WORK SHEET

ACCOUNTING FOR MERCHANDISE OPERATION

Exercise 1
1. The following transactions were completed by Montrose Company during May of the current
year. Montrose Company uses a perpetual inventory system.
May 3. Purchased merchandise on account from Floyd Co., $4,000, terms FOB shipping point,
2/10, n/30, with prepaid freight of $120 added to the invoice.
May 5. Purchased merchandise on account from Kramer Co., $8,500, terms FOB destination,
1/10, n/30.
6. Sold merchandise on account to C. F. Howell Co., list price $4,000, trade discount 30%,
terms 2/10, n/30. The cost of the merchandise sold was $1,125.
8. Purchased office supplies for cash, $150.
10. Returned merchandise purchased on May 5 from Kramer Co., $1,300.
13. Paid Floyd Co. on account for purchase of May 3, less discount.
14. Purchased merchandise for cash, $10,500.
15. Paid Kramer Co. on account for purchase of May 5, less return of May 10 and discount.
16. Received cash on account from sale of May 6 to C. F. Howell Co., less discount.
22. Sold merchandise on account to Comer Co., $3,480, terms 2/10, n/30. The cost of the
merchandise sold was $1,400.
24. Sold merchandise for cash, $4,350. The cost of the merchandise sold was $1,750.
25. Received merchandise returned by Comer Co. from sale on May 22, $1,480.
The cost of the returned merchandise was $600.
Instructions
1. Journalize the transactions.

Exercise 2
Based on the following data, determine the cost of merchandise sold for June:
Merchandise inventory, June 1 $ 35,500
Merchandise inventory, June 30 40,500
Purchases 384,000
Purchases returns and allowances 11,000
Purchases discounts 3,000
Freight in 6,000
Exercise 3
Journalize the following merchandise transactions:
A. Sold merchandise on account, $41,000 with terms 1/10, n/30. The cost of the merchandise
sold was $22,500.
B. Received payment less the discount.

Exercise 4
 Saddlebag Co. sold merchandise to Bioscan Co. on account, $17,500, terms FOB shipping point,
2/10, n/30. The cost of the merchandise sold is $10,000. Saddlebag Co. paid freight of $600 and
later received the amount due within the discount period.
Journalize Saddlebag Co.’s and Bioscan Co.’s entries for the payment of the amount due.

Exercise 5
Santana Co. sold merchandise to Birch Co. on account, $6,000, terms 2/15, n/30. The cost of the
merchandise sold is $4,000. Santana Co. issued a credit memo for $800 for merchandise returned
and later received the amount due within the discount period.The cost of the merchandise
returned was $550.
Journalize Santana Co.’s and Birch Co.’s entries for the payment of the amount due.

Exercise 6
For (a) through (d), identify the items designated by “X” and “Y.”
a. Purchases - (X + Y) = Net purchases.
b. Net purchases + X = Cost of merchandise purchased.
c. Merchandise inventory (beginning) + Cost of merchandise purchased = X.
d. Merchandise available for sale -X = Cost of merchandise sold

Exercise 7
Two items are omitted in each of the following four lists of income statement data.
Determine the amounts of the missing items, identifying them by letter.
Sales $250,000 $600,000 $1,000,000 $ (g)
Sales returns and allowances (a) 30,000 (e) 7,500
Sales discounts 10,000 18,000 40,000 11,500
Net sales 225,000 (c) 910,000 (h)
Cost of merchandise sold (b) 330,000 (f) 400,000
Gross profit 90,000 (d) 286,500 120,000

Exercise 8
Merchandise is sold on account to a customer for $12,500, terms FOB shipping point, 1/10, n/30.
The seller paid the freight of $400. Determine the following: (a) amount of the sale, (b) amount
debited to Accounts Receivable, (c) amount of the discount for early payment,

Newgen Company purchased merchandise on account from a supplier for $9,000, terms 2/10,
n/30. Newgen Company returned $1,200 of the merchandise and received full credit.

