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Problems (Group A)For all problems, assume the perpetual inventory system is used unless stated otherwise. Round all numbers to the nearest whole dollar unless stated otherwise.P5-31A Journalizing purchase and sale transactionsLearning Objective 3Sep. 10 Cash $3,977Journalize the following transactions that occurred in September 2016 for Purple Haze, assuming perpetual inventory system is being used. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name.SOLUTIONP5-31A, contP5-31A, contP5-31A, contP5-31A, contP5-32A Journalizing purchase and sale transactionsLearning Objectives 1, 2, 3Nov. 14 Merch. Inv. $40Journalize the following transactions that occurred in November 2016 for May’s Adventure Park. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name.SOLUTIONDateAccounts and ExplanationDebitCreditNov. 4Merchandise Inventory 8,000Accounts Payable—Valera Company8,0006Merchandise Inventory160 Cash1608Accounts Payable—Valera Company 4,000Merchandise Inventory ($8,000 × 0.50)4,00010Cash1,700Sales Revenue1,700Cost of Goods Sold680Merchandise Inventory68011Accounts Receivable—Garrison Corporation10,300Sales Revenue10,300Cost of Goods Sold5,150Merchandise Inventory5,15012Delivery Expense30 Cash3013Accounts Receivable—Cain Company9,000Sales Revenue9,000Cost of Goods Sold4,500Merchandise Inventory4,50014Accounts Payable—Valera Company ($8,000 – $4,000)4,000Cash ($4,000 – $40)3,960Merchandise Inventory ($4,000 × 0.01)4016Sales Returns and Allowances200Accounts Receivable—Garrison Corporation20017Sales Returns and Allowances400Accounts Receivable—Cain Company400Merchandise Inventory200Cost of Goods Sold200P5-32A, cont.Nov. 18Merchandise Inventory3,700Accounts Payable—Regan Corporation3,70020Cash ($10,100 – $303)9,797Sales Discounts ($10,100 × 0.03)303Accounts Receivable—Garrison Corporation ($10,300 – $200)10,10026Accounts Payable—Regan Corporation 3,700Cash ($3,700 – $74)3,626Merchandise Inventory ($3,700 × 0.02)7428Cash ($8,600 – $86)8,514Sales Discounts ($8,600 × 0.01)86Accounts Receivable—Cain Company ($9,000 – $400)8,60029Merchandise Inventory12,000Cash12,000Merchandise Inventory200 Cash200P5-33A Preparing a multi-step income statement, journalizing closing entries, and preparing a post-closing trial balanceLearning Objectives 4, 51. Operating Income $59,050The adjusted trial balance of Big Rita’s Music Company at June 30, 2016, follows:RequirementsPrepare Big Rita’s multi-step income statement for the year ended June 30, 2016.Journalize Big Rita’s closing entries.Prepare a post-closing trial balance as of June 30, 2016.SOLUTIONRequirement 1BIG RITA’S MUSIC COMPANYIncome StatementYear Ended June 30, 2016Sales Revenue$ 187,000Less: Sales Returns and Allowances4,500Sales Discounts3,500Net Sales Revenue$ 179,000Cost of Goods Sold84,150Gross Profit94,850Operating Expenses:Selling Expenses18,800Administrative Expenses17,000Total Operating Expenses35,800Operating Income59,050Other Revenues and (Expenses):Interest Expense (1,000)Total Other Revenues and (Expenses) (1,000)Net Income$ 58,050Requirement 2DateAccounts and ExplanationDebitCreditJun. 30Sales Revenue187,000Income Summary187,00030Income Summary128,950Sales Returns and Allowances4,500Sales Discounts3,500Cost of Goods Sold84,150Selling Expense18,800Administrative Expense17,000Interest Expense1,00030Income Summary58,050Rita, Capital58,05030Rita, Capital42,500Rita, Withdrawals42,500P5-33A, cont.Requirement 3BIG RITA’S MUSIC COMPANYPost-Closing Trial BalanceJune 30, 2016Account TitleBalanceDebitCreditCash$ 3,700Accounts Receivable38,500Merchandise Inventory17,100Office Supplies850Furniture39,800Accumulated Depreciation—Furniture$ 8,800Accounts Payable13,100Salaries Payable800Unearned Revenue7,400Notes