Chapter 3: Review of a Company’s Accounting System
131. Graham Corp. engaged in the following transactions during the month of June:
Made cash sales of $15,000.
Made credit sales of $25,000.
Customers returned $800 of merchandise from the June 5 sale because it was
defective.
Received payment for balance due on the June 5 sale.
Sold land that had originally cost $15,000 for $55,000 cash.
Required:
Record these transactions in a general journal, assuming Graham uses a periodic inventory system.
Sales Revenue
5
Accounts Receivable
Sales Revenue
Sales Returns & Allowances
Accounts Receivable
Cash
Accounts Receivable
Cash
Land
Gain on Sale of Land
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Challenging
ACCT.WHAL.16.3.6 – LO: 3.6
United States – BUSPORG: Analytic
United States – OH – Default City – AICPA: FN-Measurement
Chapter 3: Review of a Company’s Accounting System
132. The following information was taken from the accounting records of Acme Builders at the end of the year.
Land
$450
Capital stock
900
Inventory
206
Accumulated depreciation-Building
180
Liabilities
250
Cash
32
Allowance for doubtful accounts
14
Retained earnings
264
Accounts receivable
?
Building
840
Required:
Calculate the amount of gross accounts receivable.
$80:
Cash
Accounts receivable
Less: Allowance for doubtful accounts
Inventory
Land
Building
Less: Accumulated depreciation
Liabilities
Capital stock
Retained earnings
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Challenging
ACCT.WHAL.16.3.6 – LO: 3.6
United States – BUSPORG: Analytic
United States – OH – Default City – AICPA: FN-Measurement
Chapter 3: Review of a Company’s Accounting System
133. The following are selected account balances of the Roberts Company:
Debit
Credit
Cash
$15,300
Inventory, January 1, 2015
10,000
Sales Salaries Expense
15,000
Sales Revenue
$115,000
Inventory, December 31, 2015
8,300
Sales Returns and Allowances
2,250
Accounts Receivable
25,000
Purchases Discounts
1,500
Purchases Returns and Allowances
2,350
Sales Discounts
2,300
Purchases
69,700
Freight-In
2,400
Prepaid Rent
8,000
Required:
Prepare a partial income statement through gross profit on sales.
Sales revenue
Less: Sales returns and allowances
Sales discounts
Net sales
Cost of goods sold
Inventory, 1/1/15
Purchases
Purchases returns and allowances
Purchases discounts
Freight-in
Cost of goods available for sale
Less: Inventory, 12/31/15
Cost of goods sold
Gross profit on sales
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Challenging
ACCT.WHAL.16.3.6 – LO: 3.6
United States – OH – Default City – AICPA: FN-Measurement
Chapter 3: Review of a Company’s Accounting System
134. The following are selected account balances for Streamline Services:
Selling Expenses
$500
Interest Expense
42
Purchases
2,300
Sales
7,900
Accounts Payable
90
Ending Inventory
?
Prepaid Insurance
84
Net Sales
7,430
Purchase Discounts
158
Beginning Inventory
300
Sales Returns and Allowances
?
Purchase Returns and Allowances
180
Cost of Goods Sold
1,500
Sales Discounts
260
Required:
Prepare a partial income statement through gross profit on sales. Do not prepare the heading.
Sales
Less: Sales returns and allowances
Sales discounts
Net sales
Cost of goods sold:
Beginning inventory
Purchases
Less: Purchase returns and
allowances
Purchase discounts
Net purchases
Goods available for sale
Less: Ending inventory
Cost of goods sold
Gross profit on sales
1
Challenging
ACCT.WHAL.16.3.6 – LO: 3.6
United States – BUSPORG: Analytic
United States – OH – Default City – AICPA: FN-Measurement
135. Selected accounts from the December 31, 2015, adjusted trial balance of the Howard Company are shown below.
Debit
Credit
Inventory, January 1, 2015
$30,000
Sales Revenue
$90,000
Sales Returns and Allowances
3,000
Purchases
40,000
Freight-In
2,500
Selling Expenses
14,000
Administrative Expenses
8,000
Bad Debts Expense
500
Depreciation Expense-Building
1,500
Interest Expense
2,000
Income Tax Expense
2,200
Dividends
2,100
On December 31, 2015 the inventory was $18,000.
