Chapter 5 Homework E5-16 On January 1, 2010, Rachael Ray Corporation had merchandise inventory of $50,000. At December 31, 2010, Rachael Ray had the following account balances. Freight-in $ 4,000 Purchases 500,000 Purchase discounts 6,000 Purchase returns and allowances 2,000 Sales 800,000 Sales discounts 5,000 Sales returns and allowances 10,000 At December 31, 2010, Rachael Ray determines that its ending inventory is $60,000. Instructions (a) Compute Rachael Ray's 2010 gross profit. (b) Compute Rachael Ray's 2010 operating expenses if net income is $130,000 and there are no non-operating activities. E5-18 The following information relates to Martinez Co. 1. On April 5 purchased merchandise from D. Norlan Company for $20,000, terms 2/10, net/30, and FOB shipping point. 2. On April 6 paid freight costs of $900 on merchandise purchased from D. Norlan Company. 3. On April 7 purchased equipment on account for $26,000. 4. On April 8 returned some of April 5 merchandise, which cost $2,800, to D. Norlan Company. 5. On April 15 paid the amount due to D. Norlan Company in full. Instructions (a) Prepare the journal entries to record these transactions on the books of Martinez Co. using a periodic inventory system. (b) Assume that Martinez Co. paid the balance due to D. Norlan Company on May 4 instead of April 15. Prepare the journal entry to record this payment. E5-19 Presented below is information related to Chevalier Co. 1. On April 5, purchased merchandise from Paris Company for $22,000, terms 2/10, net/30, FOB shipping point. 2. On April 6, paid freight costs of $800 on merchandise purchased from Paris. 3. On April 7, purchased equipment on account from Wayne Higley Mfg. Co. for $26,000. 4. On April 8, returned merchandise, which cost $4,000, to Paris Company. 5. On April 15, paid the amount due to Paris Company in full. Instructions (a) Prepare the journal entries to record these transactions on the books of Chevalier Co. using a periodic inventory system. (b) Assume that Chevalier Co. paid the balance due to Paris Company on May 4 instead of April 15. Prepare the journal entry to record this payment. P5-5 At the end of Gordman Department Store's fiscal year on December 31, 2010, these accounts appeared in its adjusted trial balance. Freight-in Merchandise Inventory Purchases Purchase Discounts Purchase Returns and Allowances Sales $5,600 40,500 447,000 12,000 6,400 718,000 8,000 Sales Returns and Allowances Additional facts: 1. Merchandise inventory on December 31, 2010, is $75,000. 2. Note that Gordman Department Store uses a periodic system. Instructions Prepare an income statement through gross profit for the year ended December 31, 2010. P5-7 At the beginning of the current season, the ledger of Village Tennis Shop showed Cash $2,500; Merchandise Inventory $1,700; and Angie Wilbert, Capital $4,200. The following transactions were completed during April. Apr. 4 Purchased racquets and balls from Denton Co. $740, terms 3/10, n/30. 6 Paid freight on Denton Co. purchase $60. 8 Sold merchandise to members $900, terms n/30. 10 Received credit of $40 from Denton Co. for a racquet that was returned. 11 Purchased tennis shoes from Newbee Sports for cash $300. 13 Paid Denton Co. in full. 14 Purchased tennis shirts and shorts from Venus's Sportswear $600, terms 2/10, n/60. 15 Received cash refund of $50 from Newbee Sports for damaged merchandise that was returned. 17 Paid freight on Venus's Sportswear purchase $30. 18 Sold merchandise to members $1,000, terms n/30. 20 Received $500 in cash from members in settlement of their accounts. 21 Paid Venus's Sportswear in full. 27 Granted an allowance of $30 to members for tennis clothing that did not fit properly. 30 Received cash payments on account from members $500. Instructions Journalize the April transactions using a periodic inventory system