Question Accounting Chapter 5 correct answers

29 Jun Question Accounting Chapter 5 correct answers

Question
Accounting Chapter 5 correct answers

Exercise 5-9 Preparing adjusting and closing entries for a merchandiser LO P3

The following list includes selected permanent accounts and all of the temporary accounts from the December 31, 2013, unadjusted trial balance of Emiko Co., a business owned by Kumi Emiko. Emiko Co. uses a perpetual inventory system.

Debit

Credit

Merchandise inventory

$

28,800

Prepaid selling expenses

$

5,500

K.Emiko, Withdrawals

$

2,200

Sales

$

518,400

Sales returns and allowances

$

19,699

Sales discounts

$

5,516

Cost of goods sold

$

255,053

Sales salaries expense

$

57,024

Utilities expense

$

16,589

Selling expenses

$

44,582

Administrative expenses

$

114,566

Additional Information

Accrued sales salaries amount to $1,700. Prepaid selling expenses of $2,200 have expired. A physical count of year-end merchandise inventory shows $28,253 of goods still available.

(a) Use the above account balances along with the additional information, prepare the adjusting entries.

(b) Use the above account balances along with the additional information, prepare the closing entries

Problem 5-1A Preparing journal entries for merchandising activities-perpetual system LO P1, P2

July 1 Purchased merchandise from Boden Company for $6,600 under credit terms of 2/15, n/30, FOB shipping point, invoice dated July 1.

2 Sold merchandise to Creek Co. for $950 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 2. The merchandise had cost $550.

3 Paid $140 cash for freight charges on the purchase of July 1.

8 Sold merchandise that had cost $1,900 for $2,300 cash.

9 Purchased merchandise from Leight Co. for $2,400 under credit terms of 2/15, n/60, FOB destination, invoice dated July 9.

11 Received a $400 credit memorandum from Leight Co. for the return of part of the merchandise purchased on July 9.

12 Received the balance due from Creek Co. for the invoice dated July 2, net of the discount.

16 Paid the balance due to Boden Company within the discount period.

19 Sold merchandise that cost $800 to Art Co. for $1,200 under credit terms of 2/15, n/60, FOB shipping point, invoice dated July 19.

21 Issued a $200 credit memorandum to Art Co. for an allowance on goods sold on July 19.

24 Paid Leight Co. the balance due after deducting the discount.

30 Received the balance due from Art Co. for the invoice dated July 19, net of discount.

31 Sold merchandise that cost $5,400 to Creek Co. for $7,300 under credit terms of 2/10, n/60, FOB shipping point, invoice dated July 31.

Prepare journal entries to record the above merchandising transactions of Blink Company, which applies the perpetual inventory system. (Round your answers to 2 decimal places.)

Problem 5-3A Preparing adjusting entries and income statements; and computing gross margin, acid-test, and current ratios LO A1, A2, P3, P4

[The following information applies to the questions displayed below.]

The following unadjusted trial balance is prepared at fiscal year-end for Nelson Company.

NELSON COMPANY Unadjusted Trial Balance January 31, 2013

Debit

Credit

Cash

$

22,700

$

Merchandise inventory

$

14,500

$

Store supplies

$

5,700

$

Prepaid insurance

$

2,700

$

Store equipment

$

42,700

$

Accumulated depreciation—Store equipment

$

$

19,400

Accounts payable

$

$

15,000

J. Nelson, Capital

$

$

41,000

J. Nelson, Withdrawals

$

2,150

$

116,050

Sales

$

$

Sales discounts

$

1,850

$

Sales returns and allowances

$

2,050

$

Cost of goods sold

$

38,000

$

Depreciation expense—Store equipment

$

0

$

Salaries expense

$

31,400

$

Insurance expense

$

0

$

Rent expense

$

18,000

$

Store supplies expense

$

0

$

Advertising expense

$

9,700

$

$

$

Totals

$

191,450

$

191,450

Rent expense and salaries expense are equally divided between selling activities and the general and administrative activities. Nelson Company uses a perpetual inventory system.

a. Store supplies still available at fiscal year-end amount to $2,950.

b. Expired insurance, an administrative expense, for the fiscal year is $1,350.

c. Depreciation expense on store equipment, a selling expense, is $1,625 for the fiscal year.

d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,100 of inventory is still available at fiscal year-end.

Problem 5-3A Part 1

Required: 1. Using the above information prepare adjusting journal entries:

Problem 5-3A Part 2

2. Prepare a multiple-step income statement for fiscal year 2013.

Problem 5-3A Part 4

4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31, 2013. (Round your answers to 2 decimal places.)

Problem 5-5A Preparing closing entries and interpreting information about discounts and returns LO C2, P3

Valley Company’s adjusted trial balance on August 31, 2013, its fiscal year-end, follows.

Debit

Credit

Merchandise inventory

$

42,300

Other (noninventory) assets

43,600

Total liabilities

$

25,900

K. Valley, Capital

20,700

K. Valley, Withdrawals

8,600

Sales

226,600

Sales discounts

2,200

Sales returns and allowances

13,500

Cost of goods sold

74,200

Sales salaries expense

32,500

Rent expense—Selling space

8,700

Store supplies expense

1,800

Advertising expense

13,500

Office salaries expense

28,500

Rent expense—Office space

3,400

Office supplies expense

400

Totals

$

273,200

$

273,200

On August 31, 2012, merchandise inventory was $25,400. Supplementary records of merchandising activities for the year ended August 31, 2013, reveal the following itemized costs

o Invoice cost of merchandise purchases $ 92,900

o Purchase discounts received 2,000

o Purchase returns and allowances 4,200

o Costs of transportation-in 4,800

Required: 1. Prepare closing entries as of August 31, 2013 (the perpetual inventory system is used).