4-121
212.
Serene Spa Sales, Inc. uses the gross method for recording purchases and sales and a
perpetual inventory system and had the following transactions during August.
Aug. 1
Sold merchandise on credit for $5,000, terms
3/10, n/30. The items sold had a cost of $3,500.
3
Purchased merchandise for cash, $2,720.
4
Purchased merchandise on credit for $2,600,
terms 1/20, n/30.
5
Issued a credit memorandum for $3,000 to a
customer who returned merchandise purchased
July 20. The returned items had a cost of $2,010.
10
Received payment for merchandise sold August 1.
15
Received a credit memorandum from the seller for
the return of faulty merchandise purchased on
August 4 for $600.
18
Paid freight charges of $200 for merchandise
ordered last month. (FOB shipping point)
23
Paid for the merchandise purchased August 4 less
the portion that was returned.
24
Sold merchandise on credit for $7,000, terms
2/10, n/30. The items had a cost of $4,900.
31
Received payment for merchandise sold on
August 24.
Required:
Prepare the general journal entries to record these transactions.
Sales
Cost of goods sold
Merchandise Inventory
Merchandise Inventory
Cash
213.
Craig’s Snowboards, Inc. uses the gross method of accounting for sales and a perpetual
inventory system and had the following sales transactions during June:
June 2
Sold merchandise to General Sports Store on
credit for $4,800, terms 1/15, n/60. The items
sold had a cost of $2,700.
June 4
General Sports Store returned merchandise that
had a selling price of $200. The cost of the
merchandise returned was $110.
June 13
General Sports Store paid for the merchandise
sold on June 2 less the return, taking any
appropriate discount earned.
Sales returns and
June
Prepare the journal entries to record these transactions.
4-124
214.
Forrest’s Cycle Shop, Inc. uses the gross method of accounting for sales and a perpetual
inventory accounting system and had the following transactions during the month of July:
July 3
Sold merchandise to a customer on credit for
$600, terms 2/10, n30. The cost of the
merchandise sold was $350.
July 4
Sold merchandise to a customer for cash of
$425. The cost of the merchandise was $250.
July 6
Sold merchandise to a customer on credit for
$1,300, terms 2/10, n/30. The cost of the
merchandise sold was $750.
July 8
The customer from July 3 returned merchandise
with a selling price of $100. The cost of the
merchandise returned was $55.
July 15
The customer from July 6 paid the full amount
due, less any appropriate discounts earned.
July 31
The customer from July 3 paid the full amount
due, less any appropriate discounts earned.
Prepare the required journal entries that Forrest’s Cycle Shop, Inc. must make to record
these transactions.
July 3
Accounts receivable
Sales
Cost of goods sold
Merchandise inventory
July 4
Sales
Cost of goods sold
Merchandise inventory
July 6
Accounts receivable
Sales
Cost of goods sold
215.
Following is the year-end adjusted trial balance for Fred’s Corner Grocery, Inc. for the
current year:
Fred’s Corner Grocery, Inc.
Adjusted Trial Balance
December 31
Dr.
Cr.
Cash
$67,500
Accounts receivable
46,000
Merchandise inventory
60,000
Store supplies
800
Accounts payable
16,000
Salaries payable
850
Common stock
1,000
Retained earnings
124,630
Dividends
45,000
Sales
550,000
Sales returns & allowances
4,500
Sales discounts
4,250
Cost of goods sold
382,450
Sales salaries expense
44,000
Advertising expense
8,150
Store salaries expense
24,325
Store supplies expense
450
Interest expense
5,055
Total
$692,480
$692,480
Required:
Prepare the closing entries at December 31 for the current year.
Dec.
Sales
4-128
216.
The year-end adjusted trial balance of Gordon Produce, Inc. for the current year, is shown
below:
GORDON PRODUCE
Adjusted Trial Balance
December 31
Debit
Credit
Cash
$1,500
Store supplies
500
Merchandise inventory
11,000
Store equipment
18,000
Accum. depr.—store
equipment
$3,000
Accounts payable
6,000
Common stock
1,000
Retained earnings
49,000
Dividends
22,000
Sales
60,500
Cost of goods sold
48,000
Depreciation expense—Store
equipment
1,000
Store supplies expense
1,500
Salaries expense
14,000
Rent expense
2,000
$119,500
$119,500
Required:
Prepare closing entries at December 31 for the current year.
Income Summary
4-130
217.
From the adjusted trial balance for Brookstone Art Supplies, Inc. given below, prepare a
multiple-step income statement in good form.
Brookstone Art Supplies, Inc.
Adjusted Trial Balance
December 31
Debit
Credit
Cash
$9,400
Accounts receivable
25,000
Merchandise inventory
32,000
Inventory returns estimated
4,000
Office supplies
900
Store equipment
75,000
Accumulated depreciation—
store equipment
$22,000
Office equipment
60,000
Accumulated depreciation—
office equipment
15,000
Accounts payable
35,000
Sales refund payable
7,000
Notes payable
10,000
Common stock
1,000
Retained earnings
109,700
Dividends
48,000
Sales
325,000
Sales discounts
6,000
Sales returns and allowances
16,500
Cost of goods sold
195,000
Selling expenses
32,500
General and administrative
expenses
19,800
Interest expense
600
Total
$524,700
$524,700
4-132
218.
From the adjusted trial balance for Fabricated Products Company, Inc. given below,
prepare the necessary closing entries.
219.