Exercise 9
Versailles Co., a women’s clothing store, purchased $18,000 of merchandise from a supplier on
account, terms FOB destination, 2/10, n/30. Versailles Co. returned $3,000 of the merchandise,
receiving a credit memo, and then paid the amount due within the discount period. Journalize
 Versailles Co.’s entries to record (a) the purchase, (b) the merchandise return, and (c) the
payment.

Exercise 10
Summit Co., a furniture wholesaler, sells merchandise to Bitone Co. on account, $23,400, terms
2/10, n/30. The cost of the merchandise sold is $14,000. Summit Co. issues a credit memo for
$4,400 for merchandise returned and subsequently receives the amount due within the discount
period. The cost of the merchandise returned is $2,600. Journalize Summit Co.’s entries for (a)
the sale, including the cost of the merchandise sold, (b) the credit memo, including the cost of the
returned merchandise, and (c) the receipt of the check for the amount due from Bitone Co.

Exercise 11
The following selected transactions were completed by Artic Company during February of the
current year. Artic Company uses the periodic inventory system.
Feb. 2. Purchased $17,500 of merchandise on account, FOB shipping point, terms 2/15,n/30.
5. Paid freight of $300 on the February 2 purchase.
6. Returned $2,000 of the merchandise purchased on February 2.
13. Sold merchandise on account, $9,000, FOB destination, 2/10, n/30. The cost of
merchandise sold was $6,600.
15. Paid freight of $100 for the merchandise sold on February 13.
17. Paid for the purchase of February 2 less the return and discount.
23. Received payment on account for the sale of February 13 less the discount.
Journalize the entries to record the transactions of Artic Company.

Exercise 12
The following selected accounts and their current balances appear in the ledger of Case-It Co. for
the fiscal year ended December 31, 2018:
Cash $ 37,700 Sales Returns and Allowances $ 37,800
Accounts Receivable 111,600 Sales Discounts 19,800
Merchandise Inventory 180,000 Cost of Merchandise Sold 1,926,000
Office Supplies 5,000 Sales Salaries Expense 378,000
Prepaid Insurance 12,000 Advertising Expense 50,900
Office Equipment 115,200 Depn Exp Stor Eqpm 8,300
Accm Depn Off Eqpm 49,500 Miscellaneous Selling Expense 2,000
Store Equipment 311,500 Office Salaries Expense 73,800
Accm Depn Stor Eqpm 87,500 Rent Expense 39,900
Accounts Payable 48,600 Insurance Expense 22,950
Salaries Payable 3,600 Depn Exp Offi Eqpm 16,200
Note Payable 54,000 Office Supplies Expense 1,650
Gina Hennessy, Capital 454,800 Miscell Adm Exp 1,900
Gina Hennessy, Drawing 45,000 Interest Expense 4,400
Sales 2,703,600
Instructions
 1. Prepare a multiple-step income statement.
2. Prepare a statement of owner’s equity.
3. Prepare a account form of balance sheet.

Exercise 13
The following selected accounts and their current balances appear in the ledger of Land Scape
Co. for the fiscal year ended December 31, 2018:
Cash $ 161,250 Sales Returns and Allowances $ 69,300
Accounts Receivable 363,000 Sales Discounts 65,700
Merchandise Inventory 525,000 Cost of Merchandise Sold 2,325,000
Office Supplies 16,800 Sales Salaries Expense 519,600
Prepaid Insurance 10,200 Advertising Expense 131,400
Office Equipment 255,000 Depn Exp Store Eqip 19,200
Accm Depn Office Equip 138,400 Miscellaneous Selling Expense 4,800
Store Equipment 759,000 Office Salaries Expense 252,450
Acum Depn Store Equip 102,600 Rent Expense 94,050
Accounts Payable 166,800 Depn Exp Office Equip 38,100
Salaries Payable 7,200 Insurance Expense 11,700
Note Payable 168,000 Office Supplies Expense 3,200
Tanya Xavier, Capital 1,312,250 Miscellaneous Admin Expense 5,500
Tanya Xavier, Drawing 105,000 Interest Expense 15,000
Sales 3,855,000
Instructions
1. Prepare a multiple-step income statement.
2. Prepare a statement of owner’s equity.
3. Prepare account form of balance sheet.

