Financial Accounting (5th Edition) (What's New in Accounting)
5th Edition
ISBN: 9780134727790
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Question
Chapter 4, Problem 5SE
a.
To determine
Record the purchase transactions.
b.
To determine
Record the purchase returned.
c.
To determine
Record the purchase payment within the discount period.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
(Learning Objective 2: Calculate purchases by analyzing inventory account activity)On Willow Grove Department Stores’ most recent balance sheet, the balance of its inventory at the beginning of the year was $12,000. At the end of the year, the inventory balancewas $14,500. During that year, its cost of goods sold was $55,000. All purchases of inventorythroughout the year were on account. What was the total of Willow Grove’s purchases duringthe year?
(Learning Objectives 1, 2, 3: Apply GAAP for sales, sales returns, and salesdiscounts) Antique Interiors reported the following transactions in October:Oct 210111519Sold merchandise on account to Tim Hinkel, $1,200, terms 1/10, n/30.Sold merchandise on account to Ben Homan, $2,600, terms 2/10, n/30.Collected payment from Hinkel for the October 2 sale.Homan returned $2,000 of the merchandise purchased on October 10.Collected payment from Homan for the balance of the October 10 sale.Requirements1. Record the foregoing transactions in the journal of Antique Interiors using the grossmethod. (You do not need to make the cost of sales journal entries; assume that these entrieswill be made by the company when it makes its other adjusting entries at period end.)2. Calculate the amount of gross sales minus sales discounts for the month of October.
For all problems, assume the perpetual inventory system is used unless stated otherwise.
P6-28A Accounting for inventory using the perpetual inventory system-
FIFO, LIFO, and weighted-average
Fit Gym began January with merchandise inventory of 78 crates of vitamins that cost
a total of $4,290. During the month, Fit Gym purchased and sold merchandise on
Merchandise Inventory 363
Learning Objectives 2, 3
2. Ending Merch. Inv., $990
account as follows:
Jan. 5 Purchase
156 crates @ $ 64 each
13 Sale
180 crates @$ 100 each
18 Purchase
114 crates @ $ 75 each
26 Sale
150 crates @ $ 116 each
Requirements
1 Prepare a perpetual inventory record, using the FIFO inventory costing method,
and determine the company's cost of goods sold, ending merchandise inventory,
and gross profit.
2. Prepare a perpetual inventory record, using the LIFO inventory costing method,
and determine the company's cost of goods sold, ending merchandise inventory,
and gross profit.
3. Prepare a perpetual inventory record,…
Chapter 4 Solutions
Financial Accounting (5th Edition) (What's New in Accounting)
Ch. 4 - Prob. 1DQCh. 4 - What are some reasons why a merchandiser might...Ch. 4 - Why do businesses use subsidiary ledgers?Ch. 4 - Prob. 4DQCh. 4 - How many accounts are involved in recording the...Ch. 4 - Prob. 6DQCh. 4 - Prob. 7DQCh. 4 - Prob. 8DQCh. 4 - What is the difference between a single-step and...Ch. 4 - Prob. 10DQ
Ch. 4 - Which account does a merchandiser use that a...Ch. 4 - The two main inventory accounting systems are the...Ch. 4 - Prob. 3SCCh. 4 - Prob. 4SCCh. 4 - Prob. 5SCCh. 4 - Prob. 6SCCh. 4 - Prob. 7SCCh. 4 - Prob. 8SCCh. 4 - Prob. 9SCCh. 4 - Prob. 10SCCh. 4 - Prob. 11SCCh. 4 - Prob. 12SCCh. 4 - Inventory methods (Learning Objective 2) 5-10 min....Ch. 4 - Prob. 2SECh. 4 - Prob. 3SECh. 4 - Prob. 4SECh. 4 - Prob. 5SECh. 4 - Prob. 6SECh. 4 - Prob. 7SECh. 4 - Journalizing sales and return transactions...Ch. 4 - Prob. 9SECh. 4 - Prob. 10SECh. 4 - Prob. 11SECh. 4 - Prob. 12SECh. 4 - Calculating gross profit percentage and net income...Ch. 4 - Prob. 14AECh. 4 - Journalizing inventory purchases, returns, and...Ch. 4 - Prob. 16AECh. 4 - Prob. 17AECh. 