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198. Which of the following accounts would be included in the chart of accounts of a merchandising company
using the: (a) periodic inventory system, (b) perpetual inventory system, or (c) both systems?
(1) Sales Discounts
(2) Merchandise Inventory
(3) Sales
(4) Purchases Discounts
(5) Cost of Merchandise Sold
(6) Freight In
(7) Delivery Expense
(8) Sales Returns and Allowances
199. Journalize the following transactions for Armour Inc. using both the periodic inventory system and the
perpetual inventory system, presented in a side-by-side format shown at the end of this exercise.
Oct.7 Sold merchandise on credit to Rondo Distributors, terms n/30, FOB destination, $1,200; the cost of the
merchandise was $720.
Oct. 8 Purchased merchandise, $10,000, terms FOB shipping point, 2/15, n/30, with prepaid freight charges of
$525 added to the invoice.
PERIODIC INVENTORY
PERPETUAL INVENTORY
Accounts
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200. Journalize the following transactions for Dulcimer Inc. using both the periodic inventory system and the
perpetual inventory system, presented in a side-by-side format shown at the end of this exercise.
Oct. 9 Merchandise sold on October 7 accepted back from Rondo Co. for full credit and returned to
merchandise inventory, $300; the cost of the merchandise was $180.
Nov. 5 Received payment in full of $900 from Pine Co. for sale of merchandise on Oct. 25.
PERIODIC INVENTORY
PERPETUAL INVENTORY
Accounts
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201. Journalize the following transactions for Donnell Inc. using both the periodic inventory system and the
perpetual inventory system, presented in a side-by-side format shown at the end of this exercise.
Oct. 5 Purchased $18,000 of merchandise from Rex on account, terms 2/10, n/30.
Oct. 8 Returned merchandise purchased on account on Oct. 5 amounting to $3,500.
Oct. 15 Paid for purchase of Oct. 5, less Oct. 8 return and purchase discount.
PERIODIC INVENTORY
PERPETUAL INVENTORY
Accounts
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202. The following data were extracted from the accounting records of Meridian Designs for the year ended
March 31, 2014.
Merchandise Inventory, April 1, 2013
$530,000
Merchandise Inventory, March 31, 2014
375,000
Purchases
270,000
Purchase Returns and Allowances
25,000
Purchase Discounts
10,000
Sales
790,000
Sales Returns
20,000
Freight In
3,000
Prepare the cost of merchandise sold section of the income statement for the year ended March 31, 2014, using the periodic method. Also determine
gross profit.
203. The following data for the current year ended June 30 were extracted from the accounting records of Excel
Co.:
Admisitrative Expenses
$28,750
Cost of merchandise sold
181,440
Interest Expense
3,600
Rent Revenue
1,500
Sales
548,000
Sales Returns and Allowances
9,000
Sales Discounts
4,560
Selling Expenses
65,000
Prepare a multiple-step income statement for the year ended June 30, 2014.
204. Selected data from the ledger of Morrison Co. after adjustment at September 30, 2011 the end of the fiscal
year, are listed as follows:
Accounts Receivable
$ 39,120
Office Equipment
$ 82,700
Accumulated Depreciation
60,540
Prepaid Insurance
4,680
Administrative Expenses
90,000
Note Payable
77,750
Bob Morrison, Capital
85,000
Salaries Payable
3,060
Cost of Merchandise Sold
550,000
Sales (net)
950,000
Bob Morrison, Drawing
65,000
Selling Expenses
102,000
Interest Revenue
10,000
Supplies
3,125
Prepare an income statement, using the single-step form, and a statement of owner's equity.
205. Prepare (a) a single-step income statement, (b) a statement of owner's equity, and (c) a balance sheet in
report form from the following data for Kooper Co., taken from the ledger after adjustment on December 31,
2010 the end of the fiscal year.