Exercise 14
South Coast Co. is a merchandising business. The account balances for South Coast Co. as of
January 1, 2018 are as follows: are as follows
110 Cash $ 63,600
112 Accounts Receivable 153,900
115 Merchandise Inventory 602,400
116 Prepaid Insurance 16,800
117 Store Supplies 11,400
123 Store Equipment 469,500
124 Accumulated Deprn—Store Eqpt 56,700
210 Accounts Payable 96,600
211 Salaries Payable —
310 Rocky Hansen, Capital 555,300
311 Rocky Hansen, Drawing 135,000
312 Income Summary —
410 Sales 3,221,100
411 Sales Returns and Allowances 92,700
412 Sales Discounts 59,400
510 Cost of Merchandise Sold 1,623,000
520 Sales Salaries Expense 334,800
521 Advertising Expense 81,000
522 Depreciation Expense —
523 Store Supplies Expense —
529 Miscellaneous Selling Expense 12,600
530 Office Salaries Expense 182,100
531 Rent Expense 83,700
532 Insurance Expense —
539 Miscellaneous Administrative Expense 7,800omprehensivroblem 2C
Comprehensive Problem 2omp mprehensive Problem 2rehensive Problem 2Comprehensi
During January the following transactions were completed:
1. Paid rent for January, $5,000.
3. Purchased merchandise on account from Belmont Terms 2/10,n/30, FOB shipping, $40,000.
4. Paid freight on purchase of January 3, $600.
6. Sold merchandise on account to MM Co., terms 2/10, n/30, FOB shipping point, $25,000.
The cost of the merchandise sold was $15,000.
7. Received $26,500 cash from Yuba Co. on account, no discount.
10. Sold merchandise for cash, $80,000. The cost of the merchandise sold was $50,000.
13. Paid for merchandise purchased on January 3, less discount.
14. Received merchandise returned on sale of January 6, $6,000. The cost of the merchandise
returned was $4,500.
15. Paid advertising expense for January, $7,500.
16. Received cash from sale of January 6, less return of January 14 and discount.
19. Purchased merchandise for cash, $36,000.
19. Paid $18,000 to Bakke Co. on account, no discount.
20. Sold merchandise on account to Reedley Co., terms 1/10, n/30, FOB shipping point, $40,000.
The cost of the merchandise sold was $25,000.
21. Received $17,600 cash from Owen Co. on account, no discount.
21. Purchased merchandise on account from N Co., terms 1/10, n/30, FOB destination, $20,000.
24. Returned $2,000 of damaged merchandise purchased on January 21, receiving credit memo.
28. Paid sales salaries of $22,800 and office salaries of $15,200.
29. Purchased store supplies for cash, $2,400.
30. Sold merchandise on account to Whitetail Co., terms 2/10, n/30, FOB shipping point,
$18,750. The cost of the merchandise sold was $11,250.
30. Received cash from sale of January 20, less discount.
31. Paid for purchase of January 21, less return of January 24 and discount.
Instructions
1. Enter the balances of each of the accounts. Journalize the transactions for January.
2. Post the journal to the general ledger.
3. Prepare an unadjusted trial balance.
4. At the end of January, the following adjustment data were assembled.
a. Merchandise inventory on January 31 $589,850
b. Insurance expired during the year $12,500
c. Store supplies on hand on January 31 $ 4,700
d. Depreciation for the current year $18,800
e. Accrued salaries on January 31:
Sales salaries $4,400
Office salaries $2,700
5. Enter the unadjusted trial balance on a 10-column work.
6. Journalize and post the adjusting entries.
7. Prepare an adjusted trial balance.
8. Prepare an income statement, a statement of owner’s equity, and a balance sheet.
9. Prepare and post the closing entries.
10. Prepare a post-closing trial balance.
Cash 115,000.00
Exercise 15
Account Receivable 3,000.00
The account in the ledger of Texas
Merchandize inventory 121,000.00
Company with the balance as of
Store supplies 2,000.00 December 31,2018 the end of its
fiscal years are as follow.
Prepaid Insurance 5,000.00

