CHAPTER 5 Accounting for Merchandising Operations ASSIGNMENT CLASSIICATION TA!LE
Learning O"#ecti$es
%uestions
!rief E&ercises
*1.
Ident dentif ify y th the dif differen erenc ces between service and merchandising companies.
2, 3, 4
1
1
1
*2.
Explain ain th the re recording of prchases nder a perpetal inventory system.
!, ", #
2, 4
2
2, 3, 4, 11
1$, 2$, 4$
1%, 2%, 4%
*3.
Explain ain th the re recording of sales revenes nder a perpetal inventory system.
&, ', 1(, 11
2, 3
3
3, 4, &, 11
1$, 2$, 4$
1%, 2%, 4%
*4.
Expl Explai ain n the step steps s in the acconting cycle for a merchandising company. company.
1, 12, 13, 14
&, !
4
!, ", #
3$, 4$, &$
3%, 4%
*&.
)repare an in income statement for a merchandiser.
1&, 1!, 1", 1#
", #, '
&
!, ', 1(, 12, 13, 14
2$, 3$, &$
2%, 3%
*!. *!.
)rep )repar are e a wor worsh sheet eet for for a merchandising company. company.
1'
1(
1&, 1!
&$
*". *".
Expl Explai ain n the the rec recordi ording ng of prchases and sales of inventory nder a periodic inventory system.
2(, 21
11, 12, 13, 14, 1&
1", 1#, 1', 2(, 21, 22
!$, "$, #$
'o It(
E&ercises
A Pro")e*s
! Pro")e*s
&%, !%, "%
*Note+ $ll asteris,ed +estions, Exercises, Exercises, and )roblems )roblems relate to material material contained in the appendices to the chapter.
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()1
ASSIGNMENT CHARACTERISTICS TA!LE Pro")e* Nu*"er
'escription
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Ti*e A))otted .*in/0
1$
or orna nali li-e -e prc prcha hase se and and sal sales es tran transa sact ctio ions ns nde nderr a perpetal inventory system.
imple
2(/3(
2$
ornali-e, post, and prepare a partial income statement.
imple
3(/4(
3$
)rep )repar are e fina financ ncia iall sta state teme ment nts s and and ad0 ad0st stin ing g and and closing entries.
oderate
4(/&(
4$
ornali-e, post, and prepare a trial balance.
imple
3(/4(
*&$
omplete acconting cycle beginning with a worsheet.
oderate
&(/!(
*!$ *!$
ete eterm rmin ine e cos costt of of goo goods ds sold sold and and gro gross ss prof profit it nde nderr periodic approach.
oderate
4(/&(
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alclate missing amonts and assess profitability.
oderate
2(/3(
*#$ *#$
or orna nali li-e -e,, post post,, and and prep prepar are e tria triall bala balanc nce e and and part partia iall income statement sing periodic approach.
imple
3(/4(
1%
or orna nali li-e -e prc prcha hase se and and sal sales es tran transa sact ctio ions ns nde nderr a perpetal inventory system.
imple
2(/3(
2%
ornali-e, post, and prepare a partial income statement.
imple
3(/4(
3%
)rep )repar are e fina financ ncia iall sta state teme ment nts s and and ad0 ad0st stin ing g and and closing entries.
oderate
4(/&(
4%
ornali-e, post, and prepare a trial balance.
imple
3(/4(
*&% *&%
ete eterm rmin ine e cos costt of of goo goods ds sold sold and and gro gross ss prof profit it nde nderr periodic approach.
oderate
4(/&(
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alclate missing amonts and assess profitability.
oderate
2(/3(
*"% *"%
or orna nali li-e -e,, post post,, and and prep prepar are e tria triall bala balanc nce e and and part partia iall income statement sing periodic approach.
imple
3(/4(
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ASSIGNMENT CHARACTERISTICS TA!LE Pro")e* Nu*"er
'escription
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Ti*e A))otted .*in/0
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or orna nali li-e -e prc prcha hase se and and sal sales es tran transa sact ctio ions ns nde nderr a perpetal inventory system.
imple
2(/3(
2$
ornali-e, post, and prepare a partial income statement.
