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Exercise 5-9

Note: The original missing numbers are blocked.

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

(a)

(b)

(c)

(d)

(e)

$60,000

$42,500

$36,000

$78,000

$23,600

Cost of goods sold:
Merch. inv. (beg.) .......
Total cost of merch.
purchases .................

6,000

17,050

7,500

7,000

2,560

36,000

1,550

33,750

32,000

5,600

Merch. inv. (end.) .......

(7,950)

(2,700)

(9,000)

(6,600)

Cost of goods sold ....

34,050

15,900

32,250

32,400

5,600

Gross profit .................

25,950

26,600

3,750

45,600

18,000

Expenses .....................

9,000

10,650

12,150

2,600

6,000

Net income (loss) ........

$16,950

$15,950

$ (8,400)

$43,000

$12,000

(2,560)

Explanations:
a. Find merchandise inventory (ending) by subtracting cost of goods sold from
goods available for sale. Find gross profit as the difference between the sales
and cost of goods sold. Find net income as the gross profit less the expenses.
b. Find total cost of merchandise purchases by finding the number that makes the
total equal the cost of goods sold. Find gross profit from sales less cost of
goods sold.
c. Find cost of goods sold from sales less gross profit. Find cost of merchandise
purchases by finding the number to make the calculation equal cost of goods
sold.
d. Calculate cost of goods sold as usual. Calculate sales as gross profit plus cost
of goods sold.
e. Find merchandise inventory (ending) by subtracting cost of goods sold from
goods available for sale. Find gross profit from sales less cost of goods sold.
Find net income as gross profit less expenses.

.... 1... 7 Cash ................... Merchandise Inventory ........ 6) Nov..............500 To record sale of merchandise on credit... Cash ...................500 Sales........372 To record cash payment in discount period..... Nov...........................................400 Accounts Payable .. Nov................................... 28 1........................... Merchandise Inventory ...........................02) 4) Nov.................. 1................. 200 200 To record return of merchandise sold on credit.................... Cash ......... 2) Nov..........................400 To record merchandise purchases on credit............. 10 Merchandise Inventory ..................... 1... 100 100 ............................ 13 Cost of Goods Sold ........400 x 0... *$100 – ($100 x 0.............. 80 80 To record payment of freight charges........... 1 Merchandise Inventory ..400 Merchandise Inventory ...... 13 Accounts Receivable ................................... 5) Nov.. 750 750 To record cost of merchandise sold..... 1......... 16 Merchandise Inventory ............................................................... Accounts Receivable ............ 5 Accounts Payable ................. 1........................... To record cost of merchandise returned..02 3) Nov. *$1...... 98 98 To record check received for return of purchases previously paid for with discount already taken................................. Cost of Goods Sold ........................... 16 Sales Returns and Allowances ...Exercise 5-14 Perpetual Inventory System 1) Nov.........................................................

Collected receivable within the discount period.......... 2 Cost of Goods Sold ...... 1........... 800 800 Sold goods on credit............ Sales....600 Sold goods for cash.................... 200 200 Received credit memo from returning goods to supplier..................... 500 500 To record cost of the July 2 sale..... 8 Cash ....600 Sales.................................................................. 6..............................................................000 Purchased goods on credit..................... 12 Cash .................................................Problem 5-2A July 1 Merchandise Inventory .. 2 Accounts Receivable—Coke ... 2............ 1..............................200 To record cost of the July 8 sale..................000 Accounts Payable—Black ..................................... 784 16 800 ......................... 11 Accounts Payable—Lane ..... 8 Cost of Goods Sold ......................................... Accounts Receivable—Coke ...... 2......... Merchandise Inventory ... 6....................... 3 Merchandise Inventory ................................................................................. Sales Discounts (2%) .. Merchandise Inventory ..............200 Merchandise Inventory ................... 9 Merchandise Inventory .............300 Purchased goods on credit.....................................................300 Accounts Payable—Lane .. 1.. 1................................................................ 100 100 Paid freight on incoming goods................................... Cash ...

......................... 31 Cost of Goods Sold ...... [($1............ 150 150 Issued credit memo for allowance on goods sold to customer.000 Sales.....................Problem 5-2A July 16 Accounts Payable—Black .. To record cost of the July 31 sale..... 5......... 900 900 To record cost of the July 19 sale.. 19 Cost of Goods Sold ..................058 Paid payable in discount period (*2% x $2....... 6...100 Merchandise Inventory * .................................. 1..078 Sales Discounts (2%) .......... 1...............000 Merchandise Inventory (1%) ........... Merchandise Inventory ........$150) x ............. 60 5...... 5..............250 Sales............200 ..............250 Sold goods on credit. 19 Accounts Receivable—AKP ........ 21 Sales Returns and Allowances ............02] 31 Accounts Receivable—Coke ............................................... 3.............................................................................. 22 Accounts Receivable—AKP .................200 Merchandise Inventory . 30 Cash ........................... 3.......................... Cash ................ 1................100)..................................000 Sold goods on credit.............100 Collected receivable within discount period...940 Paid payable within discount period................................................................... 1................. Cash ............................... 2........... Accounts Receivable—AKP ......................... 42 2...................................250 .................. 24 Accounts Payable—Lane ..

....... 24.000 $230. ..400............. $430.......... 3... Net income ........... Cost of goods sold ........500) (5....................... Net income computation: Gross profit from sales (from d) ... If actual (physical) inventory is $38..... Sales returns and allowances ..........000 $ 49. Gross profit .......................... Less: Sales discounts ............. Net income is $197.................400 2....................... $405...........400 20......................000 b............000 $ 6.....400........... c...... Ending ......................000 increase in cost of goods sold would result in a corresponding decrease in both gross profit and net income............. This $4..... Less: Purchase discounts received..................... Total cost of merchandise purchased (from b) ...............000.............000 (42.............. Merchandise inventory...................000 $181.000 d....... Total cost of merchandise purchases .... Cost of goods sold computation: Merchandise inventory.... $217.................... Operating expenses (given) ..........000 $217........................................................................................Teamwork in Action — BTN 5-6 1. Add costs of transportation-in .............000 loss from inventory shrinkage occurred...... Net sales . Merchandise available for sale .............................. Less: Cost of goods sold (from c) .............500) 11......... The inventory account balance is $42.................... a......000 (4..........000) $188....000 $197.....600 $405................... This would result in an adjustment necessitating a reduction (credit) to the inventory account and an increase (debit) to cost of goods sold..................... This means that net income would decline to $193.. Total cost of merchandise purchases computation: Invoice cost of merchandise purchases ..............................000........................400 188........ Gross profit computation: Net sales (from a) ...600 18.... Beginning........................... Purchase returns and allowances ................000 181........ Net sales computation: Sales ....400 e................................400 $180. a $4...........