Managerial Accounting
3rd Edition
ISBN: 9780077826482
Author: Stacey M Whitecotton Associate Professor, Robert Libby, Fred Phillips Associate Professor
Publisher: McGraw-Hill Education
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Question
Chapter 1, Problem 10ME
To determine
Concept introduction:
An organization can be manufacturing, servicing of merchandising type. For a manufacturing business the activities are manufacturing, payment to the supplier, sales, and receipts from the customer. For a merchandiser, the main business activities are the purchase, payment to the supplier, sales, and receipts from the customer. For a servicing business, the main business activities are the purchase, payment to the supplier, services, and receipts from the customer.
To indicate:
The type of business for each of the given company
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1. Which accounts are used in a merchandising business but not in a service firm?2. What is the primary revenue account in a merchandising business? Can a merchandising business have a Service Income account?3. What are the two systems of maintaining inventory? Briefly define each.4. If you are going to put up a business, what type of business would you wan toestablish? Why?
Identify the following accounts if it is normally used in Service and/or in Merchandising Business Income Statement.
1 Sales
2 Service Income
3 Salaries
4 Purchases
5 Purchase Discount
6 Merchandise Inventory
7 Distribution Costs
8 Freight In
9 Transportation and Travelling
10 Rent Expense
11 Depreciation
12 Insurance
13 General and Administrative Expenses
14 Cost of Goods Sold
15 Goods Available for Sale
16 Interest Expense
17 Transportation In
18 Travel Expenses
19 Professional Income
20 Finance Expenses
XYZ Limited is a clothing wholesaler that sells the name-brand clothing to department stores and boutiquedress shops. Figure on Page No 4 describes the credit sales procedures of XYZ Limited. In particular, theFigure describes different business activities of four departments, including (1) Sales Department, (2)Accounting Department, (3) Warehouse/Shipping, and (4) Mailroom. Further, these activities areelaborated below.The sales department received the customer orders by fax and email. You should be aware that thesesales orders are usually unstandardized sales order (recall our discussion on the revenue cycle during theinteractive tutorial for week 4). The sales clerk, who works on commission, performs the following tasks:• approves the credit sales,• calculates commission and discounts, and• records the sales in the sales journal from the PC in the sales department.
Page 3 of 9
After entering these records, the sales clerk then prepares three documents, including (1) a sales…
Chapter 1 Solutions
Managerial Accounting
Ch. 1 - What is the primary difference between financial...Ch. 1 - Prob. 2QCh. 1 - Why are traditional, GAAP-based financial...Ch. 1 - Prob. 4QCh. 1 - consider the area within a 3-mile radius of your...Ch. 1 - What are the three basic functions of management?Ch. 1 - How are the three basic management functions...Ch. 1 - What are ethics and why is ethical behavior...Ch. 1 - Prob. 9QCh. 1 - Prob. 10Q
Ch. 1 - Prob. 11QCh. 1 - Prob. 12QCh. 1 - Why are businesses starting to incorporate...Ch. 1 - What factors does sustainability accounting...Ch. 1 - Think about your activities over the last week....Ch. 1 - Prob. 16QCh. 1 - Why is it important for managers to be able to...Ch. 1 - Prob. 18QCh. 1 - Prob. 19QCh. 1 - Explain the difference between relevant and...Ch. 1 - Prob. 21QCh. 1 - What are prime costs? Why have they decreased in...Ch. 1 - Prob. 23QCh. 1 - Why can't prime cost and conversion cost be added...Ch. 1 - Prob. 25QCh. 1 - Prob. 26QCh. 1 - Prob. 27QCh. 1 - Prob. 28QCh. 1 - Prob. 29QCh. 1 - Prob. 1MCCh. 1 - Prob. 2MCCh. 1 - Prob. 3MCCh. 1 - Prob. 4MCCh. 1 - Prob. 5MCCh. 1 - What is Garcia's total manufacturing cost? a....Ch. 1 - Prob. 7MCCh. 1 - What is Garcia's manufacturing overhead? a....Ch. 1 - Prob. 9MCCh. 1 - Which of the following would not be treated as a...Ch. 1 - MINI-EXERCISES Comparing Financial and Managerial...Ch. 1 - Prob. 4MECh. 1 - Prob. 5MECh. 1 - Prob. 6MECh. 1 - Prob. 8MECh. 1 - Prob. 9MECh. 1 - Prob. 10MECh. 1 - Identifying Direct and Indirect Costs for a...Ch. 1 - Prob. 12MECh. 1 - Identify sustainability issues affecting the...Ch. 1 - Classifying Costs Seth's Skateboard Company incurs...Ch. 1 - Calculation Costs Cotton White, Inc., makes...Ch. 1 - Prob. 7ECh. 1 - Prob. 8ECh. 1 - Classifying Costs Blockett Company makes...Ch. 1 - Prob. 10ECh. 1 - Prob. 12ECh. 1 - Prob. 13ECh. 1 - Explaining Effects of Cost Misclassification Donna...Ch. 1 - Prob. 4.1GAPCh. 1 - Prob. 4.2GAPCh. 1 - Prob. 4.3GAPCh. 1 - Prob. 3.1GBPCh. 1 - Prob. 3.2GBPCh. 1 - Classifying Costs, Calculating Total Costs, and...Ch. 1 - Prob. 4.2GBPCh. 1 - Classifying Costs, Calculating Total Costs, and...
