Fundamentals of Financial Accounting
5th Edition
ISBN: 9780078025914
Author: Fred Phillips Associate Professor, Robert Libby, Patricia Libby
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 6, Problem 6.2PB
Reporting Purchase Transactions between Wholesale and Retail Merchandisers Using Perpetual Inventory Systems
The transactions listed below are typical of those involving Southern Sporting Goods and Sports R Us, Southern Sporting Goods is a wholesale merchandiser and Sports R Us is a retail merchandiser. Assume all sales of merchandise from Southern Sporting Goods to Sports R Us are made with terms 2/10, n/30, and that the two companies use perpetual inventory systems. Assume the following transactions between the two companies occurred in the order listed during the year ended December 31.
- a. Southern Sporting Goods sold merchandise to Sports R Us at a selling price of $125,000. The merchandise had cost Southern Sporting Goods $94,000.
- b. Two days later, Sports R Us complained to Southern Sporting Goods that some of the merchandise differed from what Sports R Us had ordered. Southern Sporting Goods agreed to give an allowance of $3,000 to Sports R Us.
- c. Just three days later Spoils R Us paid Southern Sporting Goods, which settled all amounts owed.
Required:
- 1. Indicate the effect (direction and amount) of each transaction on the Inventory balance of Sports R Us.
- 2. Prepare the
journal entries that Sports R Us would record and show any computations.
PB6-2 Reporting Sales Transactions between Wholesale and Retail Merchandisers Using Perpetual Inventory Systems
Use the information in PB6-1 to complete the following requirements.
Required:
- 1. For each of the events (a) through (c), indicate the amount and direction of the effect (+ for increase, − for decrease, and NE for no effect) on Southern Sporting Goods in terms of the following items.
- 2. Which of the above items are likely to be reported on Southern Sporting Goods’ external financial statements, and which items will be combined “behind the scenes”?
- 3. Prepare the journal entries that Southern Sporting Goods would record and show any computations.
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Required information
[The following information applies to the questions displayed below.]
The transactions listed below are typical of those involving Southern Sporting Goods (SSG) and Sports R Us
(SRU). SSG is a wholesale merchandiser and SRU is a retail merchandiser. Assume all sales of merchandise from
SSG to SRU are made with terms n/30, and the two companies use perpetual inventory systems. Assume the
following transactions between the two companies occurred in the order listed during the year ended December
31.
a. SSG sold merchandise to SRU at a selling price of $140,000. The merchandise had cost SSG $100,000.
b. Two days later, SRU complained to SSG that some of the merchandise differed from what SRU had ordered.
SSG agreed to give an allowance of $4,500 to SRU. SRU also returned some sporting goods, which had cost
SSG $13,500 and had been sold to SRU for $18,000. No further returns are expected
c. Just three days later SRU paid SSG, which settled all amounts owed.
. Prepare…
Required information
[The following information applies to the questions displayed below.]
The transactions listed below are typical of those involving Southern Sporting Goods (SSG) and Sports R Us
(SRU). SSG is a wholesale merchandiser and SRU is a retail merchandiser. Assume all sales of merchandise from
SSG to SRU are made with terms n/30, and the two companies use perpetual inventory systems. Assume the
following transactions between the two companies occurred in the order listed during the year ended December
31.
a. SSG sold merchandise to SRU at a selling price of $150,000. The merchandise had cost SSG $104,000.
b. Two days later, SRU complained to SSG that some of the merchandise differed from what SRU had ordered.
SSG agreed to give an allowance of $5,500 to SRU. SRU also returned some sporting goods, which had cost
SSG $14,500 and had been sold to SRU for $19,000.
c. Just three days later SRU paid SSG, which settled all amounts owed.
Required:
. For each of the events (a)…
Dog
Chapter 6 Solutions
Fundamentals of Financial Accounting
Ch. 6 - Prob. 1QCh. 6 - If a Chicago-based company ships goods on...Ch. 6 - Define goods available for sale. How does it...Ch. 6 - Define beginning inventory and ending inventory.Ch. 6 - Describe how transportation costs to obtain...Ch. 6 - What is the main distinction between perpetual and...Ch. 6 - Why is a physical count of inventory necessary in...Ch. 6 - What is the difference between FOB shipping point...Ch. 6 - Describe in words the journal entries that are...Ch. 6 - What is the distinction between Sales Returns and...