imple
3(/4(
3$
)rep )repar are e fina financ ncia iall sta state teme ment nts s and and ad0 ad0st stin ing g and and closing entries.
oderate
4(/&(
4$
ornali-e, post, and prepare a trial balance.
imple
3(/4(
*&$
omplete acconting cycle beginning with a worsheet.
oderate
&(/!(
*!$ *!$
ete eterm rmin ine e cos costt of of goo goods ds sold sold and and gro gross ss prof profit it nde nderr periodic approach.
oderate
4(/&(
*"$
alclate missing amonts and assess profitability.
oderate
2(/3(
*#$ *#$
or orna nali li-e -e,, post post,, and and prep prepar are e tria triall bala balanc nce e and and part partia iall income statement sing periodic approach.
imple
3(/4(
1%
or orna nali li-e -e prc prcha hase se and and sal sales es tran transa sact ctio ions ns nde nderr a perpetal inventory system.
imple
2(/3(
2%
ornali-e, post, and prepare a partial income statement.
imple
3(/4(
3%
)rep )repar are e fina financ ncia iall sta state teme ment nts s and and ad0 ad0st stin ing g and and closing entries.
oderate
4(/&(
4%
ornali-e, post, and prepare a trial balance.
imple
3(/4(
*&% *&%
ete eterm rmin ine e cos costt of of goo goods ds sold sold and and gro gross ss prof profit it nde nderr periodic approach.
oderate
4(/&(
*!%
alclate missing amonts and assess profitability.
oderate
2(/3(
*"% *"%
or orna nali li-e -e,, post post,, and and prep prepar are e tria triall bala balanc nce e and and part partia iall income statement sing periodic approach.
imple
3(/4(
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1E2GAN'T INANCIAL ACCO3NTING4 ACCO3NTING4 IRS Edition4 e CHAPTER 5 ACCO3NTING OR MERCHAN'ISING OPERATIONS Nu*"er
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ACCO3NTING OR MERCHAN'ISING OPERATIONS .Continued0 Nu*"er
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Corre)ation Chart "et8een !)oo*6s Ta&ono*-4 Learning O"#ecti$es and End9of9Chapter E&ercises and Pro")e*s Learning O"#ecti$e ;/
Identif- the differences "et8een ser$ice and *erchandising co*panies/
E&p)ain the recording of purchases under a perpetua) in$entor- s-ste*/
/
E&p)ain the recording of sa)es re$enues under a perpetua) in$entor- s-ste*/
:no8)edge %59< 'I59;
Co*prehension
App)ication
Ana)-sis
%59 %59=
E59;!E59;
%59> %59?
%59@ !E59< !E59= 'I59< E59<
E59 E59= P59;A P59
P59
%59;; !E59< !E59 'I59 E59
E59= E595 P59;A P59
P59;! %59B P59
%595 %59;
=/
E&p)ain the steps in the accounting c-c)e for a *erchandising co*pan-/
%59; %59;< %59;=
%59; !E595 !E59> 'I59=
E59> E59? E59@ P59=A
P595A P59A P59=! P59!
5/
Prepare an inco*e state*ent %59;@ for a *erchandiser/
%59;? !E59@ 'I595
%59;5 %59;> !E59? !E59B E59> E59B
E59; E59;< E59; P59
P59
>/ Prepare a 8or,sheet for a *erchandising co*pan-/
%59;B !E59;
E59;5
?/ E&p)ain the recording of purchases and sa)es under a periodic in$entor- s-ste*/
%59<
%59<; !E59;; !E59;< !E59; !E59;= !E59;5
!roadening 2our Perspecti$e
Co**unication
S-nthesis
E$a)uation
! L O O M 6S
T A 7 O N O M 2 T A !
L E
P595A E59;> E59;? E59;@ E59;B E59< E59<; E59<<
P59>A P59?A P595! P59>! P59@A P59?!
inancia) Reporting 'ecisionDMa,ing Co*parati$e Ana)-sis Co*parati$e Ana)-sis Across the inancia) Reporting 'ecisionDMa,ing Across Organiation 'ecisionDMa,ing Across the Organiation the Organiation Ethics Case
ANS1ERS TO %3ESTIONS ;/
8a9
:he normal operating cycle for a merchandising company is liely to be longer than in a service company becase inventory mst first be prchased and sold, and then the receivables mst be collected.
