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Accounting 23rd Edition Carl S. Warren - Solutions
=+PE 6-7B Inventory shrinkage During the current year, merchandise is sold for $795,000. The cost of the merchandise sold is $477,000.
=+PE 6-7A Inventory shrinkage obj. 4 EE 6-7 p. 275 Chapter 6 Accounting for Merchandising Businesses 291 Hairology Company’s perpetual inventory records indicate that $120,500 of merchandise should be on hand on April 30, 2010. The physical inventory indicates that $115,850 of merchandise is
=+PE 6-6B Transactions for buyer and seller obj. 3 EE 6-6 p. 273 Retro Company’s perpetual inventory records indicate that $975,000 of merchandise should be on hand on October 31, 2010. The physical inventory indicates that $894 ,750 of merchandise is actually on hand. Journalize the adjusting
=+PE 6-6A Transactions for buyer and seller obj. 3 EE 6-6 p. 273 Santana Co. sold merchandise to Birch Co. on account, $6,000, terms 2/15, n/30. The cost of the merchandise sold is $4,000. Santana Co. issued a credit memo for $800 for merchandise returned and later received the amount due within
=+a. $9,000 $300 FOB shipping point, 1/10, n/30 $2,500b. 7,500 200 FOB destination, 2/10, n/30 400
=+PE 6-5A Freight terms obj. 3 EE 6-5 p. 271 Determine the amount to be paid in full settlement of each of invoices (a) and (b), assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.Freight Returns and Merchandise
=+b. 32,100 900 FOB shipping point, 2/10, n/30 5,000
=+PE 6-4B Purchase transactions obj. 3 Determine the amount to be paid in full settlement of each of invoices (a) and (b), assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period.Freight Returns and Merchandise Paid
=+b. Under a perpetual inventory system, what account is credited by Enduro Tile Company to record the return?
=+a. If Enduro Tile Company pays the invoice within the discount period, what is the amount of cash required for the payment?
=+PE 6-4A Purchase transactions obj. 3 EE 6-4 p. 268 Enduro Tile Company purchased merchandise on account from a supplier for $8,000, terms 2/10, n/30. Enduro Tile Company returned $3,500 of the merchandise and received full credit.
=+b. Under a perpetual inventory system, what account is debited by Kosmos Company to record the return?
=+a. If Kosmos Company pays the invoice within the discount period, what is the amount of cash required for the payment?
=+PE 6-3B Sales transactions obj. 3 EE 6-3 p. 265 Kosmos Company purchased merchandise on account from a supplier for $21,500, terms 1/10, n/30. Kosmos Company returned $1,500 of the merchandise and received full credit.
=+a. Sold merchandise on account, $16,000 with terms 2/10, n/30. The cost of the merchandise sold was $9,600.
=+PE 6-3A Sales transactions obj. 3 EE 6-3 p. 265 290 Chapter 6 Accounting for Merchandising Businesses Journalize the following merchandise transactions:
=+b. Received payment less the discount.
=+a. Sold merchandise on account, $41,000 with terms 1/10, n/30. The cost of the merchandise sold was $22,500.
=+EE 6-2 p. 257 Journalize the following merchandise transactions:
=+PE 6-2B Cost of merchandise sold obj. 2
=+During the current year, merchandise is sold for $32,800 cash and $379,500 on account.The cost of the merchandise sold is $250,000. What is the amount of the gross profit?During the current year, merchandise is sold for $375,000 cash and $815,000 on account.The cost of the merchandise sold is
=+15. Assume that Business Outfitters Inc. in Eye Opener 14 experienced an abnormal inventory shrinkage of $80,750. Business Outfitters Inc. has decided to record the abnormal inventory shrinkage so that it would be separately disclosed on the income statement. What account would be debited for
=+14. Business Outfitters Inc., which uses a perpetual inventory system, experienced a normal inventory shrinkage of $9,175. What accounts would be debited and credited to record the adjustment for the inventory shrinkage at the end of the accounting period?
=+13. Who bears the freight when the terms of sale are (a) FOB shipping point, (b) FOB destination?
=+12. What is the nature of (a) a credit memo issued by the seller of merchandise, (b) a debit memo issued by the buyer of merchandise?
=+11. What is the meaning of (a) 1/15, n/60; (b) n/30; (c) n/eom?
=+10. The credit period during which the buyer of merchandise is allowed to pay usually begins with what date?
=+9. How are sales to customers using MasterCard and VISA recorded?
=+8. Name at least three accounts that would normally appear in the chart of accounts of a merchandising business but would not appear in the chart of accounts of a service business.
=+7. What type of revenue is reported in the other income section of the multiple-step income statement?
=+6. What are the major advantages and disadvantages of the single-step form of income statement compared to the multiple-step statement?
=+5. Differentiate between the multiple-step and the single-step forms of the income statement.
=+4. Describe how the periodic system differs from the perpetual system of accounting for merchandise inventory.