Ch. 6 - Prob. 11QCh. 6 - In response to the weak economy, your companys...Ch. 6 - Prob. 13QCh. 6 - Why are contra-revenue accounts used rather than...Ch. 6 - What is gross profit? How is the gross profit...Ch. 6 - Prob. 1MCCh. 6 - Prob. 2MCCh. 6 - Prob. 3MCCh. 6 - Prob. 4MCCh. 6 - Prob. 5MCCh. 6 - Prob. 6MCCh. 6 - Prob. 7MCCh. 6 - Prob. 8MCCh. 6 - Prob. 9MCCh. 6 - Prob. 10MCCh. 6 - Distinguishing among Operating Cycles Identify the...Ch. 6 - Calculating Shrinkage in a Perpetual Inventory...Ch. 6 - Prob. 6.3MECh. 6 - Inferring Purchases Using the Cost of Goods Sold...Ch. 6 - Evaluating Inventory Cost Components Assume...Ch. 6 - Prob. 6.6MECh. 6 - Recording Journal Entries for Purchases and Safes...Ch. 6 - Prob. 6.8MECh. 6 - Recording Journal Entries for Sales and Sales...Ch. 6 - Prob. 6.10MECh. 6 - Prob. 6.11MECh. 6 - Calculating Shrinkage and Gross Profit in a...Ch. 6 - Preparing a Multistep Income Statement Sellall...Ch. 6 - Prob. 6.14MECh. 6 - Computing and Interpreting the Gross Profit...Ch. 6 - Interpreting Changes in Gross Profit Percentage...Ch. 6 - Prob. 6.17MECh. 6 - Understanding Relationships among Gross Profit and...Ch. 6 - Relating Financial Statement Reporting to Type of...Ch. 6 - Prob. 6.2ECh. 6 - Identifying Shrinkage and Other Missing inventory...Ch. 6 - Prob. 6.4ECh. 6 - Prob. 6.5ECh. 6 - Inferring Missing Amounts Based on Income...Ch. 6 - Prob. 6.7ECh. 6 - Prob. 6.8ECh. 6 - Reporting Purchases, Purchase Discounts, and...Ch. 6 - Prob. 6.10ECh. 6 - Items Included in Inventory PC Mall, Inc., is a...Ch. 6 - Prob. 6.12ECh. 6 - Prob. 6.13ECh. 6 - Reporting Net Sales with Credit Sales and Sales...Ch. 6 - Prob. 6.15ECh. 6 - Prob. 6.16ECh. 6 - Prob. 6.17ECh. 6 - Determining the Effects of Credit Sales, Sales...Ch. 6 - Prob. 6.19ECh. 6 - Inferring Missing Amounts Based on Income...Ch. 6 - Prob. 6.21ECh. 6 - Prob. 6.22ECh. 6 - (Supplement 6A) Recording Purchases and Sales...Ch. 6 - Prob. 6.1CPCh. 6 - Prob. 6.2CPCh. 6 - Prob. 6.3CPCh. 6 - Prob. 6.4CPCh. 6 - (Supplement A) Recording Inventory Transactions...Ch. 6 - Prob. 6.1PACh. 6 - Reporting Purchase Transactions between Wholesale...Ch. 6 - Recording Sales with Discounts and Returns and...Ch. 6 - Prob. 6.4PACh. 6 - (Supplement A) Recording Inventory Transactions...Ch. 6 - Prob. 6.1PBCh. 6 - Reporting Purchase Transactions between Wholesale...Ch. 6 - Prob. 6.3PBCh. 6 - Prob. 6.4PBCh. 6 - (Supplement A) Recording Inventory Transactions...Ch. 6 - Accounting for Inventory Orders, Purchases, Sales,...Ch. 6 - Prob. 6.1SDCCh. 6 - Prob. 6.2SDCCh. 6 - Internet-Based Team Research: Examining an Annual...Ch. 6 - Evaluating the Results of Merchandising Operations...Ch. 6 - Prob. 6.6SDCCh. 6 - Prob. 6.1CC
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- Assume that the business in Exercise 7-9 maintains a perpetual inventory system. Determine the cost of merchandise sold for each sale and the inventory balance after each sale, assuming the last-in, first-out method. Present the data in the form illustrated in Exhibit 4.arrow_forwardAssume that the business in Exercise 6-9 maintains a perpetual inventory system. Determine the cost of goods sold for each sale and the inventory balance after each sale, assuming the first-in, first-out method. Present the data in the form illustrated in Exhibit 3.arrow_forwardSelected data on merchandise inventory, purchases, and sales for Jaffe Co. and Coronado Co. are as follows: Instructions 1. Determine the estimated cost of the merchandise inventory of Jaffe Co. on February 28 by the retail method, presenting details of the computations. 2. a. Estimate the cost of the merchandise inventory of Coronado Co. on October 31 by the gross profit method, presenting details of the computations. b. Assume that Coronado Co. took a physical inventory on October 31 and discovered that 366,500 of merchandise was on hand. What was the estimated loss of inventory due to theft or damage during May through October?arrow_forward
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