Accounting Principles A Business Perspective Financial Accounting Chapter 1-8 1st Edition James Edwards, Roger Hermanson, Bill Buxton - Solutions

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Group project G With a small group of students, identify and visit a retail store that uses periodic inventory procedure and uses the retail inventory method for preparing interim (monthly or quarterly)financial reports. Discover how the retail inventory method is applied and how the end-of-year
Group project F In a team of two or three students, locate and visit a nearby retail store that uses perpetual inventory procedure and a computerized inventory management system. Investigate how the system works by interviewing a knowledgeable person in the company. Write a report to your
Group project E In teams of two or three students, interview the manager of a merchandising company. Inquire about inventory control methods, inventory costing methods, and any other information about the company's inventory procedures. As a team, write a memorandum to your instructor summarizing
Ethics case – Writing experience D Respond in writing to the following questions based on the ethics case concerning Terry Dorsey:a. Do you believe that Terry's scheme will work?b. What would you do if you were Terry's accountant?c. Comment on each of Terry's points of justification.
Annual report analysis C Refer to the financial statements of The Limited in the Annual Report Appendix. Describe how inventory values are determined (see Footnote 1). Also, determine the inventory turnover ratio for 2000.
Business decision case B Connie Dalton owns and operates a sporting goods store. On February 2 the store suffered extensive fire damage, and all of the inventory was destroyed. Dalton uses periodic inventory procedure and has the following information in her accounting records, which were
Business decision case A Susan Green and Carol Lewis, were interested in starting part-time business activities to supplement their family incomes. Both heard a presentation by the manufacturer of an exercise device and decided to become a distributor of this exerciser. Green's sales territory is
Alternate problem K Apple Company's records contained the following inventory information:Cost Retail Sales $420,000 Purchases $396,000 582,000 Purchase returns 8,400 12,000 Transportation-in 10,800 —Merchandise inventory January 1 21,600 30,000
Alternate problem J The sales and cost of goods sold for Lively Company for the past five years were as follows:Sales Cost of Year (net) Goods Sold 2004 $ 9,984,960 $ 6,240,600 2005 10,794,240 6,746,400 2006 12,346,560 7,716,600 2007 11,926,080 7,272,000 2008 12,747,840 7,920,000 The following
Alternate problem I Data on the ending inventory of Jannis Company on 2009 December 31, are:Unit Unit Item Quantity Cost Market 1 8,400 $3.20 $3.12 2 16,800 2.88 3.04 3 5,600 2.80 2.88 4 14,000 3.84 3.60 5 11,200 3.60 3.68 6 2,800 3.04 2.88a. Compute the ending inventory applying the LCM method to
Alternate problem H Star Company accounts for its inventory using the LIFO method under periodic inventory procedure. Data on purchases, sales, and inventory for the year ended 2009 December 31, are:Units Unit Cost Merchandise inventory, January 1 2,000 @ $20 Purchases:January / 5,000 @ 24 July 7
Alternate problem G Following are data related to a product of Coen Company for the year 2010:Unit Units Cost Merchandise Inventory, January 1 2,100 @ $12.60 Purchases:March 10 1,500 @ 12.00 May 24 3,000 @ 11.20 July 15 1,800 @ 10.50 September 20 2,100 @ 9.00 December 1 2,700 @ 10.00 Sales:April 5
Alternate problem F Refer to the data in alternate problem Ea. Give the journal entries to record the purchases and sales (Cost of Goods Sold entry only) for the year under FIFO perpetual.b. Give the journal entries to record the purchases for the year and necessary year-end entries to charge
Alternate problem E Following are data for Dandy Company for the year 2010:Units Unit Cost Merchandi se Inventor y, January 1 700 @ $20.4 0Pur chases :Februar y 2 500 @@21.00 Apr i l 5 1,000 24.00 June 1 5 600 @ 2/ .00 September 30 700 @ 30.00 November 28 900 4,400@ 31.20 Sales :Mar ch 5 400 July
Alternate problem D The inventory records of Coral Company show the following:Jan. 1 Beginning inventory consists of 12 units costing USD 48 per unit.5 Purchased 15 units @ USD 49.92 per unit.10 Sold 9 units @ USD 108 per unit.12 Sold 7 units @ USD108 per unit.20 Purchased 20 units @ USD 50.16 per
Alternate problem C High Surf Company sells the Ultra-Light model wind surfer and uses the specific identification method to account for its inventory. The Ultra-Lights are identical except for identifying serial numbers. On 2009 August 1, the company had three Ultra-Lights that cost USD 14,000