Johnnycake Restaurant uses the gross method of accounting for purchases and a
periodic
inventory system. Prepare general journal entries to record the following transactions for
Johnnycake:
Aug. 10
Johnnycake purchased merchandise on credit
from Foster Foods for $9,000, terms 2/10, n/30,
FOB destination. Transportation costs of $350
were paid by Foster.
12
Johnnycake returned $600 of merchandise from
the June 10 purchase.
19
Johnnycake paid Foster for the June 10
purchase.
Purchases Discounts ($8,400 ×
.02)
220.
Austin’s Pub Supply uses the gross method of accounting for sales and a
periodic
inventory system and had the following sales transactions during August:
August 2
Sold merchandise to Jo’s Pub and Grub on
credit for $3,750, terms 2/15, n/60. The items
sold had a cost of $1,200.
August 4
Jo’s Pub and Grub returned merchandise that
had a selling price of $300. The cost of the
merchandise returned was $110.
August 13
Jo’s Pub and Grub paid for the merchandise
sold on August 2, taking any appropriate
discount earned.
Prepare the journal entries that Austin‘s Pub Supply must make to record these
transactions.
221.
Preston Office Furniture, Inc. uses the gross method of accounting for sales and a
periodic
inventory system and had the following transactions during the month of May:
May 3
Sold merchandise to a customer on credit for
$600, terms 2/10, n/30. The cost of the
merchandise sold was $350.
May 4
Sold merchandise to a customer for cash of
$425. The cost of the merchandise was $250.
May 6
Sold merchandise to a customer on credit for
$1,300, terms 2/10, n/30. The cost of the
merchandise sold was $750.
May 8
The customer from May 3 returned merchandise
with a selling price of $100. The cost of the
merchandise returned was $55.
May 15
The customer from May 6 paid the full amount
due, less any appropriate discounts earned.
May 31
The customer from May 3 paid the full amount
due, less any appropriate discounts earned.
May 3
Accounts receivable
Sales
May 4
Sales
May 6
Accounts receivable
Sales
May 8
Sales returns and allowances
Accounts receivable
May 15
Sales discounts
Accounts receivable
Calculation: Discount = $1,300 * .02 = $26
May 31
Prepare the required journal entries that Preston Office Furniture, Inc. must make to
record these transactions.
4-137
222.
At its fiscal year-end of June 30, Kendall Wholesale’s general ledger shows the following
selected account balances. Kendall Wholesale uses the
perpetual
inventory system.
Merchandise Inventory
$60,000
Sales
940,000
Sales discounts
16,000
Sales returns and allowances
8,000
Cost of goods sold
456,000
Merchandise Inventory
A physical count of its June 30 year-end inventory discloses that the cost of the
merchandise inventory still available is $58,160. Prepare the entry to record any inventory
shrinkage.
4-138
223.
Prepare journal entries to record the following merchandising transactions of Margin
Company, Inc., which uses the gross method of accounting for purchases and sales and a
perpetual
inventory system. Margin Company, Inc. offers all of its credit customers credit
terms of 2/10, n/30.
May 1
Purchased merchandise from Craft Company
for $7,800 under credit terms of 1/10, n/30,
FOB shipping point, invoice dated May 1.
May 2
Purchased merchandise from Bow Company for
$10,600 under credit terms 2/05, n/20, FOB
destination.
May 3
Sold merchandise to Sting Company for $5,600,
FOB shipping point, invoice dated May 4. The
merchandise had cost $3,000.
May 4
Paid $300 cash for the freight charges on the
May 1 purchase of merchandise.
May 5
Received an $800 credit memorandum from
Craft Company for the return of part of the
merchandise purchased on May 1.
May 6
Paid Bow Company the balance due within the
discount period.
May 8
Sold merchandise to Skeet Company for
$3,300, FOB shipping point, invoice dated May
8. The merchandise had a cost of $1,500.
May 11
Paid Craft Company the balance due within the
discount period.
May 13
Received the balance due from Sting Company
within the discount period.
May 14
Issued a credit $300 credit memorandum to
Skeet Company for an allowance on defective
merchandise.
May 17
Received the balance due from Skeet Company
within the discount period.
May 1
Merchandise Inventory
Accounts Payable—Craft Co.
4-140
224.
Prepare journal entries to record the following merchandising transactions of Bradford
Company, Inc., which uses the gross method of accounting for purchases and uses a
perpetual
inventory system.
October 1
Purchased merchandise from Marks
Company for $7,200 under credit terms of
1/10, n/30, FOB shipping point, invoice
dated October 1.
October 2
Purchased merchandise from Barrow
Company for $8,600 under credit terms 2/05,
n/20, FOB destination.
October 4
Paid $200 cash for the freight charges on
the October 1 purchase of merchandise.
October 5
Received a $400 credit memorandum from
Marks Company for the return of part of the
merchandise purchased on October 1.
October 6
Paid Barrow Company the balance due
within the discount period.
October 10
Paid Marks Company the balance due within
the discount period.
Oct. 1
Merchandise Inventory
Accounts Payable—Marks Co.
Oct. 2
Merchandise Inventory
Accounts Payable—Barrow Co.
Oct. 4
Merchandise Inventory
Cash
Oct. 5
Accounts payable—Marks Co.
Merchandise inventory
Oct. 6
Accounts payable—Barrow Co.
Merchandise inventory ($8,600 * .02)
Cash ($8,600 – $172)
Oct.
Accounts payable—Marks Co. ($7,200 –