/
8a9 :he components of revenes and expenses differ as follows;
isagree. :he steps in the acconting cycle are the same for both a merchandising company and a service company. 8b9 :he measrement of income is conceptally the same. In both types of companies, net income 8or loss9 reslts from the matching of expenses with revenes.
erchandising
ales ost of =oods old and >perating
8b9 :he income measrement process is as follows; ost of
ervice ?ees, perating 8only9
ANS1ERS TO %3ESTIONS ;/
8a9
:he normal operating cycle for a merchandising company is liely to be longer than in a service company becase inventory mst first be prchased and sold, and then the receivables mst be collected.
/
8a9 :he components of revenes and expenses differ as follows;
isagree. :he steps in the acconting cycle are the same for both a merchandising company and a service company. 8b9 :he measrement of income is conceptally the same. In both types of companies, net income 8or loss9 reslts from the matching of expenses with revenes.
erchandising
ervice ?ees, perating 8only9
ales ost of =oods old and >perating
8b9 :he income measrement process is as follows; ales
@ess
ost of =oods old
EAals
=ross )rofit
@ess
>perating Expenses
EAals
6et Income
=/
Income measrement for a merchandising company differs from a service company as follows; 8a9 sales are the primary sorce of revene and 8b9 expenses are divided into two main categories; cost of goods sold and operating expenses.
5/
In a perpetal inventory system, cost of goods sold is determined each time a sale occrs.
>/
:he letters ?>% mean ?ree on %oard. ?>% shipping point means that goods are placed free on board the carrier by the seller. :he byer then pays the freight and debits Inventory. ?>% destination means that the goods are placed free on board to the byerBs place of bsiness. :hs, the seller pays the freight and debits ?reightCot.
?/
redit terms of 2D1(, nD3( mean that a 2 cash discont may be taen if payment is made within 1( days of the invoice dateF otherwise, the invoice price, less any retrns, is de 3( days from the invoice date.
@/
ly 24
B/
;/
$cconts )ayable 8G2,&(( / G2((9................................................ Inventory 8G2,3(( 5 29......................................................... ash 8G2,3(( / G4!9...............................................................
2,3(( 4! 2,2&4
$gree. In accordance with the revene recognition principle, companies record sales revene when the performance obligation is satisfied. :he performance obligation is satisfied when the goods transfer from the seller to the byerF that is, when the exchange transaction occrs. :he earning of revene is not dependent on the collection of credit sales. 8a9
:he primary sorce docments are; 819 cash salesHcash register tapes and 829 credit salesH sales invoice.
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%uestions Chapter 5 8ontined9 $' -he entries are
ebit ash salesH
redit salesH
;;/
ly 1'
ash............................................................... ales
55
$cconts
55
redit 55
55 55
55 55 55
ash 8!(( / 129................................................................ ales isconts 8!(( 5 29................................................ $cconts
&## 12 !((
;
:he perpetal inventory records for merchandise inventory may be incorrect de to a variety of cases sch as recording errors, theft, or waste.
;/
:wo closing entries are reAired; 819
829
ales
1#(,(((
Income mmary........................................................................... ost of =oods old.................................................................
12&,(((
1#(,(((
12&,(((
;=/
>f the merchandising acconts, only Inventory will appear in the postCclosing trial balance.
;5/
ales revene.................................................................................................. ost of goods sold........................................................................................... =ross profit......................................................................................................
JK1,('(,((( "((,((( JK 3'(,(((
=ross profit rate; JK3'(,((( L JK1,('(,((( M 3&.#
;>/
=ross profit............................................................................................................. @ess; 6et income................................................................................................... >perating expenses...............................................................................................
;?/
:here are three distingishing featres in the income statement of a merchandising company; 819 a sales revenes section, 829 a cost of goods sold section, and 839 gross profit.
N&"(,((( 24(,((( N33(,(((
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%uestions Chapter 5 8ontined9 ;@/
8a9 :he operating activities part of the income statement has three sections; sales revenes, cost of goods sold, and operating expenses. 8b9 :he nonoperating activities part consists of two sections; other income and expense, and interest expense.
