENDIX C

Ex. C1
a.

Purchases........................................................................
Accounts PayableYellowstone Co.......................

12,000

b. Accounts PayableYellowstone Co............................

Purchases Returns and Allowances.......................

2,500

c.

Accounts PayableYellowstone Co............................

Purchases Discounts................................................
Cash............................................................................

9,500

d. Purchases........................................................................
Accounts PayableGlacier, Inc..............................

9,000

e.

9,000

Accounts PayableGlacier, Inc....................................

Purchases Discounts................................................
Cash............................................................................

12,000
2,500
190
9,310
9,000
90
8,910

Ex. C2
July

6
6
9
16

Accounts Receivable...........................................
Sales..................................................................

18,500

Accounts Receivable...........................................
Cash...................................................................

420

Sales Returns and Allowances...........................

Accounts Receivable.......................................

4,700

Cash.......................................................................
Sales Discounts....................................................
Accounts Receivable.......................................

13,944
276

18,500
420
4,700

14,220

Ex. C3
Income Summary...................................................................
Merchandise Inventory...................................................

475,000

Merchandise Inventory..........................................................
Income Summary............................................................

528,300

57

475,000
528,300

Ex. C4
a.
b.
c.
d.
e.
f.
g.
h.
i.

Sales returns and allowances, sales discounts

Purchases returns and allowances, purchases discounts
Transportation in
Merchandise available for sale
Merchandise inventory (ending)
Gross profit
Income from operations
Selling expenses, administrative expenses
Other income, other expense

58

Ex. C5
CANYON FERRYStores COMPANY
Income Statement
For the Year Ended December 31, 2006
Revenue from sales:
Sales.............................................
Less: Sales returns and
allowances.....................
Sales discounts...............
Net sales......................................

$1,288,000
$

13,920
10,400

24,320
$1,263,680

Cost of merchandise sold:

Merchandise inventory,
January 1, 2006.....................
$ 85,760
Purchases....................................
$1,051,200
Less: Purchases returns and
allowances..................... $24,800
Purchases discounts...... 12,800
37,600
Net purchases.............................
$1,013,600
Add transportation in.................
36,000
Cost of merchandise
purchased...........................
1,049,600
Merchandise available for sale.
$1,135,360
Less merchandise inventory,
December 31, 2006................
102,240
Cost of merchandise sold....
Gross profit.......................................

1,033,120
$ 230,560

59

Ex. C6
a.

Income Summary.............................................................
Merchandise Inventory.............................................

300,000

Merchandise Inventory...................................................
Income Summary.......................................................

275,000

b. Sales.................................................................................
Purchases Returns and Allowances.............................
Purchases Discounts......................................................
Income Summary.......................................................

1,450,000
9,000
14,000

Income Summary.............................................................
Sales Returns and Allowances................................
Sales Discounts.........................................................
Purchases...................................................................
Transportation In.......................................................
Selling Expenses.......................................................
Administrative Expenses..........................................
Interest Expense........................................................

1,206,000

Income Summary.............................................................
Connie Sorum, Capital..............................................

242,000

Connie Sorum, Capital....................................................

Connie Sorum, Drawing............................................

40,000

60

300,000
275,000

1,473,000
32,000
18,000
820,000
21,300
240,200
72,000
2,500
242,000
40,000

Prob. C1
Nov.

2
8
9

10
11
12

15
19

21

25
28

30

Purchases.............................................................
Accounts PayableLoftin Co.........................

18,000

Cash.......................................................................
Sales..................................................................

8,100

Purchases.............................................................
Transportation In..................................................
Accounts PayableChestnut Co. .................

12,000
180

Accounts PayableLoftin Co.............................

Purchases Returns and Allowances..............

3,000

Accounts ReceivableFawcett Co....................

Sales..................................................................

2,000

Accounts PayableLoftin Co.............................

Cash...................................................................
Purchases Discounts.......................................

15,000

Accounts ReceivableAmerican Express........

Sales..................................................................

9,850

Accounts PayableChestnut Co. .....................

Cash...................................................................
Purchases Discounts.......................................

12,180

Cash.......................................................................
Sales Discounts....................................................
Accounts ReceivableFawcett Co................

1,980
20

Accounts ReceivableClemons Co. ................

Sales..................................................................

3,000

Cash.......................................................................
Nonbank Credit Card Expense...........................
Accounts ReceivableAmerican Express....

9,470
380

Sales Returns and Allowances...........................

Accounts ReceivableClemons Co. ............