Alternate problem B An examination of the financial records of Jersey Company on 2009 December 31, disclosed the following with regard to merchandise inventory for 2009 and prior years:2008 December 31, inventory was correct.2009 December 31, inventory was understated USD 50,000.2010 December 31,
Alternate problem A Harris Company reported net income of USD 312,000 for 2009, USD 324,000 for 2010, and USD 348,000 Recently Harris corrected these inventory amounts. Harris used the correct 2011 December 31, inventory amount in calculating 2011 net income.2009 December 31 $96,000 $108,000 2010
Problem J As part of a loan agreement with a local bank, Brazos Company must present quarterly and cumulative income statements for the year 2009. The company uses periodic inventory procedure and marks its merchandise to sell at a price yielding a gross margin of 30 per cent. Selected data for the
Problem I The accountant for Gentry Company prepared the following schedule of the company's inventory at 2009 December 31, and used the LCM method applied to total inventory in determining cost of goods sold:Unit Unit Item Quantity Cost Market Q 4,200 $7.20 $7.20 R 2,400 6.00 5.76 S 5,400 4.80
Problem H Welch Company accounts for a product it sells using LIFO periodic inventory procedure. Product data for the year ended 2009 December 31, are shown below. Merchandise inventory on January 1 was 3,000 units at USD 14.40 each.Purchases Sales Unit Unit Units Cost Units Co st January 5 6,000 @
Problem G The following data relate to the beginning inventory, purchases, and sales of Braxton Company for the year 2010:Unit Units Cost Merchandise Inventory, January 1 1,400 @ $5.04 Purchases:February 2 1,000 @ 4.80 April 5 2,000 @ 3.60 June 15 1,200 @ 3.00 September 30 1,400 @ 2.88 November 28
Problem F Refer to the data in problem Ea. Using LIFO perpetual inventory procedure, prepare the journal entries for the purchases and sales (Cost of Goods Sold entry only).b. Repeat (a) using LIFO periodic inventory procedure, including closing entries. (Note: You may want to refer to the Appendix
Problem E The following purchases and sales for Ripple Company are for April 2010. There was no inventory on April 1.Purchases Sales Unit Units Cost Units April 3 3,200 @ $33.00 April 6 1,500 April 10 1,600 @ 34.00 April 12 1,400 April 22 2,000 @ 35.00 April 25 2,300 April 28 1,800 @ 36.00a.
Problem D The inventory records of Thimble Company show the following:March 1 Beginning inventory consists of 10 units costing USD 40 per unit.3 Sold 5 units at USD 94 per unit.10 Purchased 16 units at USD 48 per unit.12 Sold 8 units at USD 96 per unit.20 Sold 7 units at USD 96 per unit.25
Problem C Brett Company sells personal computers and uses the specific identification method to account for its inventory. On 2010 November 30, the company had 46 Orange III personal computers on hand that were acquired on the following dates and at these stated costs:Units Unit cost July 3 10 @
Problem B An examination of the financial records of Lanal Company on 2009 December 31, disclosed the following with regard to merchandise inventory for 2009 and prior years:2005 December 31, inventory was correct.2006 December 31, inventory was overstated USD 200,000.2007 December 31, inventory
Problem A Kelley Company reported net income of USD 358,050 for 2009, USD 371,400 for 2010, and USD 325,800 for 2011, using the incorrect inventory amounts shown for 2009 December 31, and 2010. Recently, Kelley corrected the inventory amounts for those dates. Kelley used the correct 2011 December
Exercise S Victoria Falls Company, Inc., records show the following account balances for the year ending 2010 December 31:Cost Retail Beginning inventory USD 42,000 USD 57,500 Purchases 25000 37500 Transportation-in 500 Sales 52500 Using these data, compute the estimated cost of ending inventory
Exercise R Ryan Company takes a physical inventory at the end of each calendar-year accounting period. Its financial statements for the past few years indicate an average gross margin on net sales of 30 per cent.On June 12, a fire destroyed the entire store building and the inventory. The records
Exercise Q Tilley-Mill Company takes a physical inventory at the end of each calendar-year accounting period to establish the ending inventory amount for financial statement purposes. Its financial statements for the past few years indicate an average gross margin on net sales of 25 per cent.On
Exercise P Use the data in the previous exercise to compute the cost of the ending inventory using the LCM method applied to the total inventory.
