Chapter 05 – Accounting for Retail Businesses
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Page 129
balances given above for Cerelat Co.
a.
$886,000
b.
$832,500
c.
$822,000
d.
$825,000
ANSWER:
c
RATIONALE:
Beg. inventory + Purchases – Purchases Returns and Allowances –
Purchases Discounts – Physical inventory at year end – Increase in Estimated
Returns Inventory + Freight In = Cost of goods sold
$850,000 + $850,000 – $7,000 – $3,500 – $882,000 – $1,500 + $16,000 =
$822,000
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Cerelat Co – selected accounts
LEARNING OBJECTIVES:
FNMN.WAJO.19.05–03 – LO: 05–03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.09 – Financial Statements
ACCT.AICPA.FN.03 – Measurement
BUSPROG – Analytic
DATE CREATED:
10/3/2017 11:59 AM
DATE MODIFIED:
12/11/2017 5:05 PM
268. A physical inventory at the end of June was $882,000. Estimated Returns Inventory is expected to increase to
$16,500. What is Cerelat Co.’s income from operations for the year?
a.
$136,000
b.
$121,500
c.
$105,000
d.
$180,000
ANSWER:
a
RATIONALE:
Sales – Cost of goods sold = Gross profit; Gross profit – Selling expenses –
Administrative expenses = Operating income
$1,600,000 – $822,000 = $778,000 – $380,000 – $262,000 = $136,000
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Cerelat Co – selected accounts
LEARNING OBJECTIVES:
FNMN.WAJO.19.05–04 – LO: 05–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.09 – Financial Statements
ACCT.AICPA.FN.03 – Measurement
BUSPROG – Analytic
DATE CREATED:
10/3/2017 12:06 PM
Chapter 05 – Accounting for Retail Businesses
4
Sold merchandise on account, $8,500.
8
Sold merchandise on VISA, $14,500.
8
Returned damaged merchandise, $800, purchased on April 6.
9
Paid for the merchandise purchased on April 1, less discount.
12
Received cash on account from the April 4 sale.
13
Paid for merchandise purchased on April 6, less return and discount.
ANSWER:
Date
Description
Debit
Credit
Sept. 1
Purchases
8,000
Accounts Payable
8,000
3
Accounts Payable
1,000
Purchases Returns and Allowances
1,000
7
Purchases
1,500
Freight In
75
Accounts Payable
1,575
14
Accounts Payable
1,575
Cash
1,545
Purchases Discount
30
20
Accounts Payable
7,000
Cash
7,000
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Moderate
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.05–02 – LO: 05–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.ACBSP.APC.17 – Inventories Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG – Analytic
DATE CREATED:
10/3/2017 12:48 PM
DATE MODIFIED:
12/11/2017 4:54 PM
271. Record the following purchases and sales transactions for Manioc Corp. using the general journal form provided
below. Assume Manioc uses a periodic inventory system. Omit transaction descriptions from entries.
Date
Transaction
Apr. 1
Purchased merchandise on account, list price $22,000, trade discount 30%,
terms FOB destination, 2/10, n/30.
Chapter 05 – Accounting for Retail Businesses
12
Cash
8,500
Accounts Receivable
8,500
13
Accounts Payable
17,340
Cash
16,996
Purchases Discounts
344
ANSWER:
Date
Description
Debit
Credit
Apr. 1
Purchases
15,400
Accounts Payable
15,400
4
Accounts Receivable
8,500
Sales
8,500
6
Purchases
18,000
Freight In
140
Accounts Payable
18,140
8
Cash
14,500
Sales
14,500
8
Accounts Payable
800
Purchases Returns and Allowances
800
9
Accounts Payable
15,400
Cash
15,092
Purchases Discounts
308
Chapter 05 – Accounting for Retail Businesses
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Page 136
Assume that Austin Maxwell pays his $400 receivable on January 3, taking the 2 percent discount to which he is entitled.
Journalize the entry to record the transaction.
ANSWER:
Jan. 3
Cash
392
Allowance for Sales Discounts
8
Accounts Receivable—Austin Maxwell
400
POINTS:
1
DIFFICULTY:
Bloom’s Applying
Easy
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.05–05 – LO: 05–05
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.AICPA.FN.03 – Measurement
BUSPROG – Analytic
DATE CREATED:
10/3/2017 1:39 PM
DATE MODIFIED:
12/13/2017 11:40 AM