Required: Prepare a 2015 income statement for the Howard Company.
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ACCT.WHAL.16.3.6 – LO: 3.6
136. McNally Play Company engaged in the following transactions during the month of August:
Purchased $3,000 of merchandise on account, terms 1/10, n/30. McNally records
purchases using the gross method.
Returned $400 of the merchandise purchased on Aug. 4 because it was defective.
Purchased a machine for $5,000. Paid 20% down and signed an 8%, two-month note
for the balance.
Purchased $900 of merchandise and paid $940, which included freight.
Paid the balance due on the purchase of Aug. 4.
Required:
Record these transactions in a general journal, assuming McNally Play uses a periodic inventory system.
1
Challenging
ACCT.WHAL.16.3.7 – LO: 3.7
United States – BUSPORG: Analytic
United States – OH – Default City – AICPA: FN-Measurement
137. The following are selected data for the Young Company:
Administrative expenses
$ 920
Beginning inventory
1,140
Net sales
10,050
Net income
3,130
Ending inventory
1,180
Sales returns
1,180
Total operating expenses
1,380
Purchases
5,600
Required:
Compute the following:
a.
Sales
b.
Purchase returns
c.
Selling expenses
d.
Cost of goods sold
a.
$11,230 (Net sales $10,050 + Sales returns $1,180)
Purchase returns = Purchases $5,600 – Net purchases $5,580 = $20)
c.
$460 (Total operating expenses $1,380 – Administrative expenses $920)
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Challenging
ACCT.WHAL.16.3.7 – LO: 3.7
United States – BUSPORG: Analytic
United States – OH – Default City – AICPA: FN-Measurement
138. December 31 balances for selected accounts of the Chaney Company are presented below.
Accounts Receivable
$ 500
Sales
2,500
Interest Revenue
750
Dividends
300
Allowance for Doubtful Accounts
100
Salaries Expense
500
Depreciation Expense
400
Unearned Rent
200
Required:
Based on the accounts presented above, prepare the appropriate closing entries.
1
Challenging
ACCT.WHAL.16.3.7 – LO: 3.7
United States – BUSPORG: Analytic
United States – OH – Default City – AICPA: FN-Measurement
Chapter 3: Review of a Company’s Accounting System
139. Figure APC-1 is the condensed worksheet for the Amoss Company as of December 31, 2015.
Additional Information:
a.
Prepaid insurance is for a two-year theft policy dated July 1, 2015.
b.
The ending inventory balance is to $300.
c.
The building is being depreciated over a 30-year life, straight-line, no salvage value.
d.
The balance in Unearned Consulting Revenue pertains to a contract sold on September 1,
2015, to provide service to a client for one year.
e.
Office supplies on hand at year-end amount to $24.
f.
At year-end, there are accrued salaries of $50.
g.
Repair Service Revenue includes a contract for $120 received on July 1, 2015, for a one-
year period of time.
h.
The tax rate is 50%.
Required:
Complete the worksheet, assuming that adjusting entries are made only at December 31, 2015.
Chapter 3: Review of a Company’s Accounting System
Chapter 3: Review of a Company’s Accounting System
Chapter 3: Review of a Company’s Accounting System
140. Figure APC-2 is the condensed worksheet for the Christopher Company as of December 31, 2014.
Additional Information:
a.
Prepaid Insurance is for a two-year fire insurance policy dated July 1, 2014.
b.
The ending inventory amounts to $76.
c.
The building is being depreciated over a ten-year life, straight-line, no salvage value.
d.
The balance in Unearned Repair Service Revenue pertains to a contract sold on November
1, 2014, to provide service to a client for one year.
e.
Office supplies on hand at year-end amount to $14.
f.
At year-end, there are accrued salaries of $6.
g.
Consulting Revenue includes a contract for $60 received on October 1, 2014, for a one-
year period of time.
h.
The tax rate is 50%.
Required:
Complete the worksheet, assuming that adjusting entries are made only at December 31.
Chapter 3: Review of a Company’s Accounting System
Chapter 3: Review of a Company’s Accounting System
Chapter 3: Review of a Company’s Accounting System