Exercise O Your assistant has compiled the following data:Quantity Unit Unit Total Total Item (units) Cost Market Cost Market A 300 $ 57.60 $ 55.20 $17,280 $16,560 B 300 28.80 33.60 8,640 10,080 C 900 21.60 21.60 19,440 19,440 D 500 12.00 13.20 6,000 6,600 Calculate the dollar amount of the ending
Exercise N Pure Sound Systems used one sound system as a floor model. It cost USD 3,600 and had an original selling price of USD 4,800. After six months, the sound system was damaged and replaced by a newer model. The sound system had an estimated selling price of USD 2,880, but when the company
Exercise M Levi Motor Company owns a luxury automobile that it has used as a demonstrator for eight months. The auto has a list or sticker price of USD 85,000 and cost Levi USD 75,000. At the end of the fiscal year, the auto is on hand and has an expected selling price of USD 80,000. Costs expected
Exercise L Clayton Company's inventory was 12,000 units with a cost of USD 160 each on 2010 January 1. During 2010, numerous units were purchased and sold. Also during 2010, the purchase price of this product fell steadily until at year-end it was USD 120. The inventory at year-end was 18,000
Exercise K A company purchased 1,000 units of a product at USD 12.00 and 2,000 units at USD 13.20. It sold all of these units at USD 18.00 each at a time when the current cost to replace the units sold was USD 13.80. Compute the amount of gross margin under FIFO that LIFO supporters would call
Exercise J Following are inventory data for Kintech Company:January 1 inventory on hand, 400 units at USD 28.80.January sales were 80 units.February sales totaled 120 units.March 1, purchased 200 units at USD 30.24.Sales for March through August were 160 units.September 1, purchased 40 units at USD
Exercise I Wells Company had the following transactions during February:Purchased 135 units at USD 65 on account.Sold 108 units at USD 90 on account.Purchased 170 units at USD 75 on account.Sold 122 units at USD 95 on account.Sold 67 units at USD 100 on account.The beginning inventory consisted of
Exercise H Following are selected transactions of Gamble Company:Purchased 100 units of merchandise at USD 240 each; terms 2/10, n/30.Paid the invoice in transaction 1 within the discount period.Sold 80 units at USD 384 each for cash.Purchased 100 units at USD 360; terms 2/10, n/30.Paid the invoice
Exercise G The following are selected transactions and other data of the Custer Company:Purchased 20 units at USD 360 per unit on account on 2010 September 18.Sold 6 units on account for USD 576 per unit on 2010 September 20.Discovered a shortage of USD 2,640 at year-end after a physical
Exercise F Kettle Company made the following purchases of Product A in its first year of operations:Units Unit Cost January 2 1,400 @ $7.40 March 31 1,200 @ 7.00 July 5 2,400 @ 7.60 November 1 1,800 @ 8.00 The ending inventory that year consisted of 2,400 units. Kettle uses periodic inventory
Exercise E London Company had a beginning inventory of 160 units at USD 24 (total = USD 3,840) and the following inventory transactions during the year:January 8, sold 40 units.January 11, purchased 80 units at USD 30.00.January 15, purchased 80 units at USD 32.00.January 22, sold 80 units.Using
Exercise D Using the data in the previous exercise for Miami Discount Company, present a schedule showing the measurement of the ending inventory using LIFO perpetual inventory procedure.