4 - Prob. 18AECh. 4 - Prob. 19AECh. 4 - Prob. 20AECh. 4 - Prob. 21AECh. 4 - Preparing a single-step income statement (Learning...Ch. 4 - Prob. 23AECh. 4 - Prob. 24AECh. 4 - Prob. 25AECh. 4 - Prob. 26BECh. 4 - Prob. 27BECh. 4 - Prob. 28BECh. 4 - Prob. 29BECh. 4 - Prob. 30BECh. 4 - Journalizing inventory sales, returns, and freight...Ch. 4 - Prob. 32BECh. 4 - Prob. 33BECh. 4 - Prob. 34BECh. 4 - Prob. 35BECh. 4 - Prob. 36BECh. 4 - Prob. 37BECh. 4 - Journalizing inventory purchases, returns, and...Ch. 4 - Prob. 39APCh. 4 - Prob. 40APCh. 4 - Prob. 41APCh. 4 - Prob. 42APCh. 4 - Prob. 43APCh. 4 - Prob. 44APCh. 4 - Journalizing inventory purchases, returns, and...Ch. 4 - Prob. 46BPCh. 4 - Prob. 47BPCh. 4 - Journalizing inventory purchases, sales, returns,...Ch. 4 - Prob. 49BPCh. 4 - Prob. 50BPCh. 4 - Prob. 51BPCh. 4 - Prob. 1CECh. 4 - Continuing Problem In this problem, we continue...Ch. 4 - Continuing Financial Statement Analysis Problem...Ch. 4 - Prob. 1EIACh. 4 - Prob. 2EIACh. 4 - Prob. 1FACh. 4 - Prob. 1IACh. 4 - Prob. 1SBACh. 4 - Prob. 1WC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- (Learning Objectives 4, 5: Compute gross profit; estimate inventory using the grossprofit method) Cleveland Company, a camera store, lost some inventory in a fire on October15. To file an insurance claim, the company must estimate its October 15 inventory using thegross profit method. For the past two years, Cleveland Company’s gross profit has averaged41% of net sales. Its inventory records reveal the following data:Inventory, October 1................ $ 57,700Transactions October 1–15:Purchases ................................. 490,800Purchase discounts................... 17,000Purchase returns....................... 70,900Sales......................................... 660,000Requirements1. Estimate the cost of the lost inventory using the gross profit method.2. Prepare the income statement for October 1 to October 15 for this product through grossprofit. Show the detailed computations of cost of goods sold in a separate schedule.arrow_forwardLearning Objective 2: Compare ending inventory and cost of goods sold—FIFOvs. LIFO) Paulson’s specializes in sound equipment. Company records indicate the followingdata for a line of speakers:Unit Cost$4964JunDate12713ItemBalance...................Purchase.................Sale ........................Sale ........................Quantity18376Sale Price$115103Requirements1. Determine the amounts that Paulson’s should report for cost of goods sold and endinginventory two ways:a. FIFOb. LIFO2. Paulson’s uses the FIFO method. Prepare the company’s income statement for the monthended June 30, 2018, reporting gross profit. Operating expenses totaled $340, and theincome tax rate was 35%.arrow_forwardE5-57 O E-F:5-23 Journalizing sales transactions (Learning Objective 3) Journalize the following sales transactions for Antique Mall. Explanations are not required. The company estimates sales returns at the end of each month. Jan. 4 & 4 7 8 13 20 20 29 Sold $16,000 of antiques on account, credit terms are n/30, to Cavalli Designs. Cost of goods is $8,000. Received a $300 sales return on damaged goods from Cavalli Designs. Cost of goods damaged is $150. Antique Mall received payment from Cavalli Designs on the amount due from Jan. 4, less the return. Sold $4,900 of antiques on account, credit terms are 1/10, n/45, FOB destination, to White Furniture. Cost of goods is $2,450. Antique Mall paid $70 on freight out to White Furniture. Received payment from White Furniture on the amount due from Jan. 20, less the discount. 4+ 8 144 9 ▶|| F5-57 U A لا insert ← prt sc backspace 9:28 PM 9/21/2022 delete homarrow_forward