Office Equipment 42,950.00

Account Payable 20,000.00

Sales Tax Payable 6,000.00

Mulugeta capital 175,000.00

Data for the adjustments
Mulugeta Drawing 54,000.00
a/ Merchandize Inventory at
Income Summary -
December 31, Br 125,000
Sales 468,000.00
b/ Store Supplies Inventory at
Sales Return & Allowance 9,000.00 December 31, Br 1,000

Purchase 303,000.00 c/ Insurance expire during the year

Br. 3,000
Purchase Discount 7,000.00
Instruction
Purchase Return & Allowance 5,000.00
1. Prepare work sheet
Salary Expense 53,000.00 2. Prepare Income Statement
3. Prepare a capital statement
Advertising expense 7,000.00 4. Prepare a balance sheet on Dec
31 2018
Store Supplies Expense -
5. Make necessary adjusting
Insurance Expense - Entries
6. Make Closing entry
Utilities Expense 6,000.00

Interest Expense 1,000.00

Miscellaneous Expense 2,000.00

 7. Prepare post Clothing Trial balance

Exercise 16
The following Information is given for KK – Co. 2019
Beginning Inventory........................Br. 12250
Gross margin........................................7500
Operating Expenses.............................3100
Purchase return and allowance.............600
Purchase Discounts...............................550
Purchases............................................39250
Sales ...................................................51500
Sales Return and Allowances...............1700
Required:
a. Compute Net sales
b. Compute net purchases
c. Compute cost of goods sold
d. Compute ending Inventory
e. Compute net Income

Exercise 17
The unadjusted trial balance of Alpha Trading Private Limited Company on December 31, 2002 is
presented below.

Alpha Trading Plc.

Unadjusted Trial Balance
December 31, 2015
Debit Credit

Cash $ 2,300

Accounts Receivable 12,500

Prepaid Insurance 5,600

Merchandise Inventory 23,700

Supplies 5,700

Equipment 17,300

Accumulated Depreciation-Equipment $3,500

 Accounts Payable 3,500

Notes Payable 19,600

Sales Tax Payable 3,400

Larson, Capital 25,600

Larson, Drawing 3,000

Sales 110,200

Sales Returns and Allowance 3,100

Sales Discount 2,300

Purchases 67,800

Purchase Returns and Allowance 1,200

Purchase Discount 1,300

Freight-In 3,900

Salary Expense 11,400

Miscellaneous Expense 9,700

Total $168,300 $168,300

Additional Information:

a. The ending merchandise inventory amount is $18,500.

b. Accrued salary expense on December 31, 2015 amounts $3,500.
c. The prepaid insurance reported on the trial balance is an amount paid on January 1, 2015. This
amount applies for four years starting from the date of payment.
d. Supplies on hand amounts $3,100 as of December 31, 2015.
e. The depreciation expense for 2015 is $500.

Instruction:
a. Prepare the adjusting entries for the month of December.
b. Prepare an adjusted trial balance at December 31, 2015.
c. Prepare Income statement, owner’s equity statement for the year ended December 31, 2015 and
Balance sheet at December 31, 2015.

Exercise 18
 Smart Company is a small editorial services company owned and operated by Abel M. On December 31,
2017, the end of the current year, Smart Company's accounting clerk prepared the unadjusted trial balance
shown below.
Smart Company
Unadjusted Trial Balance
December 31, 2017