Exercise C Miami Discount Company inventory records show:Unit Total Units Cost Cost Beginning inventory 3,000 $38.00 $114,000 Purchases:February 14 900 39.00 35,100 March 18 2,400 40.00 96,000 July 21 1,800 40.30 72,540 September 27 1,800 40.60 73,080 November 27 600 41.00 24,600 Sales:April 15
Exercise B Slate Truck Company manufactures trucks and identifies each truck with a unique serial plate. On December 31, a customer ordered 5 trucks from the company, which currently has 20 trucks in its inventory. Ten of these trucks cost USD 20,000 each, and the other 10 cost USD 25,000 each. If
Exercise A Crocker Company reported annual net income as follows:2008 $484,480 2009 487,680 2010 409,984 Analysis of its inventories revealed the following incorrect inventory amounts and these correct amounts:Incorrect Inventory Amount Correct inventory amount 2008 December 31 $ 76,800 $89,600
 The Limited Based on the notes to the financial statements of The Limited contained in the Annual Report Appendix, what inventory methods were used?
Cost of goods sold using weighted-average is:a. USD 147,200.b. USD 160,350.c. USD 155,250.d. USD 114,000.e. None of the above.
Cost of ending inventory using weighted-average is:a. USD 114,750.b. USD 157,600.c. USD 122,400.d. USD 109,650.e. None of the above.
Cost of goods sold using LIFO is:a. USD 155,250.b. USD 114,000.c. USD 147,600.d. USD 165,600.e. None of the above.
Cost of ending inventory using LIFO is:a. USD 104,400.b. USD 114,750.c. USD 156,000.d. USD 122,400.e. None of the above.
Cost of goods sold using FIFO is:a. USD 165,600.b. USD 150,000.c. USD 147,600.d. USD 122,400.e. None of the above.
Jack Company began the accounting period with inventory of 3,000 units at USD 30 each. During the period, the company purchased an additional 5,000 units at USD 36 each and sold 4,600 units.Assume the use of periodic inventory procedure for the following six questions.Cost of ending inventory using
(6) Under perpetual procedure, cost of goods sold is determined as a result of the closing entries made at the end of the period.true or false.
(5) To use the retail inventory method, both cost and retail prices must be known for the goods available for sale.true or false.
(4) Under the gross margin method, an estimate must be made of gross margin to determine estimated cost of goods sold and estimated ending inventory.true or false.
(3) Under LCM, inventory is written down to market value when the market value is less than the cost, and inventory is written up to market value when the market value is greater than the cost.true or false.
(2) In a period of rising prices, FIFO results in the lowest cost of goods sold.true or false.
Overstated ending inventory results in an overstatement of cost of goods sold and an understatement of gross margin and net income.true or false.
Demonstration problem Ba. Joel Company reported annual net income as follows:2007.... USD 27,200 2008.... USD 28,400 2009.... USD 24,000 Analysis of the inventories shows that certain clerical errors were made with the following results:Incorrect inventory amount Correct inventory amount 2007
Demonstration problem A Following are data related to Adler Company's beginning inventory, purchases, and sales:Beginning Inventory and Purchases Sales Unit Units Cost Units Beginning inventory 6,250 @ $3.00 February 3 5,250 March 15 5,000 @ 3.12 May 4 4,500 May 10 8,750 @ 3.30 September 16 8,000
Group project G In a team of two or three students, obtain access to several annual reports of companies in different industries (see www.sec.gov/edgar.shtml.) Examine their income statements and identify differences in their formats. Discuss these differences within your group and then present
Group project F In a team of two or three students, contact a variety of businesses in your area and inquire as to the types of sales discount terms they offer to credit customers and the types of purchase discount terms they are offered by their suppliers. Calculate the approximate annual rate of