Accounts Payable
$ 97,200
Accounts Receivable
64,300
Accumulated Depreciation - Office Equipment
72,750
Accumulated Depreciation - Store Equipment
162,100
Administrative Expenses
56,500
Maeve Kooper, Capital
81,750
Cash
53,000
Cost of Merchandise Sold
121,700
Maeve Kooper, Drawing
52,000
Interest Expense
12,000
Merchandise Inventory
93,250
Note Payable, Due 2012
154,000
Office Equipment
149,750
Prepaid Insurance
6,500
Rent Revenue
17,500
Salaries Payable
28,700
Sales (net)
365,500
Selling Expenses
41,500
Store Equipment
325,000
Supplies
4,000
206. Prepare a multiple-step income statement for Armour Co. from the following data for the year ended
December 31, 2014.
Sales, $790,000; cost of merchandise sold, $330,000; administrative expenses, $35,000; interest expense,
$20,000; rent revenue, $25,000; sales returns and allowances, $35,000; selling expenses, $50,000.
207. Which of the following costs would be included in merchandise inventory?
(a)
Purchase price
(b)
Insurance in transit FOB shipping point
(c)
Freight for delivery FOB shipping point
(d)
Repair due to negligence of receiving clerk
(e)
Receiving Department employee salary
(f)
Cost of processing purchase orders
208. For each of the following, calculate the cost of inventory reported on the balance sheet.
(a)
The total merchandise on hand at the end of the year as determined by taking a physical inventory is $62,000. Of the $62,000, $8,000
has been sold FOB destination and is awaiting pickup by the carrier.
(b)
The total merchandise inventory counted at the end of the year was $63,000. Purchases for $6,000 are in transit under FOB shipping
point terms.
(c)
The total merchandise inventory counted at the end of the year was $75,000. Purchases for $5,000 are in transit under FOB destination
terms.
209. Using the perpetual inventory system, journalize the entries for the following selected transactions:
(a)
Sold merchandise on account, for $12,000. The cost of the merchandise sold was $6,500.
(b)
Sold merchandise to customers who used MasterCard and VISA, $9,500. The cost of the merchandise sold was $5,300.
(c)
Sold merchandise to customers who used American Express, $2,900. The cost of the merchandise sold was $1,700.
(d)
Paid an invoice from First National Bank for $385, representing a service fee for processing MasterCard and VISA sales.
(e)
Received $4,325 from American Express Company after a $115 collection fee had been deducted.
210. Merchandise with a list price of $4,200 and costing $2,300 is sold on account, subject to the following
terms: FOB destination, 2/10, n/30. The seller prepays the freight costs of $85 (debit Freight Out for the freight
costs). Prior to payment for the goods, the seller issues a credit memo for $750 to the customer for
merchandise costing $425 that is returned. The correct amount is received within the discount period. The
company uses a perpetual inventory system.
Record the foregoing transactions of the seller in the sequence indicated below.
(a)
Sold the merchandise, recognizing the sale and cost of merchandise sold.
(b)
Paid the freight charges.
(c)
Issued the credit memo.
(d)
Received payment from the customer.
211. Based on the information below, journalize the entries for the Seller and the Buyer. Both use a perpetual
inventory system.
(a)
Seller sold merchandise on account to the buyer, $4,750, terms 2/10, net 30, FOB shipping point. The cost of the merchandise is
$2,850. The seller prepays the freight of $75.
(b)
Buyer returns $ 700 of merchandise as defective. The cost of the merchandise is $420.
(c)
Buyer pays within the discount period.
Seller
Buyer
Accounts
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212. Details of a purchase invoice and related credit memo are summarized as follows:
Invoice:
Cost of merchandise listed on purchase invoice
$6,500
Prepaid freight charge added to invoice
150
Terms, FOB shipping point, 1/10, n/eom
Credit memo: Cost of merchandise returned
$1,500
Assume that the credit memo was received prior to payment and that the invoice is paid within the discount period. Determine the following:
(a)
Amount of the cash discount allowed.
(b)
Amount to be paid by the purchaser if the discount is taken.
(c)
Cost of the merchandise to the purchaser if the discount is NOT taken.
213. Conquest Company uses a perpetual inventory system. Conquest purchased $1,500 of merchandise on
account and payment was made within the discount period. The credit terms were 2/10,n/30. Journalize
Conquest’s purchase and payment.