Payable, long-term15,000Rita, Capital54,850Total$ 99,950 $ 99,950 P5-34A Journalizing adjusting entries, preparing adjusted trial balance, and preparing financial statementsLearning Objectives 4, 52. Total Credits $482,880The unadjusted trial balance for Travis Electronics Company at March 31, 2016, follows:RequirementsJournalize the adjusting entries using the following data:Interest revenue accrued, $450.Salaries (Selling) accrued, $2,500.Depreciation expense—Equipment (Administrative), $1,330.Interest expense accrued, $1,100.A physical count of inventory was completed. The ending Merchandise Inventory should have a balance of $44,600.Prepare Travis Electronics’s adjusted trial balance as of March 31, 2016.Prepare Travis Electronics’s multi-step income statement for year ended March 31, 2016.Prepare Travis Electronics’s statement of owner’s equity for year ended March 31, 2016. Assume Travis made no additional contributions during the year.Prepare Travis Electronics’s classified balance sheet in report form as of March 31, 2016.SOLUTIONRequirement 1DateAccounts and ExplanationDebitCreditMar. 31Interest Receivable450Interest Revenue45031Salaries Expense (Selling)2,500Salaries Payable2,50031Depreciation Expense—Equipment (Administrative)1,330Accumulated Depreciation—Equipment1,33031Interest Expense1,100Interest Payable1,10031Cost of Goods Sold500Merchandise Inventory500($45,100 – $44,600)P5-34A, cont.Requirement 2TRAVIS ELECTRONICS COMPANYAdjusted Trial BalanceMarch 31, 2016Account TitleBalanceDebitCreditCash$ 3,700Accounts Receivable33,300Interest Receivable450Merchandise Inventory44,600Office Supplies6,300Equipment133,000Accumulated Depreciation—Equipment $ 37,930Accounts Payable16,400Salaries Payable2,500Interest Payable1,100Unearned Revenue13,600Notes Payable, long-term44,000Travis, Capital56,900Travis, Withdrawals21,000Sales Revenue310,000Interest Revenue450Sales Returns and Allowances7,100Sales Discounts3,000Cost of Goods Sold171,000Salaries Expense (Selling)26,500Rent Expense (Selling)15,000Salaries Expense (Administrative)5,400Utilities Expense (Administrative)10,100Depreciation Expense—Equipment (Administrative)1,330Interest Expense1,100Total$ 482,880 $ 482,880 P5-34A, cont.Requirement 3TRAVIS ELECTRONICS COMPANYIncome StatementYear Ended March 31, 2016Sales Revenue$ 310,000Less: Sales Returns and Allowances7,100Sales Discounts3,000Net Sales Revenue$ 299,900Cost of Goods Sold171,000Gross Profit128,900Operating Expenses:Selling Expenses:Salaries Expense26,500Rent Expense15,000Total Selling Expenses41,500Administrative Expenses:Salaries Expense5,400Utilities Expense10,100Depreciation Expense—Equipment1,330Total Administrative Expenses16,830Total Operating Expenses58,330Operating Income70,570Other Revenues and (Expenses):Interest Revenue450Interest Expense(1,100)Total Other Revenues and (Expenses) (650)Net Income$ 69,920Requirement 4TRAVIS ELECTRONICS COMPANYStatement of Owner’s EquityYear Ended March 31, 2016Travis, Capital, April 1, 2015$ 56,900Owner contribution0Net income for the year69,920$ 126,820Owner withdrawal(21,000)Travis, Capital, March 31, 2016$ 105,820P5-34A, cont.Requirement 5TRAVIS ELECTRONICS COMPANYBalance SheetMarch 31, 2016AssetsCurrent Assets: Cash$ 3,700 Accounts Receivable33,300Interest Receivable450Merchandise Inventory44,600Office Supplies6,300 Total Current Assets$ 88,350Plant Assets: Equipment$ 133,000 Less: Accumulated Depreciation (37,930) Total Plant Assets95,070Total Assets$ 183,420LiabilitiesCurrent Liabilities: Accounts Payable$ 16,400 Salaries Payable2,500 Interest Payable1,100 Unearned Revenue13,600 Total Current Liabilities$ 33,600Long-term Liabilities: Notes Payable44,000Total Liabilities77,600Owner’s EquityTravis, Capital105,820Total Liabilities and Owner’s Equity$ 183,420P5-35A