Group project E In teams of two or three students, go to the library (or find an annual report at www.sec.gov/edgar.shtml) to locate one merchandising company's annual report for the most recent year. Calculate the company's gross margin percentage for each of the most recent three years. As a
Ethics case – Writing experience D Based on the ethics case related to World Auto Parts Corporation, respond in writing to the following questions:a. Do you agree that the total impact of this practice could be as much as USD 10 million?b. Are the small suppliers probably better off going along
Business decision case B In the Annual report appendix, refer to the consolidated statements of earnings for The Limited's most recent three years. Calculate the gross margin percentage and write an explanation of what the results mean for each of the three years.Annual report analysis C Refer to
Business decision case A Candy's Shirts, Inc., has an opportunity to purchase 40,000 shirts with the logo of her favorite school in January 2009. Candy, who is not currently in business, is considering buying these shirts and then renting a display cart from which to sell these shirts (called a
Alternate problem E The following data are for Bayer Lamp Company:Bayer Lamp Company Trial Balance 2010 December 31 Acct. Account Title Debits Credits No.100 Cash $ 228,800 103 Accounts Receivable 193,200 105 Merchandise Inventory, 2010 January 1 166,400 108 Prepaid Insurance 11,600 130 Land
Alternate problem D Organized on 2010 May 1, Noah Cabinet Company engaged in the following transactions:May 1 The stockholders invested USD 900,000 in this new business by purchasing capital stock.1 Purchased merchandise on account from String Company, USD 46,800; terms n/60, FOB shipping point,
Alternate problem C Gardner Company engaged in the following transactions in June 2010, the company's first month of operations:June 1 Stockholders invested USD 384,000 cash and USD 144,000 of merchandise inventory in the business in exchange for capital stock.3 Merchandise was purchased on
Alternate problem B Edwardo Auto Parts Company and Spoon Company engaged in the following transactions with each other during August 2010:Aug.15 Edwardo Auto Parts Company purchased merchandise on account with a list price of USD 192,000 from Spoon Company. Trade discounts of 20 per cent and 10 per
Alternate problem Aa. Candle Carpet Company engaged in the following transactions in August 2010:Aug. 2 Sold merchandise on account for USD 300,000; terms 2/10, n/30, FOB shipping point, freight collect.18 Received payment for the sale of August 2.20 A total of USD 10,000 of the merchandise sold on
Problem E The following data are for Leone Lumber Company:LEONE LUMBER COMPANY Trial Balance 2010 December 31 Acct.No.Account Title Debits Credits 100 103 105 107 108 112 170 171 200 300 310 410 412 418 500 502 503 505 508 509 510 511 536 540 567 Cash Accounts Receivable Merchandise Inventory, 2010
Problem D The Western Wear Company, a wholesaler of western wear clothing, sells to retailers.The company entered into the following transactions in May 2010:May 1 The Western Wear Company was organized as a corporation. The stockholders purchased stock at par for the following assets in the
Problem C The following data for June 2010 are for Rusk Company's first month of operations:June 1 Rusk Company was organized, and the stockholders invested USD 1,008,000 cash, USD 336,000 of merchandise inventory, and a USD 288,000 plot of land in exchange for capital stock.4 Merchandise was
Problem B Mars Musical Instrument Company and Tiger Company engaged in the following transactions with each other during July 2010:July 2 Mars Musical Instrument Company purchased merchandise on account with a list price of USD 48,000 from Tiger Company. The terms were 3/EOM, n/60, FOB shipping
Problem Aa. Spencer Sporting Goods Company engaged in the following transactions in April 2010:Apr. 1 Sold merchandise on account for USD 288,000; terms 2/10, n/30, FOB shipping point, freight collect.5 USD 43,200 of the goods sold on account on April 1 were returned for a full credit. Payment for
Exercise L Using the data in the previous exercise prepare closing entries for the preceding accounts. Do not close the Income Summary account.
