Shandong University



Chapter 5 Accounting for Merchandising Operations

QUCIK STUDY

QS 5-1

Prepare journal entries to record each of the following purchases transactions of a merchandising company. Show supporting calculations and assume a perpetual inventory system.

Mar. 5 Purchased 1,000 units of product at a cost of $12 per unit. Terms of the sale are 2/10, n/60; the invoice is dated March 5.

Mar. 7 Returned 50 defective units from the March 5 purchase and received full credit.

Mar. 15 Paid the amount due from the March 5 purchase, less the return on March 7.

QS 5-2

Prepare journal entries to record each of the following sales transactions of a merchandising company. Show supporting calculations and assume a perpetual inventory system.

Apr. 1 Sold merchandise for $5,000, granting the customer terms or 2/10, ROM; invoice dated April 1. The cost of merchandise is $3,000.

Apr. 4 The customer in the April 1 sale returned merchandise and receive credit for $1,000, The merchandise, which had cost $600, is returned to inventory.

Apr. 11 Received payment for the amount due from the April 1 sale less the return on April 4.

QS 5-3

Crystal Company ledger on July 31, its fiscal year-end, includes the following selected accounts that have normal balance(Crystal uses the perpetual inventory system).

|Merchandise inventory |$42,000 |Sales returns and allowances |$ 7,600 |

|B. Crystal, Capital |124,900 |Cost of goods sold |115,000 |

|Sales |275,300 |Depreciation expense | 12,000 |

|Sales discounts |55,200 |Salaries expense | 45,000 |

| | |Miscellaneous expense | 7,000 |

A physical count of its July 31 year-end inventory discloses that the cost of the merchandise inventory still available is $40,600. Prepare the entry to record any inventory shrinkage.

EXERCISES

Exercises 5-1

Prepare journal entries to record the following transactions for a retail store. Assume a perpetual inventory system.

Apr. 2 Purchased merchandise from Johns Company under the following terms: $5,900 price, invoice dated April 2, credit terms of 2/15, n/60, and FOB shipping point.

3. Paid $330 for shipping charges on the April 2 purchase.

4. Returned to Johns Company unacceptable merchandise that had an invoice price of $900.

17 Sent a check to Johns Company for the April 2 purchase, net of the discount and the returned merchandise.

18 Purchased merchandise from William Corp. Under the following terms; $12,250, invoice dated April 18, credit terms of 2/10, n/30, and FOB destination.

21 After negotiations, received from William a $3,250 allowance on the April 18 purchase.

28 Sent check to William paying for the April 18 purchase, net of the discount and allowance.

Exercises 5-8

The following list includes selected permanent accounts and all of the temporary accounts from the December 31, 2009, unadjusted trial balance of Yamiko Co., a business owned by Kumi Yamiko. Use these account balances along with the additional information to journalize (a) adjusting entries and (b) closing entries. Yamiko Co. uses a perpetual inventory system.

| |Debit |Credit |

|Merchandise inventory |$ 30,200 | |

|Prepaid selling expense | 4,000 | |

|K.Yamiko, withdrawals | 1,600 | |

|Sales | |$ 543,000 |

|Sales returns and allowance |20,656 | |

|Sales discounts | 5,783 | |

|Cost of goods sold |267,451 | |

|Sales salaries expense | 59,796 | |

|Utilities expense | 17,395 | |

|Selling expense | 46,749 | |

|Administrate expense |120,135 | |

Additional Information

Accrued sales salaries amount to $1,700. Prepare selling expenses of $1,600 have expired. A physical count of year-end merchandise inventory shows $29,626 of goods still available.

Exercises 5-9

Journalize the following merchandising transactions for Chiller Systems assuming it uses a perpetual inventory system.

1. On October 1, Chiller Systems purchases merchandise for $2,800 on credit with terms of 2/5, n/30, FOB shipping point; invoice dated November 1.

2. On October 5, Chiller Systems pays cash for the November 1 purchase.

3. On October 7, Chiller Systems discovers and returns $100 of defective merchandise purchased on November 1 for a cash refund.

4. On October 10, Chiller Systems pays $140 cash for transaction costs with the November 1 purchase.

5. On October 13, Chiller Systems sells merchandise for $3,024 on credit. The cost of merchandise is $1,512.

6. On October 16, the customer returns merchandise from the November 13 transaction. The returned items sell for $205 and cost $115.

PROBLEM

Problem 5-3A

Rusio Company's adjusted trial balance on August 31, 2009, its fiscal year-end, follows.

| |Debits |Credits |

|Merchandise inventory |$ 43,500 | |

|Other (noninventory) assets |174,000 | |

|Total liabilities | |$ 50,242 |

|C.Rusio, Capital | | 142,036 |

|C.Rusio, Withdrawals | 8,000 | |

|Sales | |297,540 |

|Sales discounts | ,4,552 | |

|Sales returns and allowances | 19,637 | |

|Cost of goods sold |114,571 | |

|Sales salaries expense | 40,762 | |

|Rent expense—Selling space | 13,984 | |

|Store supplies expense | 3,570 | |

|Advertising expense | 25,290 | |

|Office salaries expense | 37,192 | |

|Rent expense—Office space | 3,570 | |

|Office supplies expense | 1,190 | |

|totals |$489,818 |$489,818 |

On August 31, 2008, merchandise inventory was $35,104. Supplementary records of merchandising activities for the year ended August 31, 2009, reveal the following itemized costs.

|Invoice cost of merchandise purchases |$127,890 |

|Purchase discounts received | 2,685 |

|Purchase returns and allowances | 6,138 |

|Costs of transportation-in | 3,900 |

Required

1. Compute the company's net for the year.

2. Compute the company's total cost of merchandise purchased for the year.

3. Prepare a multiple-step income statement that includes separate categories for selling expense and for general and administrate expenses.

4. Prepare a single-step income statement that includes these expense categories: cost of goods sold, selling expense, and general and administrate expensrs.

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