1,700

61

18,000
8,100

12,180
3,000
2,000
14,700
300
9,850
11,940
240

2,000
3,000

9,850
1,700

Prob. C2
July

4
7
9
13

14

17

19
22
24
25
31

Purchases.............................................................
Transportation In..................................................
Accounts PayableSwanson Co...................

42,000
1,200

Purchases.............................................................
Accounts PayableLambert Co....................

8,000

Accounts ReceivableWalsh Co.......................

Sales..................................................................

9,600

Accounts PayableLambert Co........................

Purchases Returns and Allowances..............

1,300

Accounts PayableSwanson Co.......................

Cash...................................................................
Purchases Discounts.......................................

43,200

Accounts PayableLambert Co........................

Cash...................................................................
Purchases Discounts.......................................

6,700

Cash.......................................................................
Sales Discounts....................................................
Accounts ReceivableWalsh Co...................

9,408
192

Accounts ReceivableAmerican Express........

Sales..................................................................

7,450

Accounts ReceivableWu Co............................

Sales..................................................................

4,420

Cash.......................................................................
Sales..................................................................

4,350

Sales Returns and Allowances...........................

Accounts ReceivableWu Co........................

1,610

Cash.......................................................................
Nonbank Credit Card Expense...........................
Accounts ReceivableAmerican Express....

7,160
290

62

43,200
8,000
9,600
1,300
42,360
840
6,633
67

9,600
7,450
4,420
4,350
1,610

7,450

Prob. C3
1. May

6 Accounts ReceivableBurk Co. ...................

Sales.............................................................

18,500

6 Transportation Out...........................................
Cash.............................................................

600

10 Accounts ReceivableBurk Co. ...................

Sales.............................................................

15,750

11 Sales Returns and Allowances.......................

Accounts ReceivableBurk Co. ..............

5,500

17 Accounts ReceivableBurk Co. ...................

Sales.............................................................

30,000

17 Accounts ReceivableBurk Co. ...................

Cash.............................................................

1,750

21 Cash...................................................................
Sales Discounts................................................
Accounts ReceivableBurk Co................

12,740
260

27 Cash...................................................................
Sales Discounts................................................
Accounts ReceivableBurk Co................

31,450
300

31 Cash...................................................................
Accounts ReceivableBurk Co................

15,750

63

18,500
600
15,750
5,500
30,000
1,750

13,000

31,750
15,750

Prob. C3
2. May

Concluded

6 Purchases.........................................................
Accounts PayableSimkins Co...............

18,500

10 Purchases.........................................................
Accounts PayableSimkins Co...............

15,750

11 Accounts PayableSimkins Co.....................

Purchases Returns and Allowances........

5,500

14 Transportation In..............................................
Cash.............................................................

300

17 Purchases.........................................................
Transportation In..............................................
Accounts PayableSimkins Co...............

30,000
1,750

21 Accounts PayableSimkins Co.....................

Purchases Discounts.................................
Cash.............................................................

13,000

27 Accounts PayableSimkins Co.....................

Purchases Discounts.................................
Cash.............................................................

31,750

31 Accounts PayableSimkins Co.....................

Cash.............................................................

15,750

64

18,500
15,750
5,500
300

31,750
260
12,740
300
31,450
15,750

Prob. C4
1.

Account Title
Cash..............................
Accounts Receivable...
Merchandise Inventory
Prepaid Insurance........
Store Supplies..............
Office Supplies.............
Store Equipment..........
Accum. Depr.Store
Equipment..............
Office Equipment.........
Accum. Depr.Office
Equipment..............
Accounts Payable........
Salaries Payable...........
Unearned Rent.............
Note Payable (final
payment, 2013).......
Sherri Vogel, Capital....
Sherri Vogel, Drawing.
Income Summary.........
Sales..............................
Sales Returns & Allow.
Sales Discounts...........
Purchases.....................

Trial Balance
Dr.
Cr.
28,000
142,500
200,000
9,700
4,250
2,100
132,000

................
................
................
................
................
................
................

SUNSHINE SPORTS CO.

Work Sheet
For the Year Ended December 31, 2006
Adjusted
Adjustments
Trial Balance
Dr.
Cr.
Dr.
Cr.
.................
.................
(b)215,000
.................
.................
.................
.................

.................
.................
(a) 200,000
(c) 4,800
(d) 2,950
(e) 1,350
.................

28,000
142,500
215,000
4,900
1,300
750
132,000

................
................
................
................
................
................
................