=+3. In computing the cost of merchandise sold, does each of the following items increase or decrease that cost? (a) freight, (b) beginning merchandise inventory,(c) purchase discounts, (d) ending merchandise inventory
=+2. Can a business earn a gross profit but incur a net loss? Explain.
=+1. What distinguishes a merchandising business from a service business?
=+5. Which of the following expenses would normally be classified as other expense on a multiple-step income statement?A. Depreciation expense—office equipment B. Sales salaries expense C. Insurance expense D. Interest expense
=+4. On a multiple-step income statement, the excess of net sales over the cost of merchandise sold is called:A. operating income.B. income from operations.C. gross profit.D. net income.
=+3. The income statement in which the total of all expenses is deducted from the total of all revenues is termed the:A. multiple-step form. C. account form.B. single-step form. D. report form.
=+2. If merchandise is sold on account to a customer for $1,000, terms FOB shipping point, 1/10, n/30, and the seller prepays $50 in freight, the amount of the discount for early payment would be:A. $0. C. $10.00.B. $5.00. D. $10.50.
=+1. If merchandise purchased on account is returned, the buyer may inform the seller of the details by issuing a(n):A. debit memo. C. invoice.B. credit memo. D. bill.
=+2. Journalize the adjusting entry for merchandise inventory shrinkage, $3,750.
=+1. Journalize the preceding transactions.
=+31. Paid a service processing fee of $140 for MasterCard sales.Instructions
=+25. Received merchandise returned by Comer Co. from sale on May 22, $1,480.The cost of the returned merchandise was $600.
=+24. Sold merchandise for cash, $4,350. The cost of the merchandise sold was$1,750.
=+22. Sold merchandise on account to Comer Co., $3,480, terms 2/10, n/30. The cost of the merchandise sold was $1,400.
=+19. Sold merchandise on MasterCard credit cards, $2,450. The cost of the merchandise sold was $980.
=+16. Received cash on account from sale of May 6 to C. F. Howell Co., less discount.
=+15. Paid Kramer Co. on account for purchase of May 5, less return of May 10 and discount.
=+14. Purchased merchandise for cash, $10,500.
=+13. Paid Floyd Co. on account for purchase of May 3, less discount.
=+10. Returned merchandise purchased on May 5 from Kramer Co., $1,300.
=+8. Purchased office supplies for cash, $150.
=+6. Sold merchandise on account to C. F. Howell Co., list price $4,000, trade discount 30%, terms 2/10, n/30. The cost of the merchandise sold was $1,125.
=+May 5. Purchased merchandise on account from Kramer Co., $8,500, terms FOB destination, 1/10, n/30.
=+May 3. Purchased merchandise on account from Floyd Co., $4,000, terms FOB shipping point, 2/10, n/30, with prepaid freight of $120 added to the invoice.
=+The following transactions were completed by Montrose Company during May of the current year. Montrose Company uses a perpetual inventory system.
=+the text’s Web site at academic.cengage.com/accounting/warren) and list the functions provided by each company’s application.
=+SA 5-5 Web-based accounting systems Internet Project The two leading software application providers for supply chain management (SCM)and customer relationship management (CRM) software are I2 and Salesforce.com, respectively. In groups of two or three, go to the Web site for each company (linked
=+disadvantages of Web-based accounting compared to running software on a company’s internal computer network.
=+Go to the text’s Web site at academic.cengage.com/accounting/warren and click on the link to the NetSuite Inc. site. Read about the product from the site, and prepare a memo to management, defining Web-based accounting. Also, outline the advantages and
=+Web. Net-Suite Inc. is one of the most popular small business Web-based accounting systems.
=+Web-based application software is a recent trend in business computing. Major software firms such as Oracle, SAP, and NetSuites are running their core products on the
=+3. Which subsidiary ledgers would you recommend for the medical practice?
=+Design the format for each journal, giving special consideration to the needs of the medical practice.
=+2. Assume that CMG has decided to use a revenue journal and a purchases journal.
=+1. Briefly discuss the circumstances under which special journals would be used in place of a two-column (all-purpose) journal. Include in your answer your recommendations for CMG’s medical practice.
=+A local sales tax is collected on all patient invoices, and monthly financial statements are prepared.
=+SA 5-4 Design of accounting systems Chapter 5 Accounting Systems 249 Estimated Frequency per Type of Transaction Month Fees earned on account 240 Purchase of medical supplies on account 190 Cash receipts from patients on account 175 Cash payments on account 160 Cash receipts from patients at time
=+asked you to help with this project and has compiled the following information:
=+SA 5-3 Accounts receivable and accounts payable For the past few years, your client, Central Medical Group (CMG), has operated a small medical practice. CMG’s current annual revenues are $420,000. Because the accountant has been spending more and more time each month recording all transactions
=+transactions, while for individuals it is more common?
