Professional Documents
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Merchandise Inventory
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Merchandise Inventory 120000 Date Account Titles and Ref Debit Credit
(To record goods returned to supplier.) Explanations .
(c) March 12 Accounts Receivable (800000 – 120000) 680000 Dec Sales 192000
Merchandise Inventory (680000 2%) 13600 31 Income Summary 192000
Cash (680000 – 13600) 666400 (To close revenue account.)
(To record paid cash to supplier less discount.) Dec Income Summary 107000
The End 31 Cost of Goods Sold 105000
BE5–5 Piccola Company provides the following information for the month Sales Discounts 2000
ended October 31, 2005: Sales on credit $280000, cash sales $100000, sales (To close expense accounts.)
discount $13000, sales returns and allowance $21000. Prepare the sales Note: Ending balance of Merchandise Inventory is considered as an asset account,
revenues section of the income statement based on this information. which is not to be closed.
The End
Solution: Piccola Company BE5–8 Explain where each of the following items would appear on (1) a
Income Statement multiple-step income statement, and on (2) a single-step income statement: (a)
For the Month Ended October 31, 2005. gain on sale of equipment, (b) casualty loss from vandalism, and (c) cost of
goods sold.
Solution: (1) Multi-Step Income Statement:
Item Section
340 Accounting Principles Manual Chapter 5 (Brief Exercises) 341
(a) Gain on sale of equipment Other revenues and gains Sales revenues: Amount Amount
(b) Casualty loss from vandalism Other expenses and losses Sales $………
(c) Cost of goods sold Cost of goods sold Less: Sales return and allowance …..….
(2) Single-Step Income Statement: Net sales $………..
Item Section Less: Cost of goods sold:
(a) Gain on sale of equipment Revenues Purchase $400000
(b) Casualty loss from vandalism Expenses Less: Purchase Returns and Allowances (11000)
(c) Cost of goods sold Expenses 389000
Less: Purchase Discounts 8000
The End (a) Net Purchase 381000
BE5–9 Assume Jose Company has the following account balances: Sales Add: Freight-in 16000
$506000, Sales Returns and Allowance $15000, Cost of Goods Sold $350000, (b) Cost of goods purchased $397000
Selling Expenses $70000, and Administrative Expense $40000. Compute the Answers:(a) Net purchase = Tk 381000, (b)Cost of goods purchased = Tk 397000.
following: (a) net sales, (b) gross profit, and (c) income from operations. The End
Solution: Jose Company BE5–11 Assume the same information as in BE5-10 and also that E. Guard
Income Statement Company has beginning inventory of $60000, ending inventory of $90000, and
For the Period Ended ……... net sales of $630000. Determine the amounts to be reported for cost of goods
Sales revenues: Amount Amount sold and gross profit.
Sales $506000
Less: Sales return and allowance 15000
Solution: E. Guard Company
(a) Net sales $491000 Income Statement
Less: Cost of goods sold: For the Period Ended ……...
Cost of goods sold (350000) Amount Amount Amount
(b) Gross profit 141000 Sales revenues:
Net sales $630000
Less: Operating expenses: Less: Cost of goods sold:
Selling expenses $70000 Beginning inventory $60000
Administrative expenses 40000 (110000) Purchase $400000
(c) Income from operation $31000 Less: Purchase Returns and Allowances (11000)
Answers: (a) Net sales = Tk 491000, (b) Gross profit = Tk 141000, 389000
(c) Income from operation = Tk 31000 Less: Purchase Discounts 8000
The End Net Purchase 381000
BE5–10 Assume that E. Guard Company uses a periodic inventory system and Add: Freight-in 16000
has these account balances: Purchases $400000; Purchase Returns and Cost of goods purchased 397000
Allowances $11000; Purchase Discounts $8000; and Freight-in 16000. Cost of goods available for sale 457000
Determine net purchases and cost of goods purchased. Less: Ending inventory (90000)
Solution: E. Guard Company (a) Cost of Goods Sold (367000)
Income Statement (b) Gross profit $263000
For the Period Ended ……... Answers: (a) Cost of goods sold = Tk 367000.
(b) Gross profit = Tk 263000.
The End
BE5–12 Prepare the journal entries to record these transaction on H. Hunt
Company’s books using a periodic inventory system.
340 Accounting Principles Manual Chapter 5 (Brief Exercises) 341
(a) On March 2, H. Hunt Company purchased $900000 of merchandise from B. (c) Sales: Trial balance credit column; Adjusted trial balance credit column; and
Streisand Company, terms 2/10, n/30. Income statement credit column.
(b) On March 6, H. Hunt Company returned $130000 of merchandise
(d) Cost of goods sold: Trial balance debit column; Adjusted trial balance debit
purchased on March 2 because it was defective.
column; and Income statement debit column.
(c) On March 12, H. Hunt Company paid the balance due to B. Streisand
Company. The End
Solution: H. Hunt Company
Journal Entries
(Periodic Inventory System)
N Date Account Titles and Explanations Ref Debit Credit
.
(a) March 2 Purchases 900000
Accounts Payable 900000
(To record goods purchased on account.)
(b) March 6 Accounts Payable 130000
Purchases 130000
Coming Soon!!!
(To record goods purchased on account.)
(c) March 12 Accounts Receivable (900000 – 130000) 770000
Purchase Discounts (770000 2%) 15400
Cash (770000 – 15400) 754600
(To record paid cash to supplier less discount.)
The End
BE5–13 Presented below is the format of the work sheet presented in the
EASY
chapter.
Adjusted Income
Trial Balance Adjustments Trial Balance Statement Balance Sheet
Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
ACCOUNTING
Indicate where the following items will appear on the work sheet: (a) Cash, (b)
Merchandise Inventory, (c) Sales, (d) Cost of goods sold.
Example:
Cash: Trial balance debit column; Adjusted trial balance debit column; and
Balance sheet debit column.
THEORIES
Solution:
(a) Cash: Trial balance debit column; Adjusted trial balance debit column; and
Balance sheet debit column.
(b) Merchandise Inventory: Trial balance debit column; Adjusted trial balance debit
column; and Balance sheet debit column.
340 Accounting Principles Manual Chapter 5 (Brief Exercises) 341
BY M.
SHAMIM