Cash 5,150
Accounts Receivable 46,780
Prepaid Insurance 8,720
Supplies 2,380
Land 140,260
Building 248,200
Accumulated Depreciation- Building 168,090
Equipment 165,320
Accumulated Depreciation - Equipment 119,720
Accounts Payable 14,670
Unearned Rent 8,330
Abel M., Capital 272,300
Abel M., Drawing 18,240
Fees Earned 396,440
Salaries and Wages Expense 236,280
Utilities Expense 51,930
Advertising Expense 27,750
Repairs Expense 21,010
Miscellaneous Expense 7,530
______ ________
Total: xxxxxxxx xxxxxxxx
The data needed to determine year-end adjustments are as follows:
a. Unexpired insurance br. 5,840
b. Supplies on hand , br. 710
c. Depreciation of building for the year, br. 3,870
d. Depreciation of equipment for the year, br. 3,350
e. Rent unearned at December 31, br. 2,170
f. Accrued salaries and wages at December 31, br. 3,780
g. Fees earned but unbilled on December 31, br. 22,200

Instructions
1. Prepare adjusting journal entries and determine the balances in the accounts affected.
3. Prepare an adjusted trial balance
3. Prepare financial reports (income statement and Balance sheet)

Exercise 19
The trial balance of Mr. Eko Fashion Center contained the following accounts at November 30, the end of
the company’s fiscal year.
MR. EKO FASHION CENTER
Trial Balance
November 30, 2012
 Debit Credit
Cash $ 8,700
Accounts Receivable 30,700
Inventory 44,700
Supplies 6,200
Equipment 133,000
Accumulated Deprn—Eqmt $ 28,000
Notes Payable 51,000
Accounts Payable 48,500
Owner’s Capital 90,000
Owner’s Drawings 12,000
Sales Revenue 755,200
Sales Returns and Allowances 8,800
Cost of Goods Sold 497,400
Salaries and Wages Expense 140,000
Advertising Expense 24,400
Utilities Expense 14,000
Maintenance Expense 12,100
Freight-out 16,700
Rent Expense 24,000
Totals $972,700 $972,700

Adjustment data:
1. Supplies on hand totaled $2,000.
2. Depreciation is $11,500 on the equipment.
3. Interest of $4,000 is accrued on notes payable at November 30.
4. Inventory actually on hand is $44,400.
Instructions
(a) Enter the trial balance on a worksheet, and complete the worksheet.
(b) Prepare a multiple-step income statement and an owner’s equity statement for the year.
(c) Journalize the adjusting entries.
(d) Journalize the closing entries.
(e) Prepare a post-closing trial balance.

Exercise 20
On December 1, 2012, Shiras Distributing Company had the following account balances.
Debits Credits
Cash $ 7,200 Accd Deprn—Equ $ 2,200
Accounts Receivable 4,600 Accounts Payable 4,500
Inventory 12,000 Salaries Payable 1,000
Supplies 1,200
Equipment 22,000 Owner’s Capital 39,300
$47,000 $47,000
During December, the company completed the following summary transactions.
Dec. 6 Paid $1,600 for salaries and wages due employees, of which $600 is for December and
$1,000 is for November salaries and wages payable.
8 Received $1,900 cash from customers in payment of account.
10 Sold merchandise for cash $6,300. The cost of the merchandise sold was $4,100.
13 Purchased merchandise on account from Gong Co. $9,000, terms 2/10, n/30.
15 Purchased supplies for cash $2,000.
18 Sold merchandise on account $12,000, terms 3/10, n/30. The cost of the merchandise sold
was $8,000.
20 Paid salaries $1,800.
23 Paid Gong Co. in full, less discount.
27 Received collections in full, less discounts, from customers billed on December 18.
Adjustment data:
1. Accrued salaries payable $800.
2. Depreciation $200 per month.
3. Supplies on hand $1,500.

Instructions
(a) Journalize the December transactions using a perpetual inventory system.
(b) Enter the December 1 balances in the ledger T accounts and post the December transactions.
Use Cost of Goods Sold, Depreciation Expense, Salaries and Wages Expense, Sales Revenue,
Sales Discounts, and Supplies Expense.
(c) Journalize and post adjusting entries.
(d) Prepare an adjusted trial balance.
(e) Prepare an income statement and an owner’s equity statement for December and a classified
balance sheet at December 31.