=+Why is it unusual for businesses such as Manor Company to engage in cash
=+SA 5-2 Manual vs.computerized accounting systems Like most businesses, when Manor Company renders services to another business, it is typical that the service is rendered “on account,” rather than as a cash transaction. As a result, Manor Company has an account receivable for the service
=+Do you agree with Ken? Why might a computerized environment be preferred over the manual system?
=+SA 5-1 Ethics and professional conduct in business The following conversation took place between Jacob Construction Co.’s bookkeeper, Ken Monroe, and the accounting supervisor, Chase Hargrove:Chase: Ken, I’m thinking about bringing in a new computerized accounting system to replace our
=+b. Discuss whether customer “lock in” is an ethical business practice.
=+a. Discuss whether the half-price offer is an ethical business practice.
=+Web Books, Inc., provides accounting applications for business customers on the Web for a monthly subscription. Web Books customers run their accounting system on the Web;thus, the business data and application reside on the servers of Web Books, Inc. The senior management of Web Books believes
=+6. Verify the agreement of each subsidiary ledger with its control account. The sum of the balances of the accounts in the subsidiary ledgers as of July 31 are:Accounts Receivable $17,530 Accounts Payable 4,380 21 Accounts Payable 5,125 31 J. Bourne, Capital 265,015 248 Chapter 5 Accounting
=+2. Journalize the transactions for July 2010, using the following journals similar to those illustrated in this chapter: cash receipts journal, purchases journal (with columns for Accounts Payable, Maintenance Supplies, Office Supplies, and Other Accounts), single-column revenue journal, cash
=+Vehicles 82,300 63 Advertising Expense —19 Accum. Depr.—Vehicles 11,700 64 Miscellaneous
=+17 Accum. Depr.—Office 61 Office Salaries Expense —Equip. 5,800 62 Rent Expense —
=+14 Maintenance Supplies 9,150 51 Driver Salaries Expense —15 Office Supplies 4,200 52 Maintenance Supplies Exp. —16 Office Equipment 24,000 53 Fuel Expense —
=+1. Enter the following account balances in the general ledger as of July 1:11 Cash $155,300 32 J. Bourne, Drawing —12 Accounts Receivable 12,690 41 Fees Earned —
=+31. Issued Check No. 622 in payment for office supplies, $750.Instructions
=+30. Issued Check No. 621 for monthly salaries as follows: driver salaries, $16,150;office salaries, $7,880.31. Cash fees earned for July 17–31, $16,700.
=+25. Issued Invoice No. 944 to Darr Co., $6,080.25. Received check for $3,820 from Perkins Co. in payment of balance.26. Issued Check No. 620 to Austin Computer Co. in payment of $4,100 invoice of July 6.
=+. Issued Invoice No. 943 to Sing Co., $5,000.24. Issued Check No. 619 to J. Bourne as a personal withdrawal, $2,500.
=+20. Used $3,000 maintenance supplies to repair delivery vehicles.23. Purchased office supplies on account from Office To Go Inc., $500.
=+$1,820; office supplies, $430.20. Issued Check No. 618 in payment of advertising expense, $1,625.
=+18. Purchased maintenance supplies on account from Crowne Supply Co., $1,630.19. Purchased the following on account from McClain Co.: maintenance supplies,
=+12. Received check from Capps Co. in payment of $2,340 invoice.13. Issued Check No. 615 to Browning Transportation in payment of $30,200 balance.16. Issued Check No. 616 for $37,300 for cash purchase of a vehicle.16. Cash fees earned for July 1–16, $16, 300.17. Issued Check No. 617 for
=+11. Issued Check No. 613 for $3,520 to Crowne Supply Co. in payment of account.11. Issued Check No. 614 for $725 to Porter Co. in payment of account.
=+10. Received check from Sing Co. in payment of $3,720 invoice.10. Issued Check No. 612 for $880 to Office To Go Inc. in payment of invoice.10. Issued Invoice No. 942 to Joy Co., $1,210.
=+PR 5-5B All journals and general ledger;trial balance obj. 2 Chapter 5 Accounting Systems 247✔ 2. Total cash receipts, $48,030 July 6. Purchased office equipment on account from Austin Computer Co., $4,100.6. Issued Invoice No. 941 to Darr Co., $5,240.9. Issued Check No. 611 for fuel expense,
=+PR 5-4B Purchases and cash payments journals;accounts payable and general ledgers objs. 2, 3✔ 1. Total cash payments, $77,550 The transactions completed by Courtesy Courier Delivery Company during July 2010, the first month of the fiscal year, were as follows:July 1. Issued Check No. 610 for
=+2. Post the individual entries (Other Accounts columns of the purchases journal and the cash payments journal and both columns of the general journal) to the appropriate general ledger accounts.
=+. Journalize the transactions for September. Use a purchases journal and a cash payments journal, similar to those illustrated in this chapter, and a two-column general journal. Use debit columns for Field Supplies, Office Supplies, and Other Accounts in the purchases journal. Refer to the
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