Exercise K Given the balances in this partial trial balance, indicate how the balances would be treated in the work sheet. The ending inventory is USD 96. (The amounts are unusually small for ease in rewriting the numbers. We purposely left out the Statement of Retained Earnings columns since they
Exercise J In each of the following equations supply the missing term(s):a. Net sales = Gross sales - (______________________ + Sales returns and allowances).b. Cost of goods sold = Beginning inventory + Net cost of purchases - ________ ________.c. Gross margin = ________ ________ - Cost of goods
Exercise I In each case, use the following information to calculate the missing information:Case 1 Case 2 Case 3 Gross sales $ 640,000 $ ? $ ?Sales discounts ? 25,600 19,200 Sales returns and allowances 19,200 44,800 32,000 Net sales 608,000 1,209,600 Merchandise inventory, January 1 256,000
Exercise H Cramer Company uses periodic inventory procedure. Determine the cost of goods sold for the company assuming purchases during the period were USD 40,000, transportation-in was USD 300, purchase returns and allowances were USD 1,000, beginning inventory was USD 25,000, purchase discounts
Exercise G Stuart Company purchased goods for USD 84,000 on June 14, under the following terms: 3/10, n/ 30; FOB shipping point, freight collect. The bill for the freight was paid on June 15, USD 1,200.a. Assume that the invoice was paid on June 24, and prepare all entries required on Stuart
Exercise F Raiser Company purchased goods at a gross selling price of USD 2,400 on August 1.Discount terms of 2/10, n/30 were available. For each of the following independent situations,determine (1) the cash discount available on the final payment and (2) the amount paid if payment is made within
Exercise E Lasky Company sold merchandise with a list price of USD 60,000 on July 1. For each of the following independent assumptions, calculate (1) the gross selling price used to record the sale and (2) the amount that the buyer would have to remit when paying the invoice.Trade Discount Credit
Exercise D You have purchased merchandise with a list price of USD 36,000. Because you are a wholesaler, you are granted a trade discount of 49.6 per cent. The cash discount terms are 2/EOM, n/60. How much will you remit if you pay the invoice by the end of the month of purchase? How much will
Exercise C What is the last payment date on which the cash discount can be taken on goods sold on March 5 for USD 51,200; terms 3/10/EOM, n/60? Assume that the bill is paid on this date and prepare the correct entries on both the buyer's and seller's books to record the payment.
Exercise Ba. Silver Company purchased USD 56,000 of merchandise from Milton Company on account. Before paying its account, Silver Company returned damaged merchandise with an invoice price of USD 11,680. Assuming use of periodic inventory procedure, prepare entries on both companies' books to
Exercise A In the following table, indicate how to increase or decrease (debit or credit) each account, and indicate its normal balance (debit or credit).Increased Decreased Normal by by Balance(debit (debit (debit Title of Account or credit) or credit) or credit)ales Returns and Allowances Sales
 The Limited, Inc. Based on the financial statements of The Limited, Inc., in the Annual Report Appendix, what were the 2000 cost of goods sold, occupancy, and buying costs? For each of the three years shown, what percentage of net sales were these expenses? Is the trend favorable or unfavorable?
 The Limited, Inc. Based on the financial statements of The Limited in the Annual Report Appendix, what were the 2000 operating expenses? For each of the three years shown, what percentage of net sales were these expenses? Is the trend favorable or unfavorable?
A business purchased merchandise for USD 12,000 on account; terms are 2/10, n/30. If USD 2,000 of the merchandise was returned and the remaining amount due was paid within the discount period, the purchase discount would be:a. USD 240.b. USD 200.c. USD 1,200.d. USD 1,000.e. USD 3,600.
X Company began the accounting period with USD 60,000 of merchandise, and net cost of purchases was USD 240,000. A physical inventory showed USD 72,000 of merchandise unsold at the end of the period. The cost of goods sold of Y Company for the period is:a. USD 300,000.b. USD 228,000.c. USD
A seller sold merchandise which has a list price of USD 4,000 on account, giving a trade discount of 20 per cent. The entry on the books of the seller is:a. Accounts Receivable 3,200 Trade Discounts 800 Sales 4,000b. Accounts Receivable 4,000 Sales 4,000c. Accounts Receivable 3,200 Trade Discounts
o A classified income statement consists of only two categories of items, revenues and expenses.true or false
o In taking a physical inventory, consigned goods delivered to another party who attempts to sell the goods are not included in the ending inventory of the company that sent the goods.true or false
Purchase discounts and purchase returns and allowances are recorded in contra accounts to the Purchases account.true or false
o Under perpetual inventory procedure, the Merchandise Inventory account is debited for each purchase and credited for each sale.true or false
To compute net sales, sales discounts are added to, and sales returns and allowances are deducted from, gross sales.true or false

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Accounting Principles A Business Perspective Financial Accounting Chapter 1-8 1st Edition James Edwards, Roger Hermanson, Bill Buxton - Solutions

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