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- COMPUTING GROSS PROFIT The following data were taken from the accounts of Burnside Bedknobs, a retail business. Determine the gross profit.arrow_forwardPlease see below. The amounts can be made up but please make sure that they make sense for a merchandising company. Need asap please.arrow_forwardWhich of the following represents the components of the income statement for a merchandising business? A. Sales Revenue - Cost of Goods Sold = gross profit B. Service Revenue - Operating Expenses = gross profit C. Sales Revenue - Cost of Goods Manufactured = gross profit D. Service Revenue - Cost of Goods Purchased = gross profitarrow_forward
- XYZ Limited is a clothing wholesaler that sells name-brand clothing to department stores and boutique dress shops. The Figure at the end of this question describes the credit sales procedures of XYZ Limited. In particular, the Figure describes different business activities of four departments including (1) Sales Department, (2) Accounting Department, (3) Warehouse/Shipping, and (4) Mailroom. Further, these activities are elaborated below. The sales department received the customer orders by fax and email. You should be aware that these sales orders are usually unstandardised sales orders. The sales clerk, who works on commission, performs the following tasks: approves the credit sales, calculates commission and discounts, and records the sales in the sales journal from the PC in the sales department. After entering these records, the sales clerk then prepares three documents, including (1) a sales order, (2) a customer invoice, and (3) a packing slip. These documents are…arrow_forwardUse the following information to answer the questions that follow. A. Calculate the operating income percentage for each of the stores. Comment on how your analysis has changed for each store. B. Perform a vertical analysis for each store. Based on your analysis, what accounts would you want to investigate further? How might management utilize this information? C. Which method of analysis (using a dollar value or percentage) is most relevant and/or useful? Explain.arrow_forwardNizwa Supplies LLC is trading wholesale merchandise business in Muscat. The Business have more Suppliers (vendors) which can be found in a. Sales journal b. Purchase ledger c. General journal d. Cash receipt journalarrow_forward
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- For a manufacturer, what is the description of the account that is comparable to a merchandising businesss cost of merchandise sold?arrow_forwardCosts and Expenses The following costs are incurred by a retailer: Display fixtures in a retail store Advertising Merchandise for sale Incorporation (i.e., legal costs, stock issue costs) Cost of a franchise Office supplies Wages and salaries Computer software Computer hardware Required For each cost, explain whether all of the cost or only a portion of the cost would appear as an expense on the income statement for the period in which the cost was incurred. If not all of the cost would appear on the income statement for that period, explain why not.arrow_forwardXYZ Limited is a clothing wholesaler that sells the name-brand clothing to department stores and boutique dress shops. Figure on Page No 4 describes the credit sales procedures of XYZ Limited. In particular, the Figure describes different business activities of four departments, including (1) Sales Department, (2) Accounting Department, (3) Warehouse/Shipping, and (4) Mailroom. Further, these activities are elaborated below. The sales department received the customer orders by fax and email. You should be aware that these sales orders are usually unstandardized sales order (recall our discussion on the revenue cycle during the interactive tutorial for week 4). The salesclerk, who works on commission, performs the following tasks: approves the credit sales, calculates commission and discounts, and records the sales in the sales journal from the PC in the sales department. After entering these records, the salesclerk then prepares three documents, including (1) a sales order, (2) a…arrow_forward
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