Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Chapter 3, Problem 1E
Exercise 3-1 Determining the cost of financing inventory
On January 1, 2018, Jana started a small flower merchandising business that she named Jana’s Flowers. The company experienced the following events during the first year of operation:
1. Started the business by issuing common stock for $30,000 cash.
2. Paid $19,000 cash to purchase inventory.
3. Sold merchandise that cost $10,000 for $21,000 on account.
4. Collected $16,000 cash from
5. Paid $3,750 for operating expenses.
Required
a. Organize ledger accounts under an
b. Prepare an income statement, a
c. Since Jana sold inventory for $21,000, she will be able to recover more than half of the $30,000 she invested in the stock. Do you agree with this statement? Why or why not?
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Part 1
1. Benjo's Battery Store sells two brands of battery: Silver and Gold. Purchases for the
month of June consisted of 30 silver brand units at 1,500 each and 20 gold brand units
at 1,800 each. At the end of the month an inventory count showed that 12 silver brand
units and 5 gold brand units were still on hand.
Required:
a. Compute for each brand: purchases, merchandise inventory at the end of June and
cost of sales.
b. Assume a silver brand sells for 2,400 and a gold brand sells for 2,750. Compute for
each brand: sales revenue and gross income on sales.
2. Still using No. 1. Assume that is the following month another 25 silver brand units and
20 gold brand units were purchased from the suppliers at the same prices. At the end of
the month only 18 silver brand units and 10 gold units were on hand.
Compute for each brand: cost of purchases, total goods available for sale,
merchandise inventory end of July and the cost of sales. (use the latest cost prices)
b. Assuming the same…
Aug. 1
Beginning merchandise inventory, 10 books @ $15 each
Aug. 3
Sold 3 books @ $20 each
Aug. 12
Purchased 8 books @ $18 each
Aug. 15
Sold 9 books @ $20 each
Aug. 20
Purchased 4 books @ $20 each
Aug. 28
Sold 5 books @ $25 each
5.
Serenity
Books has the following transactions in
August
related to merchandise inventory.
Read the requirements.
a. Determine the cost of goods sold and ending merchandise inventory by preparing a perpetual inventory record using the specific identification method. Assume the following costing information for the books sold during the month:
August
3:
3
books costing
$15
each
August
15:
4
books costing
$15
each and
5
books costing
$18
each
August
28:
2
books costing
$18
each and
3
books costing
$20
each
Start by entering the beginning inventory balances. Enter the transactions in chronological order, calculating new inventory on hand balances after each transaction. Once all of the transactions…
Exercise 2: Using the perpetual inventory system – FIFO
Rambler Lawn Supply began March with 50 units of inventory that cost $15 each. During March,
Rambler completed these inventory transactions:
Units Unit Cost Unit Sale Price
March 02 Purchase 12
$20
08 Sale
40
$36
17 Purchase 24
25
22 Sale
31
40
Requirements:
1. Prepare a perpetual inventory record for the lawn supply retail goods
1
2. Determine Rambler's cost of goods sold for March.
3. Calculate gross profit for March.
Chapter 3 Solutions
Survey Of Accounting
Ch. 3 - 1. Define merchandise inventory. What types of...Ch. 3 - 2. What is the difference between a product cost...Ch. 3 - 3. How is the cost of goods available for sale...Ch. 3 - 4. What portion of cost of goods available for...Ch. 3 - 5. When are period costs expensed? When are...Ch. 3 - 6. If PetCo had net sales of 600,000, goods...Ch. 3 - Prob. 7QCh. 3 - 8. What are the effects of the following types of...Ch. 3 - 9. Northern Merchandising Company sold inventory...Ch. 3 - 10. If goods are shipped FOB shipping point, which...
Ch. 3 - 11. Define transportation-in. Is it a product or a...Ch. 3 - Prob. 12QCh. 3 - Prob. 13QCh. 3 - 14. Dyer Department Store purchased goods with the...Ch. 3 - 15. Eastern Discount Stores incurred a 5,000 cash...Ch. 3 - 16. What is the purpose of giving credit terms to...Ch. 3 - Prob. 17QCh. 3 - 18. Ball Co. purchased inventory with a list price...Ch. 3 - 22. Explain the difference between purchase...Ch. 3 - Prob. 20QCh. 3 - Prob. 21QCh. 3 - 25. What is the advantage of using common size...Ch. 3 - 27. What is the purpose of preparing a schedule of...Ch. 3 - 28. Explain how the periodic inventory system...Ch. 3 - Prob. 25QCh. 3 - Exercise 3-1 Determining the cost of financing...Ch. 3 - Exercise 3-2 Comparing a merchandising company...Ch. 3 - Exercise 3-3 Effect of inventory transactions on...Ch. 3 - Exercise 3-4 Effect of inventory transactions on...Ch. 3 - Exercise 3-5 Recording inventory transactions in a...Ch. 3 - Exercise 4-6A Understanding the freight terms FOB...Ch. 3 - Exercise 3-7 Effect of purchase returns and...Ch. 3 - Exercise 3-8 Accounting for product costs:...Ch. 3 - Effect of product cost and period cost: Horizontal...Ch. 3 - Cash Discounts and Purchase Returns On April 6,...Ch. 3 - Exercise 4-9A Determining the effect of inventory...Ch. 3 - Inventory financing costs Bill Norman comes to you...Ch. 3 - Effect of shrinkage: Perpetual system Ho Designs...Ch. 3 - Comparing gross margin and gain on sale of land...Ch. 3 - Single-step and multistep income statements The...Ch. 3 - Prob. 16ECh. 3 - Effect of cash discounts on financial statements:...Ch. 3 - Using common size statements and ratios to make...Ch. 3 - Prob. 19ECh. 3 - Determining cost of goods sold: Periodic system...Ch. 3 - Identifying product and period costs Required...Ch. 3 - Problem 4-23A Identifying freight costs Required...Ch. 3 - Effect of purchase returns and allowances and...Ch. 3 - Preparing a schedule of cost of goods sold and...Ch. 3 - Prob. 25PCh. 3 - Comprehensive cycle problem: Perpetual system At...Ch. 3 - Prob. 27PCh. 3 - Comprehensive cycle problem: Periodic system...Ch. 3 - Prob. 1ATCCh. 3 - ATC 3-2 Group Exercise Multistep income statement...Ch. 3 - Prob. 3ATCCh. 3 - Prob. 4ATC
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