;B/
:he colmns are; 8a9 InventoryH:rial %alance 8r.9, $d0sted :rial %alance 8r.9, and tatement of ?inancial )osition 8r.9. 8b9 ost of =oods oldH:rial %alance 8r.9, $d0sted :rial %alance 8r.9, and Income tatement 8r.9.
<.
<;/
$cconts
$ddedDedcted
)rchase
edcted edcted $dded
ly 24
$cconts )ayable 86:K!(,((( / 6:K!,(((9...................................... &4,((( )rchase isconts 86:K&4,((( 5 29..................................... 1,(#( ash 86:K&4,((( / 6:K1,(#(9.................................................. &2,'2(
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SOL3TIONS TO !RIE E7ERCISES !RIE E7ERCISE 59; .a0 Cost of goods so)d F =@4 .?@4 D 40/ Operating e&penses F ;B4< .4 D ;4@0/ ."0 Gross profit F 54 .;@4 D 5540/ Operating e&penses F <45 .54 D 45 .@4B ?B4>0/ Net inco*e F =4; .?B4> D B450/
!RIE E7ERCISE 59< Gio$anni Co*panIn$entor-/////////////////////////////////////////////////////////////// Accounts Pa-a")e//////////////////////////////////////// Gordon Co*panAccounts Recei$a")e/////////////////////////////////////////// Sa)es Re$enue////////////////////////////////////////////// Cost of Goods So)d///////////////////////////////////////////// In$entor-///////////////////////////////////////////////////////
?@ ?@
?@ ?@ 5> 5>
!RIE E7ERCISE 59 .a0 Accounts Recei$a")e/////////////////////////////////////////// Sa)es Re$enue////////////////////////////////////////////// Cost of Goods So)d///////////////////////////////////////////// In$entor-///////////////////////////////////////////////////////
@4
."0 Sa)es Returns and A))o8ances/////////////////////////// Accounts Recei$a")e/////////////////////////////////// In$entor-/////////////////////////////////////////////////////////////// Cost of Goods So)d//////////////////////////////////////
;<4
@4 ><4 ><4
;<4 B4 B4
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!RIE E7ERCISE 59 .Continued0 .c0 Cash .>@4 D ;4>0/////////////////////////////////// Sa)es 'iscounts .>@4 7 <0/////////////////////// Accounts Recei$a")e/////////////////////////////////// .@4 D ;<40
>>>4= ;4> >@4
!RIE E7ERCISE 59= .a0 In$entor-/////////////////////////////////////////////////////////////// Accounts Pa-a")e////////////////////////////////////////
@4
."0 Accounts Pa-a")e//////////////////////////////////////////////// In$entor-///////////////////////////////////////////////////////
;<4
.c0 Accounts Pa-a")e .@4 D ;<40/////////// In$entor .>@4 7 <0///////////////////////////////////////// Cash .>@4 D ;4>0///////////////////////////
>@4
@4
;<4
;4> >>>4=
!RIE E7ERCISE 595 Cost of Goods So)d///////////////////////////////////////////////////// In$entor-//////////////////////////////////////////////////////////////
;4B ;4B
!RIE E7ERCISE 59> Sa)es Re$enue///////////////////////////////////////////////////////////// Inco*e Su**ar-/////////////////////////////////////////////////
;B<4
Inco*e Su**ar-///////////////////////////////////////////////////////// Cost of Goods So)d///////////////////////////////////////////// Sa)es 'iscounts///////////////////////////////////////////////////
;?4
;B<4
;54 <4
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!RIE E7ERCISE 59? 2ANGTJE COMPAN24 LT'/ Inco*e State*ent .Partia)0 or the Month Ended Octo"er ;4 <;? Sa)es re$enues Sa)es re$enue .K<@4 K;40///////////////// Less+ Sa)es returns and a))o8ances///////////////// Sa)es discounts//////////////////////////////////////// Net sa)es///////////////////////////////////////////////////////////////
K@4 K<<4 54
!RIE E7ERCISE 59@ The for*at of an inco*e state*ent for a *erchandising co*pan- is designed to differentiate "et8een $arious sources of inco*e and e&pense/ Ite* .a0 ."0 .c0 .d0 .e0
Gain on sa)e of euip*ent Interest e&pense Casua)t- )oss fro* $anda)is* Cost of goods so)d 'epreciation e&pense
Section Other inco*e and e&pense After other inco*e and e&penses Other inco*e and e&pense Cost of goods so)d Operating e&penses