- years ended June 30, 2019 and 2018: Cost of Goods Available for Sale Nature Foods Grocery reported the following comparative income statements for the Beginning Merchandise Inventory Less: Ending Merchandise Inventory During 2019, Nature Foods Grocery discovered that ending 2018 merchandise inven- inventory error-two years an Merchandise Inventory 361 Learning Objective 5 1.2019, NI $36,500 NATURE FOODS GROCERY Income Statements Years Ended June 30, 2019 and 2018 2019 Net Sales Revenue Cost of Goods Sold: 2018 $ 134,000 $ 119,000 $ 17,000 78,000 $ 14,000 67,000 81,000 Net Cost of Purchases 95,000 18,000 17,000 Cost of Goods Sold 77,000 64,000 57,000 Gross Profit 55,000 Operating Expenses 26,000 21,000 $ 31,000 Net Income $ 34,000 tory was overstated by $5,500. Requirements 1. Prepare corrected income statements for the two years. 2. 2 State whether each year's net income-before your corrections-is understated or overstated, and indicate the amount of the understatement or…arrow_forward(Learning Objective 4: Compute and evaluate gross profit percentage and inventory turnover) The Red Wagon Shop had the following inventory data:2017Ending inventory at:FIFO Cost ...............LIFO Cost...............2018$27,92012,510$ 30,50020,150Cost of goods sold at:FIFO Cost ...............LIFO Cost...............Sales revenue ...............$ 87,63097,980138,000Company managers need to know the company’s gross profit percentage and rate of inventoryturnover for 2018 under1. FIFO.2. LIFO.Which method produces a higher gross profit percentage? A higher inventory turnover?arrow_forward(Learning Objectives 1, 2: Show how to account for inventory transactions; applythe FIFO cost method) Accounting records for Jubilee Corporation yield the following datafor the year ended June 30, 2018 (assume sales returns are non-existent):Inventory, June 30, 2017.......................................................................... $ 7,000Purchases of inventory (on account)......................................................... 61,000Sales of inventory—77% on account; 23% for cash (cost $49,000).........Inventory at FIFO, June 30, 2018 ............................................................100,00019,000Requirements1. Journalize Jubilee’s inventory transactions for the year under the perpetual system.2. Report ending inventory, sales, cost of goods sold, and gross profit on the appropriatefinancial statement.arrow_forward
- question is on the worksheet.arrow_forwardMerchandising Business using Periodic Inventory System Instruction: Prepare journal entries for the following transactions using the general journal format given in class discussion. KIKAY HARDWARE CHART OF ACCOUNTS ASSETS INCOME 100 Cash and Cash Equivalents 400 Sales 101 Accounts Receivable 401 Sales Returns and Allowances 102 Merchandise Inventory 402 Sales Discount 103 Supplies 104 Equipment EXPENSES 500 Purchases LIABILITIES 501 Purchase returns and Allowances 200 Accounts Payable 502 Purchase Discounts 201 Bonds Payable 503 Freight In EQUITY 504 Advertising 300 Mark Reyes, Capital 505 Freight Out 301 Mark Reyes, Drawings 506 Salaries 507 Utilities 508 Income Summary Kikay HARDWARE STORE completed the following merchandising transactions in the month of May. At the beginning…arrow_forward1)Calculate the cost of goods available for sale and the number of units of ending inventory. 2)Assume blossom use FIFO periodic.Calculate the cost of ending inventory, cost of the goods sold,and gross profit. 3)prepared journal entries to record the July 10 purchase and the July 11 sales using FIFO periodic and FIFO perpetual. Assume both the sales and purchase were for casharrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Chapter 6 Merchandise Inventory; Author: Vicki Stewart;https://www.youtube.com/watch?v=DnrcQLD2yKU;License: Standard YouTube License, CC-BY
Accounting for Merchandising Operations Recording Purchases of Merchandise; Author: Socrat Ghadban;https://www.youtube.com/watch?v=iQp5UoYpG20;License: Standard Youtube License