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Brief Exercise 5-3
Prepare the journal entries to record the following transactions on Kwang Companys books using a perpetual inventory system.
On March 2, Kwang Company sold $900,000 of merchandise to Sensat Company, terms 2/10, n/30. The cost of the merchandise sold was $620,000.(Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation
Debit
Credit
(To record credit sale)
(To record cost of merchandise sold)
On March 6, Sensat Company returned $90,000 of the merchandise purchased on March 2. The cost of the returned merchandise was $62,000.(Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation
Debit
Credit
(To record merchandise returned)
(To record cost of merchandise returned)
Brief Exercise 5-4
Prepare the journal entries to record these transactions on Sensat Companys books under a perpetual inventory system.
On March 2, Kwang Company sold $900,000 of merchandise to Sensat Company, terms 2/10, n/30. The cost of the merchandise sold was $620,000.(Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation
Debit
Credit
On March 6, Sensat Company returned $90,000 of the merchandise purchased on March 2. The cost of the returned merchandise was $62,000.(Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation
Debit
Credit
On March 12, Kwang Company received the balance due from Sensat Company.(Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation
Debit
Credit
On March 12, Kwang Company received the balance due from Sensat Company.(Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation
Debit
Credit
Brief Exercise 5-6
Hudson Company has the following account balances: Sales Revenue $195,000, Sales Discounts $2,000, Cost of Goods Sold $117,000, and Inventory $40,000.
Prepare the entries to record the closing of these items to Income Summary.(Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation
Debit
Credit
(To close accounts with credit balances.)
(To close accounts with debit balances.)
Brief Exercise 5-8
State where each of the following items would appear on (1) a multiple-step income statement, and on (2) a single-step income statement: (a) gain on sale of equipment, (b) interest expense, (c) casualty loss from vandalism, and (d) cost of goods sold.
Multiple-Step Income Statement
Single-Step Income Statement
Item
Section
Section
(a)
Gain on sale of equipment
Cost of Goods Sold
Other Expenses and Losses
Operating Expenses
Revenues
Expenses
Gross Profit
Other Revenues and Gains
Other Revenues and Gains
Expenses
Gross Profit
Other Expenses and Losses
Cost of Goods Sold
Operating Expenses
Revenues
(b)
Interest expense
Revenues
Cost of Goods Sold
Operating Expenses
Gross Profit
Other Revenues and Gains
Expenses
Other Expense
s and Losses
Expenses
Revenues
Other Expenses and Losses
Gross Profit
Other Revenues and Gains
Cost of Goods Sold
Operating Expenses
(c)
Casualty loss from vandalism
Cost of Goods Sold
Other Expenses and Losses
Gross Profit
Operating Expenses
Expenses
Revenues
Other Revenues and Gains
Other Revenues and Gains
Operating Expenses
Expenses
Gross Profit
Other Expenses and Losses
Cost of Goods Sold
Revenues
(d)
Cost of goods sold
Other Revenues and Gains
Other Expenses and Losses
Gross Profit
Expenses
Cost of Goods Sold
Operating Expenses
Revenues
Operating Expenses
Revenues
Cost of Goods Sold
Other Expenses and Losses
Gross Profit
Other Revenues and Gains
Expenses
Exercise 5-5
Presented below are transactions related to Bogner Company.
1.
On December 3, Bogner Company sold $570,000 of merchandise to Maris Co., terms 2/10, n/30, FOB shipping point. The cost of the merchandise sold was $350,000.
2.
On December 8, Maris Co. was granted an allowance of $20,000 for merchandise purchased on December 3.
3.
On December 13, Bogner Company received the balance due from Maris Co.
Prepare the journal entries to record these transactions on the books of Bogner Company using a perpetual inventory system.(Credit account titles are automatically indented when amount is entered. Do not indent manually.)
No.
Date
Account Titles and Explanation
Debit
Credit
1.
Dec. 3
(To record credit sale.)
(To record cost of merchandise sold.)
2.
Dec. 8
3.
Dec. 13
Assume that Bogner Company received the balance due from Maris Co. on January 2 of the following year instead of December 13. Prepare the journal entry to record the receipt of payment on January 2.(Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date
Account Titles and Explanation
Debit
Credit
Jan. 2
Exercise 5-7
Juan Morales Company had the following account balances at year-end: Cost of Goods Sold $60,000; Inventory $15,000; Operating Expenses $29,000; Sales Revenue $115,000; Sales Discounts $1,200; and Sales Returns and Allowances $1,700. A physical count of inventory determines that merchandise inventory on hand is $13,900.
Prepare the adjusting entry necessary as a result of the physical count.(Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation
Debit
Credit
Prepare closing entries.(Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation
Debit
Credit
(To close accounts with credit balances.)
(To close accounts with debit balances.)
(To close net income / (loss).)
Exercise 5-13
Presented below is financial information for two different companies.
Determine the missing amounts.
May Company
Reed Company
Sales revenue
$90,000
$
(d)
Sales returns
$
(a)
$5,000
Net sales
87,000
102,000
Cost of goods sold
56,000
(e)
Gross profit
(b)
41,500
Operating expenses
15,000
(f)
Net income
(c)
15,000
Determine the gross profit rates.(Round answer to 1 decimal place, e.g. 25.2%.)
May Company
Reed Company
The gross profit rate
%
%
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