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!RIE E7ERCISE 59B .a0 Net sa)es F 5>4 D ;4 F =B4/ ."0 Gross profit F =B4 D =<4 F ;5;4/ .c0 Inco*e fro* operations F ;5;4 D ;;4 F =;4/ .d0 Gross profit rate F ;5;4 =B4 F />/
!RIE E7ERCISE 59; .a0 Cash+ Tria) "a)ance de"it co)u*n Ad#usted tria) "a)ance de"it co)u*n State*ent of financia) position de"it co)u*n/ ."0 In$entor-+ Tria) "a)ance de"it co)u*n Ad#usted tria) "a)ance de"it co)u*n State*ent of financia) position de"it co)u*n/ .c0 Sa)es re$enue+ Tria) "a)ance credit co)u*n Ad#usted tria) "a)ance credit co)u*n4 Inco*e state*ent credit co)u*n/ .d0 Cost of goods so)d+ Tria) "a)ance de"it co)u*n4 Ad#usted tria) "a)ance de"it co)u*n4 Inco*e state*ent de"it co)u*n/
!RIE E7ERCISE 59;; Purchases/////////////////////////////////////////////////////////////////////// Less+ Purchase returns and a))o8ances///////////////////// Purchase discounts//////////////////////////////////////////// Net purchases///////////////////////////////////////////////////////////////// Net purchases///////////////////////////////////////////////////////////////// Add+ reight9in/////////////////////////////////////////////////////////////// Cost of goods purchased//////////////////////////////////////////////
1=4 1;4 @4
<;4 1=B4 1=B4 ;>4 1=<54
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!RIE E7ERCISE 59;< Net sa)es////////////////////////////////////////////////////////////////////////// 1>@4 !eginning in$entor-/////////////////////////////////////////////////////// 1 >4 Add+ Cost of goods purchased////////////////////////////////// =<54 Cost of goods a$ai)a")e for sa)e/////////////////////////////////// =@54 Less+ Ending in$entor-////////////////////////////////////////////////// @>4 Cost of goods so)d///////////////////////////////////////////////////////// BB4 Gross profit///////////////////////////////////////////////////////////////////// 1<@;4 Infor*ation ta,en fro* !rief E&ercise 59;;/ !RIE E7ERCISE 59; .a0 ."0 .c0
Purchases////////////////////////////////////////////////////////////// Accounts Pa-a")e//////////////////////////////////////////
B4
Accounts Pa-a")e///////////////////////////////////////////////// Purchase Returns and A))o8ances///////////////
;@=4
Accounts Pa-a")e .B4 D ;@=40//////////// Purchase 'iscounts .?;>4 7 <0/////////// Cash .?;>4 D ;=4<0/////////////////////////////
?;>4
B4 ;@=4 ;=4< ?;4>@
!RIE E7ERCISE 59;= In$entor- .ending0////////////////////////////////////////////////////////// Sa)es Re$enue//////////////////////////////////////////////////////////////// Purchase Returns and A))o8ances/////////////////////////////// Inco*e Su**ar-//////////////////////////////////////////////////
4 ;@4 4
Inco*e Su**ar-//////////////////////////////////////////////////////////// Purchases////////////////////////////////////////////////////////////// Sa)es 'iscounts///////////////////////////////////////////////////// In$entor- ."eginning0////////////////////////////////////////////
;><4
<=4 ;<4 <4 =4
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!RIE E7ERCISE 59;5 .a0
Cash+ Tria) "a)ance de"it co)u*n Ad#usted tria) "a)ance de"it co)u*n State*ent of financia) position de"it co)u*n/
."0
!eginning in$entor-+ Tria) "a)ance de"it co)u*n Ad#usted tria) "a)ance de"it co)u*n Inco*e state*ent de"it co)u*n/
.c0
Accounts pa-a")e+ Tria) "a)ance credit co)u*n Ad#usted tria) "a)ance credit co)u*n State*ent of financia) position credit co)u*n/
.d0
Ending in$entor-+ Inco*e state*ent credit co)u*n State*ent of financia) position de"it co)u*n/
SOL3TIONS OR 'O IT( REIE1 E7ERCISES 'O IT( 59; ;/
True/ a)se/ 3nder a perpetua) in$entor- s-ste*4 a co*pan- deter*ines the cost of goods so)d at each ti*e a sa)e occurs/ a)se/ !oth ser$ice and *erchandising co*panies are )i,e)- to use accounts recei$a")e/ True/
'O IT( 59< Oct/ 5
Oct/ @
In$entor-///////////////////////////////////////////////////////////////// Accounts Pa-a")e //////////////////////////////////////////// .To record goods purchased on account0
=4?
