Question

Use the data for Barkley Company in Problem 5-4 to complete the following requirements.
In Problem 5-4, Barkley Company’s adjusted trial balance on March 31, 2013, its fiscal year-end, follows.


On March 31, 2012, merchandise inventory was $ 37,500. Supplementary records of merchandising activities for the year ended March 31, 2013, reveal the following itemized costs.
Invoice cost of merchandise purchases . . . . . . . . $ 138,500
Purchase discounts received . . . . . . . . . . . . . . . . . 2,950
Purchase returns and allowances . . . . . . . . . . . . . 6,700
Costs of transportation- in . . . . . . . . . . . . . . . . . . 5,750

Required
1. Prepare closing entries as of March 31, 2013 (the perpetual inventory system is used).
Analysis Component
2. The company makes all purchases on credit, and its suppliers uniformly offer a 3% sales discount. Does it appear that the company’s cash management system is accomplishing the goal of taking all available discounts? Explain.
3. In prior years, the company experienced a 5% returns and allowance rate on its sales, which means approximately 5% of its gross sales were eventually returned outright or caused the company to grant allowances to customers. How do this year’s results compare to prior years’results?


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  • CreatedNovember 26, 2013
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