Income
Statement
Dr.
Cr.
................
................
................
................
................
................
................

................
................
................
................
................
................
................

Balance
Sheet
Dr.
Cr.
28,000
142,500
215,000
4,900
1,300
750
132,000

................
................
................
................
................
................
................

................
40,300 ................. (f) 7,500 ................
47,800 ................ ................ ................
47,800
50,000 ................ ................. .................
50,000 ................ ................ ................
50,000 ................
................
17,200 .................
................
56,700 .................
................ ................ .................
................
1,200 (i)
800

(g) 3,800
.................
(h) 6,000
.................

................
................
40,000
................
................
11,900
7,100
500,000

................. ................
100,000 ................ ................ ................
100,000
................. ................
159,600 ................ ................ ................
159,600
.................
40,000 ................ ................ ................
40,000 ................
(b)215,000
200,000
215,000
200,000
215,000 ................ ................
................. ................
960,000 ................
960,000 ................ ................
.................
11,900 ................
11,900 ................ ................ ................
.................
7,100 ................
7,100 ................ ................ ................
.................
500,000 ................
500,000 ................ ................ ................

100,000
159,600
................
................
960,000
................
................
................

.................
.................
.................
(a) 200,000
.................
.................
.................
.................

65

................
................
................
................

21,000
56,700
6,000
400

................
................
................
................

................
................
................
................

................
................
................
................

21,000
56,700
6,000
400

Prob. C4

Account Title

Continued
Trial Balance
Dr.
Cr.

Purchases Returns and

Allowances............. ................
Purchases Discounts. . ................
Transportation In.........
11,200
Sales Salaries Expense
81,400
Advertising Expense. . .
45,000
Depr. Expense
Store Equipment.... ................
Store Supplies Expense ................
Misc. Selling Expense
1,600
Office Salaries Expense
44,000
Rent Expense...............
26,000
Insurance Expense...... ................
Depr. ExpenseOffice
Equipment.............. ................
Office Supplies
Expense.................. ................
Misc. Adm. Expense....
1,650
Rent Revenue............... ................
Interest Expense..........
11,600
1,350,000
Net Income...................

Adjusted
Trial Balance
Dr.
Cr.

Adjustments
Dr.
Cr.

Income
Statement
Dr.
Cr.

Balance
Sheet
Dr.
Cr.

10,100
4,900
................
................
................

.................
.................
.................
(h) 4,000
.................

................. ................
10,100 ................
10,100 ................ ................
................. ................
4,900 ................
4,900 ................ ................
.................
11,200 ................
11,200 ................ ................ ................
.................
85,400 ................
85,400 ................ ................ ................
.................
45,000 ................
45,000 ................ ................ ................

................
................
................
................
................
................

(f) 7,500
(d) 2,950
.................
(h) 2,000
.................
(c) 4,800

.................
.................
.................
.................
.................
.................

................ (g)
................
................
................
................
1,350,000

3,800 .................

(e) 1,350
.................
.................
.................
442,200

7,500
2,950
1,600
46,000
26,000
4,800

................
................
................
................
................
................

3,800 ................

.................
1,350 ................
.................
1,650 ................
(i)
800 ................
800
.................
11,600 ................
442,200 1,582,300 1,582,300

66

7,500
2,950
1,600
46,000
26,000
4,800

................
................
................
................
................
................

................
................
................
................
................
................

................
................
................
................
................
................

3,800 ................ ................ ................

1,350 ................ ................
1,650 ................ ................
800 ................
11,600 ................ ................
967,850 1,190,800
614,450
222,950
1,190,800 1,190,800
614,450

................
................
................
................
391,500
222,950
614,450

Prob. C4
2.

Continued
SUNSHINE SPORTS CO.
Income Statement
For the Year Ended December 31, 2006

Revenue from sales:

Sales.............................................
Less: Sales returns & allow......
Sales discounts...............
Net sales......................................
Cost of merchandise sold:
Merch. inv., Jan. 1, 2006............
Purchases....................................
Less: Pur. returns & allow......... $10,100
Purchases discounts......
4,900
Net purchases..................................
Add transportation in......................
Cost of merch. purchased.........
Merchandise available for sale.......
Less merch. inv., Dec. 31, 2006......
Cost of merchandise sold.........
Gross profit.......................................
Operating expenses:
Selling expenses:
Sales salaries expense.........
Advertising expense.............
Depr. exp.store equip. .....
Store supplies expense .......
Misc. selling expense...........
Total selling expenses....
Administrative expenses:
Office salaries expense .......
Rent expense.........................
Insurance expense................
Depr. exp.office equip. .....
Office supplies expense.......
Misc. administrative exp......
Total admin. expenses....
Total operating expenses..........
Income from operations..................
Other income and expense:
Rent revenue...............................
Interest expense.........................
Net income........................................