Accounts Pa-a")e/////////////////////////////////////////////////// In$entor-/////////////////////////////////////////////////////////// .To record return of defecti$e goods0
>5
=4?
>5
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'O IT( 59 Oct/ 5
Oct/ @
Accounts Recei$a")e///////////////////////////////////////////// Sa)es Re$enue////////////////////////////////////////////////// .To record credit sa)es0
=4?
Cost of Goods So)d//////////////////////////////////////////////// In$entor- ////////////////////////////////////////////////////////// .To record cost of goods so)d0
4;
Sa)es Returns and A))o8ances ///////////////////////////// Accounts Recei$a")e ////////////////////////////////////// .To record credit granted for receipt of returned goods0
>5
In$entor-///////////////////////////////////////////////////////////////// Cost of Goods So)d ///////////////////////////////////////// .To record fair $a)ue of goods returned0
;>
=4?
4;
>5
;>
'O IT( 59= 'ec/ ; Sa)es Re$enue//////////////////////////////////////////////////////// ;5>4 Interest Re$enue //////////////////////////////////////////////////// 4 Inco*e Su**ar-////////////////////////////////////////////// .To c)ose accounts 8ith credit "a)ances0 Inco*e Su**ar-//////////////////////////////////////////////////// ;<@4> Cost of Goods So)d////////////////////////////////////////// Sa)es Returns and A))o8ances//////////////////////// Sa)es 'iscounts//////////////////////////////////////////////// reight9Out//////////////////////////////////////////////////////// 3ti)ities E&pense/////////////////////////////////////////////// Sa)aries and 1ages E&pense////////////////////////// .To c)ose accounts 8ith de"it "a)ances0
;5B4
B<4= =4; 4 <4< ?4= ;B45
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'O IT( 595 Account
inancia) State*ent
C)assification
Accounts Pa-a")e
State*ent of inancia) Position State*ent of inancia) Position State*ent of inancia) Position State*ent of inancia) Position Inco*e state*ent
Current )ia"i)ities
Accounts Recei$a")e Accu*u)ated 'epreciationQ !ui)dings Cash Casua)t- Loss fro* anda)is* Cost of Goods So)d 'epreciation E&pense 'i$idends Euip*ent reight9Out Insurance E&pense Interest Pa-a")e In$entorLand Notes Pa-a")e .due in 5 -ears0 Propert- Ta&es Pa-a")e Sa)aries and 1ages E&pense Sa)aries and 1ages Pa-a")e Sa)es Returns and A))o8ances Sa)es Re$enue Share Capita)QOrdinar3nearned Rent Re$enue
Inco*e state*ent Inco*e state*ent Retained earnings state*ent State*ent of inancia) Position Inco*e state*ent Inco*e state*ent State*ent of inancia) Position State*ent of inancia) Position State*ent of inancia) Position State*ent of inancia) Position State*ent of inancia) Position Inco*e state*ent State*ent of inancia) Position Inco*e state*ent Inco*e state*ent State*ent of inancia) Position State*ent of inancia) Position
Current assets Propert-4 p)ant4 and euip*ent Current assets Other inco*e and e&pense Cost of goods so)d Operating e&penses 'eduction section Propert-4 p)ant4 and euip*ent Operating e&penses Operating e&penses Current )ia"i)ities Current assets Propert-4 p)ant4 and euip*ent Non9current )ia"i)ities Current )ia"i)ities Operating e&penses Current )ia"i)ities Sa)es re$enues Sa)es re$enues EuitCurrent )ia"i)ities
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3ti)ities E&pense
Inco*e state*ent
Operating e&penses
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SOL3TIONS TO E7ERCISES E7ERCISE 59; ;/
>/ ?/ @/
True/ a)se/ or a *erchandiser4 sa)es )ess cost of goods sold is ca))ed gross profit/ True/ True/ a)se/ The operating c-c)e of a *erchandiser differs fro* that of a ser$ice co*pan-/ The operating c-c)e of a *erchandiser is ordinari))onger/ a)se/ In a periodic in$entor- s-ste*4 no detai)ed in$entor- records of goods on hand are *aintained/ True/ a)se/ A perpetua) in$entor- s-ste* pro$ides "etter contro) o$er in$en9 tories than a periodic s-ste*/
E7ERCISE 59< .a0 .;0 Apri) 5
In$entor-//////////////////////////////////////////// Accounts Pa-a")e/////////////////////
<54
.<0 Apri) >
In$entor-//////////////////////////////////////////// Cash///////////////////////////////////////////
B
.0 Apri) ?
