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Name: Answer Key

PROBLEM #1

Date Accounts & Explanations Debit Credit


1/2 Merchandise Inventory 8,000
A/P-Snake Oil 8,000

1/3 Merchandise Inventory 160


Cash 160

1/4 Rent Expense 2,400


Cash 2,400

1/5 A/R-Beanie's Pharmacy 3,500


Sales 3,500
Cost of Merchandise Sold 1,610
Merchandise Inventory 1,610

1/6 Advertising Expense 220


Cash 220

1/9 Merchandise Inventory 2,000


Cash 2,000

1/10 A/P-Snake Oil 8,000


Cash 7,840
Merchandise Inventory 160

1/14 Cash 3,430


Sales Discounts 70
A/R-Beanie's Pharmacy 3,500

1/15 Sales Salaries Expense 1,200


Office Salaries Expense 900
Cash 2,100

1/16 Merchandise Inventory 4,000


A/P-Scorpion Supply Co. 4,000

1/19 A/P-Scorpion Supply Co. 400


Merchandise Inventory 400

1/20 Cash 7,000


Sales 7,000
Cost of Merchandise Sold 3,220
Merchandise Inventory 3,220

1/21 A/R-Nature's Products 12,000


Sales 12,000
Cost of Merchandise Sold 5,520
Merchandise Inventory 5,520
Date Accounts & Explanations Debit Credit
1/24 Sales Returns & Allowances 500
A/R-Nature's Products 500
Merchandise Inventory 230
Cost of Goods Sold 230

1/25 A/P-Scorpion Supply Co. 3,600


Cash 3,528
Merchandise Inventory 72

1/30 Cash 11,270


Sales Discounts 230
A/R-Nature's Products 11,500

1/31 Delivery Expense 300


Cash 300

1/31 Sales Salaries Expense 1,200


Office Salaries Expense 900
Cash 2,100
Dolly's Celebrity Dolls
Income Statement
For the Month Ended 01/31/0X

Revenue from Sales


Sales $82,000
Less: Sales Returns & Allowances $2,000
Sales Discounts 1,040 3,040
Net Sales 78,960

Cost of Merchandise Sold 41,944


Gross Profit 37,016

Operating Expenses
Selling Expenses:
Sales Salaries Expense $9,600
Advertising Expense 1,200
Delivery Expense 1,400
Misc. Expense 300
Total Selling Expenses $12,500

Administrative Expenses:
Rent Expense 9,800
Office Salaries Expense 7,200
Supplies Expense 500
Insurance Expense 500
Depreciation Expense 1,300
Misc. Admin. Expense 200
Total Administrative Expenses 19,500
Total Operating Expenses 32,000
Income from Operations 5,016

Other Income & Expense


Rent Income 2,500
Interest Expense 300
Net Other Income 2,200
Net Income 7,216
Dolly's Celebrity Dolls
Statement of Owner's Equity
For the Month Ended 01/31/0X

Dolly, Capital 01/01/0X $221,800


Add: Net Income 7,216
229,016
Less: Withdrawals 2,000
Dolly, Capital 01/31/0X $227,016
Dolly's Celebrity Dolls
Balance Sheet
January 31, 200X

Assets
Current Assets
Cash $55,416
A/R 25,600
Merchandise Inventory 117,000
Supplies 4,100
Prepaid Insurance 5,500
Total Current Assets $207,616

Property, Plant & Equipment


Furniture & Equipment 140,000
Less: Accumulated Depreciation 65,700
Net Plant Assets 74,300

Total Assets $281,916

Liabilities & Equity


Current Liabilities
Accounts Payable $20,400
Salaries Payable 4,200
Interest Payable 300
Current Portion of Long Term Debt 6,000
Total Current Liabilities 30,900

Long-Term Liabilities
Note Payable 24,000
Total Liabilities 54,900

Owner's Equity
Dolly, Capital 01/31/XX 227,016
Total Liabilities & Equity $281,916
PROBLEM #3
Date Accounts & Explanations Debit Credit
1/31 Sales 82,000
Rent Income 2,500
Income Summary 84,500

1/31 Income Summary 77,284


Sales Returns & Allowances 2,000
Sales Discounts 1,040
Cost of Merchandise Sold 41,944
Sales Salaries Expense 9,600
Advertising Expense 1,200
Delivery Expense 1,400
Misc. Selling Expense 300
Rent Expense 9,800
Office Salaries Expense 7,200
Supplies Expense 500
Insurance Expense 500
Depreciation Expense 1,300
Misc. Admin. Expense 200
Interest Expense 300

1/31 Income Summary 7,216


Dolly, Capital 7,216

1/31 Dolly, Capital 2,000


Dolly, Drawing 2,000
Problem 4 - FIFO

PURCHASES COST OF MERCHANDISE SOLD INVENTORY BALANCE


UNIT TOTAL UNIT TOTAL UNIT TOTAL
DATE QTY. COST COST QTY. COST COST QTY. COST COST
1-Oct 50 15.00 750

8-Oct 20 18.00 360 50 15.00 750


20 18.00 360

11-Oct 18 15.00 270 32 15.00 480


20 18.00 360

17-Oct 32 15.00 480


18 18.00 324 2 18.00 36

21-Oct 30 20.00 600 2 18.00 36


30 20.00 600

29-Oct 2 18.00 36
2 20.00 40 28 20.00 560

Problem 4 - LIFO

PURCHASES COST OF MERCHANDISE SOLD INVENTORY BALANCE


UNIT TOTAL UNIT TOTAL UNIT TOTAL
DATE QTY. COST COST QTY. COST COST QTY. COST COST
1-Oct 50 15.00 750

8-Oct 20 18.00 360 50 15.00 750


20 18.00 360

11-Oct 18 18.00 324 50 15.00 750


2 18.00 36

17-Oct 2 18.00 36
48 15.00 720 2 15.00 30

21-Oct 30 20.00 600 2 15.00 30


30 20.00 600

29-Oct 4 20.00 80 2 15.00 30


26 20.00 520