67

$960,000
$ 11,900
7,100

19,000
$ 941,000
$200,000

$500,000
15,000
$485,000
11,200
496,200
$696,200
215,000
481,200
$ 459,800
$ 85,400
45,000
7,500
2,950
1,600
$142,450
$ 46,000
26,000
4,800
3,800
1,350
1,650
83,600
226,050
$ 233,750
$

800
(11,600)

(10,800)
$ 222,950

Prob. C4

Continued

3.
SUNSHINE SPORTS CO.
Statement of Owners Equity
For the Year Ended December 31, 2006
Sherri Vogel, capital, January 1, 2006.................................
Net income for the year.........................................................
Less withdrawals...................................................................
Increase in owners equity....................................................
Sherri Vogel, capital, December 31, 2006............................

68

$ 159,600
$222,950
40,000
182,950
$ 342,550

Prob. C4

Continued

4.
SUNSHINE SPORTS CO.
Balance Sheet
December 31, 2006
Assets
Current assets:
Cash.............................................................
Accounts receivable...................................
Merchandise inventory..............................
Prepaid insurance.......................................
Store supplies.............................................
Office supplies............................................
Total current assets..............................
Fixed assets:
Store equipment..........................................
Less accumulated depreciation..........
Office equipment........................................
Less accumulated depreciation..........
Total fixed assets.............................
Total assets.......................................................

$ 28,000
142,500
215,000
4,900
1,300
750
$392,450
$132,000
47,800
$ 50,000
21,000

Liabilities
Current liabilities:
Accounts payable.......................................
Note payable (current portion)..................
Salaries payable..........................................
Unearned rent..............................................
Total current liabilities..........................
Long-term liabilities:
Note payable (final payment, 2013)..........
Total liabilities..................................................
Owners Equity
Sherri Vogel, capital.........................................
Total liabilities and owners equity................

69

$ 84,200
29,000
113,200
$505,650

$ 56,700
10,000
6,000
400
$ 73,100
90,000
$163,100
342,550
$505,650

Prob. C4
5.

Continued

Income Summary.............................................................
Merchandise Inventory.............................................

200,000

Merchandise Inventory...................................................
Income Summary.......................................................

215,000

Insurance Expense.........................................................
Prepaid Insurance......................................................

4,800

Store Supplies Expense.................................................

Store Supplies............................................................

2,950

Office Supplies Expense................................................

Office Supplies...........................................................

1,350

Depreciation ExpenseStore Equipment....................

Accumulated DepreciationStore Equipment......

7,500

Depreciation ExpenseOffice Equipment...................

Accumulated DepreciationOffice Equipment.....

3,800

Sales Salaries Expense..................................................

Office Salaries Expense.................................................
Salaries Payable.........................................................

4,000
2,000

Unearned Rent.................................................................
Rent Revenue.............................................................

800

70

200,000
215,000
4,800
2,950
1,350
7,500
3,800

6,000
800

Prob. C4
6.

Concluded

Sales.................................................................................
Purchases Returns and Allowances.............................
Purchases Discounts......................................................
Rent Revenue..................................................................
Income Summary.......................................................

960,000
10,100
4,900
800

Income Summary.............................................................
Sales Returns and Allowances................................
Sales Discounts.........................................................
Purchases...................................................................
Transportation In.......................................................
Sales Salaries Expense.............................................
Advertising Expense.................................................
Depreciation ExpenseStore Equipment..............
Store Supplies Expense............................................
Miscellaneous Selling Expense...............................
Office Salaries Expense............................................
Rent Expense.............................................................
Insurance Expense....................................................
Depreciation ExpenseOffice Equipment.............
Office Supplies Expense...........................................
Miscellaneous Administrative Expense..................
Interest Expense........................................................

767,850

Income Summary.............................................................
Sherri Vogel, Capital..................................................

222,950

Sherri Vogel, Capital.......................................................

Sherri Vogel, Drawing................................................

40,000

71

975,800
11,900
7,100
500,000
11,200
85,400
45,000
7,500
2,950
1,600
46,000
26,000
4,800
3,800
1,350
1,650
11,600
222,950
40,000