Euip*ent///////////////////////////////////////// Accounts Pa-a")e/////////////////////
<>4
.=0 Apri) @
Accounts Pa-a")e///////////////////////////// In$entor-////////////////////////////////////
<4>
.50 Apri) ;5
Accounts Pa-a")e///////////////////////////// .<54 D <4>0 In$entor .<54 D <4>0 7 <////// Cash .<<4= D ==@0///////////////
<<4=
."0 Ma- =Accounts Pa-a")e/////////////////////////////////////////// Cash////////////////////////////////////////////////////
<<4=
<54
B <>4 <4>
==@ <;4B5<
<<4=
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E7ERCISE 59 Sept/ >
In$entor- .B 7 <0///////////////////////////////////////// Accounts Pa-a")e////////////////////////////////////
;4@
B
In$entor-////////////////////////////////////////////////////////// Cash//////////////////////////////////////////////////////////
;@
;
Accounts Pa-a")e//////////////////////////////////////////// In$entor-///////////////////////////////////////////////////
>>
;<
Accounts Recei$a")e .<@ 7 0///////////////////// Sa)es Re$enue////////////////////////////////////////// Cost of Goods So)d .<@ 7 <<0/////////////////////// In$entor-///////////////////////////////////////////////////
B<=
Sa)es Returns and A))o8ances////////////////////// Accounts Recei$a")e////////////////////////////// In$entor-////////////////////////////////////////////////////////// Cost of Goods So)d/////////////////////////////////
;=
<
Accounts Recei$a")e .= 7 50//////////////////// Sa)es Re$enue///////////////////////////////////////// Cost of Goods So)d .= 7 <<0/////////////////////// In$entor-//////////////////////////////////////////////////
;4@
>;>
;@ >> B<= >;>
<< << ;4= ;4= @@ @@
E7ERCISE 59= .a0 une ;
;;
;<
;B
In$entor-/////////////////////////////////////////////////// Accounts Pa-a")e////////////////////////////
?4>
In$entor-/////////////////////////////////////////////////// Cash//////////////////////////////////////////////////
=
Accounts Pa-a")e//////////////////////////////////// In$entor-///////////////////////////////////////////
Accounts Pa-a")e .?4> D 0////////// In$entor .?4 7 <0/////////////////////////////////
?4
?4>
=
;=>
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()20
Cash .?4 D ;=>0////////////////////////
?4;5=
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E7ERCISE 59= .Continued0 ."0 une ;
;<
;B
Accounts Recei$a")e////////////////////////////// Sa)es Re$enue///////////////////////////////// Cost of Goods So)d//////////////////////////////// In$entor-//////////////////////////////////////////
?4>
Sa)es Returns and A))o8ances////////////// Accounts Recei$a")e////////////////////// In$entor-////////////////////////////////////////////////// Cost of Goods So)d////////////////////////
Cash .?4 D ;=>0/////////////////////////////// Sa)es 'iscounts .?4 7 <0////////////// Accounts Recei$a")e .?4> D 0/////////////////////////////
?4;5= ;=>
?4> =4 =4
? ?