Preparing a single-step income statement, preparing a multi-step income statement, and computing the gross profit percentageLearning Objectives 5, 62. Operating Income $80,700The records of Quality Cut Steak Company list the following selected accounts for the quarter ended April 30, 2016:RequirementsPrepare a single-step income statement.Prepare a multi-step income statement.M. Doherty, manager of the company, strives to earn a gross profit percentage of at least 50%. Did Quality Cut achieve this goal? Show your calculations.SOLUTIONRequirement 1QUALITY CUT STEAK COMPANYIncome StatementQuarter Ended April 30, 2016Revenues:Net Sales Revenue$ 292,000Interest Revenue500Total Revenues$ 292,500Expenses:Cost of Goods Sold 160,600Rent Expense (Selling)21,400Utilities Expense (Selling)10,600Delivery Expense (Selling)3,500Depreciation Expense—Equipment (Administrative)1,300Utilities Expense (Administrative)4,300Rent Expense (Administrative)9,600Interest Expense1,700Total Expenses 213,000Net Income$ 79,500 P5-35A, cont.Requirement 2QUALITY CUT STEAK COMPANYIncome StatementQuarter Ended April 30, 2016Sales Revenue$ 306,000Less: Sales Returns and Allowances8,500Sales Discounts 5,500Net Sales Revenue$ 292,000Cost of Goods Sold160,600Gross Profit131,400Operating Expenses:Selling Expenses:Rent Expense21,400Utilities Expense10,600Delivery Expense3,500Total Selling Expenses35,500Administrative Expenses:Depreciation Expense—Equipment1,300Utilities Expense4,300Rent Expense9,600Total Administrative Expenses15,200Total Operating Expenses50,700Operating Income80,700Other Revenues and (Expenses):Interest Revenue500Interest Expense(1,700)Total Other Revenues and (Expenses) (1,200)Net Income$ 79,500Requirement 3Quality Cut Steak Company did not achieve the goal of a gross profit percentage of 50%, it was only 45%Net Sales Revenue$ 292,000Less: Cost of Goods Sold 160,600Gross Profit$ 131,400Gross profit percentage = $131,400 / $292,000 = 45%P5A-37A Preparing a multi-step income statement and journalizing closing entriesLearning Objective 7Appendix 5A1. Gross Profit $200,200Travis Department Store uses a periodic inventory system. The adjusted trial balance of Travis Department Store at December 31, 2016, follows:RequirementsPrepare Travis Department Store’s multi-step income statement for the year endedDecember 31, 2016. Assume ending Merchandise Inventory is $36,500.Journalize Travis Department Store’s closing entries.SOLUTIONRequirement 1TRAVIS DEPARTMENT STOREIncome StatementYear Ended December 31, 2016Sales Revenue$ 387,000Less: Sales Returns and Allowances6,700 Sales Discounts4,300Net Sales Revenue$ 376,000Cost of Goods Sold:Beginning Merchandise Inventory37,500Purchases$ 294,000Less: Purchase Returns & Allowances 113,000 Purchase Discounts6,700Net Purchases174,300Plus: Freight In 500Net Cost of Purchases174,800Cost of Goods Available for Sale212,300Less: Ending Merchandise Inventory36,500Cost of Goods Sold 175,800Gross Profit200,200Operating Expenses:Selling Expenses41,900Administrative Expenses26,500Total Operating Expenses68,400Operating Income131,800Other Revenues and (Expenses):Interest Expense(3,000)Total Other Revenues and (Expenses) (3,000)Net Income$ 128,800P5A-37A, cont.Requirement 2DateAccounts and ExplanationDebitCreditDec. 31Sales Revenue387,000Purchase Returns and Allowances113,000Purchase Discounts6,700Merchandise Inventory (ending)36,500Income Summary543,20031Income Summary414,400Sales Returns and Allowances6,700Sales Discounts4,300Purchases294,000Freight In500Merchandise Inventory (beginning)37,500Selling Expense41,900Administrative Expense26,500Interest Expense3,00031Income Summary128,800Tays, Capital128,80031Tays, Capital89,500Tays, Withdrawals89,500 ................
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