Let's see what you learned in Financial Accounting The following monthly information is taken from the...

 

Transcribed Image Text:

Let's see what you learned in Financial Accounting The following monthly information is taken from the adjusted trial balance of MARKOFF COMPANY, a merchandiser of widgets, as of July 31. Sales Purchases Freight-in Purchase returns Selling expenses Administrative expenses REQUIRED: Debit 18,000 2,000 3,000 2,000 Credit 75,000 1,000 A physical inventory at the start of July was $35,000, while the physical count as of July 31 was $30,000. 1) Provide the general journal entries to reflect the transactions above. Assume all sales and purchases were 'on account'. 2) Use T accounts to reflect the entries from #1 3) What do we mean by "inventory"? 4) Is inventory recorded on the balance sheet or income statement? WHY is that the right place? 5) What are sales? Is this the same as "revenues"? Something different? EXPLAIN. 6) Describe the $75,000 shown above for sales? What does that represent? 7) Let's assume that we were doing a GAAP income statement just like the ones you did in ACCT201. Let's say that all of that $75,000 was on ONE DAY, July 28. $50,000 of that was paid in cash. For the remaining $25,000 the people didn't pay you in July. Rather, they paid you in the first week of August. NOW how much sales would be reported on our GAAP income statement? 8) Okay forget about #7. Let's continue with the original story. How much was the cost of goods sold? What does that mean in plain English? 9) What is the gross profit for the month of July? 10) How much was the cost of goods available for sale? Why do you think it is called that? 11) How much was the income (loss) from operations for July? 12) Prepare a multi-step income statement for the month of July in good form. Include a schedule of cost of goods sold, either as part of the income statement or as a separate schedule. 13) Since Markoff is a merchandiser, they have only one type of inventory-merchandise inventory. What if instead, Markoff was a manufacturer of widgets. Would anything about # 1-#12 above change? If so, what? WHY? Let's see what you learned in Financial Accounting The following monthly information is taken from the adjusted trial balance of MARKOFF COMPANY, a merchandiser of widgets, as of July 31. Sales Purchases Freight-in Purchase returns Selling expenses Administrative expenses REQUIRED: Debit 18,000 2,000 3,000 2,000 Credit 75,000 1,000 A physical inventory at the start of July was $35,000, while the physical count as of July 31 was $30,000. 1) Provide the general journal entries to reflect the transactions above. Assume all sales and purchases were 'on account'. 2) Use T accounts to reflect the entries from #1 3) What do we mean by "inventory"? 4) Is inventory recorded on the balance sheet or income statement? WHY is that the right place? 5) What are sales? Is this the same as "revenues"? Something different? EXPLAIN. 6) Describe the $75,000 shown above for sales? What does that represent? 7) Let's assume that we were doing a GAAP income statement just like the ones you did in ACCT201. Let's say that all of that $75,000 was on ONE DAY, July 28. $50,000 of that was paid in cash. For the remaining $25,000 the people didn't pay you in July. Rather, they paid you in the first week of August. NOW how much sales would be reported on our GAAP income statement? 8) Okay forget about #7. Let's continue with the original story. How much was the cost of goods sold? What does that mean in plain English? 9) What is the gross profit for the month of July? 10) How much was the cost of goods available for sale? Why do you think it is called that? 11) How much was the income (loss) from operations for July? 12) Prepare a multi-step income statement for the month of July in good form. Include a schedule of cost of goods sold, either as part of the income statement or as a separate schedule. 13) Since Markoff is a merchandiser, they have only one type of inventory-merchandise inventory. What if instead, Markoff was a manufacturer of widgets. Would anything about # 1-#12 above change? If so, what? WHY?

Answer rating: 100% (QA)

1 General Journal Entries a Sales Accounts Receivable 75000 Sales 75000 b Purchases Purchases 18000 Accounts Payable 18000 c Freightin Freightin 2000 Cash 2000 d Purchase Returns Accounts Payable 1000 ... View the full answer