?4
E7ERCISE 595 .a0 ;/
'ec/
Accounts Recei$a")e/////////////////////// Sa)es Re$enue////////////////////////// Cost of Goods So)d///////////////////////// In$entor-///////////////////////////////////
5@4
Sa)es Returns and A))o8ances/////// Accounts Recei$a")e///////////////
<@4
Cash .H:U55<4 D H:U545<0/////// Sa)es 'iscounts .H:U5@4 D H:U<@40 7 ; Accounts Recei$a")e .H:U5@4 D H:U<@40///
5=>4=@
."0 Cash/////////////////////////////////////////////////////////////////////////// Accounts Recei$a")e . H:U5@4 D H:U<@40///////////////////////////
55<4
/
'ec/ @ 'ec/ ;
5@4 >=4@ >=4@
<@4
545< 55<4
55<4
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E7ERCISE 59> .a0
MEN'OJA COMPAN24 SL3 Inco*e State*ent .Partia)0 or the 2ear Ended Octo"er ;4 <;? Sa)es re$enues Sa)es re$enue////////////////////////////////////////////////// Less+ Sa)es returns and a))o8ances//////////// Sa)es discounts/////////////////////////////////// Net sa)es//////////////////////////////////////////////////////////
@<4 <@4 ;4
=;4 ??B4
Note+ reight9Out is a se))ing e&pense/ ."0 .;0 Oct/ ;
Sa)es Re$enue/////////////////////////////// Inco*e Su**ar-//////////////////
@<4
Inco*e Su**ar-////////////////////////// Sa)es Returns and A))o8ances///////////////////////// Sa)es 'iscounts////////////////////
=;4
.a0 Cost of Goods So)d//////////////////////////////////////////////// In$entor-/////////////////////////////////////////////////////////
@
."0 Sa)es Re$enue//////////////////////////////////////////////////////// Inco*e Su**ar-///////////////////////////////////////////
;;?4
Inco*e Su**ar-/////////////////////////////////////////////////// Cost of Goods So)d . >4 @0/////////// Operating E&penses/////////////////////////////////////// Sa)es Returns and A))o8ances///////////////////// Sa)es 'iscounts//////////////////////////////////////////////
B<4@
Inco*e Su**ar- . ;;?4 D B<4@0/////////////// Retained Earnings//////////////////////////////////////////
<=4<
.<0
;
@<4
<@4 ;4
E7ERCISE 59?
@
;;?4
>4@
<=4<
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E7ERCISE 59@ .a0 Cost of Goods So)d//////////////////////////////////////////////// In$entor-/////////////////////////////////////////////////////////
>
."0 Sa)es Re$enue//////////////////////////////////////////////////////// Inco*e Su**ar-///////////////////////////////////////////
?@4
Inco*e Su**ar-/////////////////////////////////////////////////// Cost of Goods So)d .<@4 >0///////// reight9Out////////////////////////////////////////////////////// Insurance E&pense///////////////////////////////////////// Rent E&pense////////////////////////////////////////////////// Sa)aries and 1ages E&pense//////////////////////// Sa)es 'iscounts////////////////////////////////////////////// Sa)es Returns and A))o8ances/////////////////////
Inco*e Su**ar- .?@4 D 0////////////// Retained Earnings//////////////////////////////////////////
54=
> ?@4 <@4> ?4 ;<4 <4 5B4 @4 ;4
54=
E7ERCISE 59B .a0
!ACH COMPAN24 LT'/ Inco*e State*ent or the Month Ended March ;4 <;? Sa)es re$enues Sa)es re$enue//////////////////////////////////////////////////// Less+ Sa)es returns and a))o8ances////////////// Sa)es discounts///////////////////////////////////// Net sa)es//////////////////////////////////////////////////////////// Cost of goods so)d//////////////////////////////////////////////// Gross profit//////////////////////////////////////////////////////////// Operating e&penses Sa)aries and 8ages e&pense//////////////////////////// Rent e&pense///////////////////////////////////////////////////// reight9out///////////////////////////////////////////////////////// Insurance e&pense//////////////////////////////////////////// Tota) operating e&penses///////////////////// Net inco*e/////////////////////////////////////////////////////////
@4 ;4 ?4=
<4= 5B4> <;<4 ;=?4>
5@4 <4 B4 ?4 ;>4 =;4>
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()2*
