(HADM)

(Sem. II)
(ACCT1013)
Assignment 3.

DUE Date : 15-04-2019(morning 10:00) Marks 65

Purpose: To demonstrate the skills acquired by you in “Accounting for Merchandising

Activities” and Internal control

Instructions:
1. The student will get full marks only if he enumerates all the steps involved
2. Plagiarism in any form would lead to a very high penalty
3. Late assignments will be penalised.If you submit an assignment a day after the deadline
then you will be marked “0” for it.

Resources: The assignment covers the chapter 5 and 7.

Requirements: You should hand the assignment complete in all respects by the due date
hand written
Evaluation: Your assignment would be marked on the basis of how well you have
understood the concepts and your ability to apply them

Q1. Prepare journal entries for march 2014 to record the following transactions for a retail store.
Assume a perpetual Inventory system
Mar2 Purchased merchandise from Blanton Company under the following terms:$4200 invoice
price,2/15,n/60,FOB factory
Mar3 Paid $350 for shipping charges on the purchase of March2.
Mar 4 Returned to Blanton Company unacceptable merchandise that had an invoice price of $400
Mar17 Sent a cheque to Blanton Co. for March2 purchase, net of the returned merchandise and
applicable discount.
Mar18 Purchased merchandise from Fleming Corp. Under the following conditions: $9,600 invoice
price,2/10,n/30,FOB destination
Mar21 Received from Fleming Corp. A $2,100 allowance on the purchase of March 18.
Mar28 Sent a cheque to Fleming Corp. Paying for the March 18 purchase , net of the discount and
the allowance.
Apr5 Sold merchandise to a customer for $6,800; terms 1/10,n/30(Cost of sales $4,080)
Apr 7 Made cash sale of $5,100 of the merchandise to a customer today (cost of sales $3,060)
Apr 8 Sold merchandise for $12,400; terms 1/10,n/30(Cost of sales $7,440)
Apr 15 Collected the amount owing from the credit customer of April5
May5 The customer of April8 paid the balance owed.
(24 marks)
Q2.The following adjusted trial balance information was taken from the end of the July 31,2014 fiscal
year for Brilliant sales:
Acc. No. Account Dr. Cr.
101 Cash $ 6,500
102 Merchandise Inventory 12,200
125 Supplies 2,400
128 Prepaid Insurance 1,150
165 Stores equipment 29,400
166 Accumulated Depriciation -StoresEquipment $7,500
167 Office equipment 15,600
168 Accumulated Depriciation -OfficeEquipment 8,100
201 Accounts payable 6,400
301 Ty Brilliant,capital 107,920
302 Ty Brilliant,withdrawl 61,000
413 Sales 395,400
415 Sales discounts 1,200
505 Cost of Goods Sold 261,800
612 Depriciation Expense, Stores equipment 1,500
613 Depriciation Expense, Office equipment 1,250
622 Sales salaries expense 39,000
623 Office salaries expense 32,000
637 Insurance expense, Stores 4,100
638 Insurance expense, Office 2,800
640 Rent expense, Stores 13,100
641 Rent expense, Selling space 21,000
651 Office Supplies expense 2,600
652 Stores Supplies Expense 1,800
655 Advertising Exepnse 14,900 0
Totals $525,320 $525,320
Required:
1. Prepare a multi step income statement for use by the external users
2. Prepare a single step statement for use by the internal users (21 marks)

Q3.The bank statement for Cates Company indicates a balance of $1,730 on June 30. The cash
balance per books had a balance of $799 on this date. The following information pertains to the bank
transactions for the company:
(i)Deposit of $160, representing cash receipts of June 30, did not appear on the bank statement.
(ii)Outstanding cheques totaled $340.
(iii)Bank service charges for June amounted to $25
(iv) The bank collected a note receivable for the company for $800 plus $56 interest revenue.
(v) A NSF cheque for $80 from a customer was returned with the statement.
Instructions
Prepare a bank reconciliation for June 30.
Prepare any adjusting entries necessary as a result of the bank reconciliation. (10 Marks)
Q4. Maritime distributors created a $500 imprest petty cash fund. During the first month of use, the
fund custodian authorized and signed petty cash tickets as shown below

Item Amount
Delivery of flyers to customers 128.80
Stamp purchase 85.98
Newsletter 60.40
Key to closet 9.52
Staples 14.72

Instruction:
Make general journal entries to (a) create the petty cash fund and (b) record its replenishment. Cash in
the total fund totals $197.58.Include explanations. (10 marks)